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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 non-compliance fines.

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 pursued.

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

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