How Master Data Management Functions as a Cornerstone of Process and Performance Improvement
For many companies, the primary reason for investing in a Master Data
Management (MDM) strategy is to support visibility through greater data
integrity; however, a much overlooked but equally important benefit of
MDM is to create common language with which to define, automate and
enforce standard business processes across an enterprise. For
enterprises running more than one instance of ERP,
MDM ensures that attributes and categories such as payment terms,
marketing campaign types, customer groups and stock item classifications
are consistently applied across the enterprise, facilitating a more
lucid expression of business rules and supporting greater automation of
their implementation within each ERP platform.
However, to define standard business processes and business rules
across the enterprise, companies must first have a universal and uniform
manner of describing the various business components (customers,
products, supplies, etc.) that are involved in these business processes.
This is where Master Data Management (MDM) becomes extremely valuable.
MDM enables companies to centrally manage these definitions and then
publish them across the organization, so that everyone is speaking the
same “business language”. You can see how this is invaluable when it
comes to how businesses categorize and label hazardous goods and
restricted substances, and when importing or exporting items in
compliance with country of origin restrictions. MDM could very well save
your company millions by avoiding lawsuits, plant shut downs, and
MDM also plays a key role in global benchmarking and Enterprise Performance Management.
Having the same descriptors in place across the enterprise enables
businesses to easily roll up data to measure performance against Key
Performance Indicators, industry best practices and company standards.
This also supports key initiatives such as supplier performance
management; now I can assess things such as what is average lead time in
one country vs. another, and which suppliers are performing best in
which categories? Sales analysis can be performed; now I can look at my
top 50 customers and my sales patterns to identify markets where my
company is not making the most of these relationships. Once I know this,
I can investigate why. There may be circumstances beyond my control
that dictate why this opportunity is not being fulfilled by my company.
However, there may be a valid opportunity there that no one has ever
By providing a common business lexicon, MDM can eliminate the
“business speaking in tongues” phenomenon, support more consistent
processes and better data collection and analysis. And with this
insight, companies can plan and manage their business more effectively.
Posted by Craig Stephens, Director, Product Marketing