How can MDM Strategies Smoothen Supply Chain Management?
Melissa AU Team | |
Data quality is critical to supply chain performance. In turn, this affects customer experiences and the organization’s growth. As sales volumes and marketing channels increase, supply chain professionals must be able to manage all the various data assets such as product data, customer data, vendor data, etc. and keep it complete, consistent, coherent and compatible. This is where Master Data Management can play a critical role.
What is Master Data?
Master Data can be defined as a consistent and uniform set of identifiers that describe the core entities of an enterprise. This includes data on suppliers, raw materials, warehouse locations, customers, etc. This data is not transactional and remains constant most of the time.
For example, when you look at orders placed for a day, customer names and addresses, order numbers, seller names, product SKUs and unit prices can be categorized as Master Data. This data is static and will not change.
Once you understand the significance of master data, you need to classify and manage the way it flows through your system.
Introducing, Master Data Management
Master Data Management (MDM) refers to systematic data handling that creates a single, trusted view of data across departments within the organization. It is IT-centric as well as business-centric and aimed at ensuring data completeness, accuracy, consistency and harmonization.
Through MDM, supply chain managers can connect data from multiple systems such as ERPs and CRMs and create interoperable data sets. This is important as fragmented data can create inefficiencies within the system, delay time-to-market and cause errors in forecasting, production, inventory planning, etc.
MDM provides supply chain managers access to clean data that improves communication between suppliers, shippers and all other involved parties and helps identify opportunities for innovation and commercialization. By giving the supply chain a single version of the truth, data errors can be eliminated while efficiency can be improved and supply chain managers can streamline decisions.
How can MDM help Supply Chain Management?
Supply chain management involves managing huge volumes of data. Not only is the data of different types, but it also has varied origins ranging from online forms and ERPs to vendors, fleet routes, employees, etc. Adopting and implementing MDM solutions helps create connections between all of this data and maintain it uniformly across departments and domains. Some of the reasons it is considered indispensable today are:
- Increase Data Usability
MDM combines data from various sources and cross-references attributes. The data is then cleansed, validated and enriched resulting in a record that acts as a single source of truth. Bad data is eliminated to avoid duplication and data formats are standardized to make it more usable and improve the efficiency of business processes.
- Creates Centralized Inter-Referenced Data Architecture
Once cleansed and enriched, data is stored in centralized inter-referenced data architecture.
This provides an all-inclusive view of the products, suppliers, customers, etc. that can be viewed by all departments from multiple locations.
For example, products may be given a barcode when they are entered into the warehouse system. As it continues to move to retail storage units, store shelves and finally the customer’s shopping basket, the barcode ensures data such as product name, price, size, description, etc. stay standardized and accessible. Any edit made in the master repository is automatically reflected when the barcode is scanned.
- Makes Operations Transparent
Siloed departments create barriers to data availability. By merging data from all sources across the organization, MDM brings about the transparency required for businesses to make data-driven decisions for their future. This also improves communications between systems and ensures that everyone is on the same page. Improved visibility makes the supply chain more efficient and reduces the risk of human error.
The transparency brought about by MDM becomes very important when new suppliers and partners are onboarded as well as during mergers and acquisitions as it helps easily identify cost-cutting and revenue generation opportunities.
- Optimizes Inventory Management
When it comes to retail, supply chain managers must be able to forecast stock requirements and manage inventory accordingly. By making data reliable, connected and accessible, MDM helps companies keep track of stock availability, year-round requirements, seasonal variations, etc. With this data, supply chain managers can make accurate predictions and improve distribution channel efficiency. As inventory monitoring improves, businesses can see a drop in operational costs as well as a spike in order-fulfilment rates and customer satisfaction.
- Aids in Global Operations
When companies grow to service international customers, data handling becomes critical. Simple mistakes like using the incorrect currency code can be disastrous. MDM and Supply Chain Risk Management controls help standardize data to minimize the risk of such inconsistencies and facilitate the smooth flow of information. In turn, this reduces administrative labor while ensuring that the business complies with global trade agreements, tariffs, regulations and legalities.
- Simplifies Last Mile Connectivity
MDM helps supply chain managers work on a transparent, consolidated, process-driven workflow. Insights gained by analyzing customer data and behavior can help identify patterns and visualize product movement. Inventories can be managed to hold enough product stock to meet upcoming sales requirements and once orders are placed, they can be fulfilled faster. Having access to reliable address data also plays a role in route optimization and cuts down on delivery costs.
MDM makes data stored in the centralized database accessible through various online and offline channels. In event of data held by any department becoming corrupted or lost, it also makes data recovery easier. Thus, there’s no risk of data loss or damage at any stage of the supply chain.
As companies grow, the volume of data handled also grows. If left siloed, much of the data becomes unusable because of unreliable quality and fragmentation. Implementing MDM initiatives minimizes complications that could arise because of poor quality/ redundant/ duplicate data in the supply chain by creating golden records that are cross-referenced and easily accessible by all involved parties. It optimizes supply chain management to increase profit margins by lowering operational costs and boosting customer satisfaction rates.