The race to digital transformation is on.

According to Gartner, a staggering 91% of organisations are already involved in some form of digital initiative. By leveraging the power of AI, Machine Learning, Big Data and other revolutionary technologies, businesses are forging progressively more responsive and resilient supply chains.

While these advancements present exciting opportunities to businesses, there is one critical ingredient you can’t afford to overlook: Master Data. Put simply, without robust data inputs, the effectiveness of these technologies, and their potential benefits, quickly diminish.

Even in the day-to-day execution of supply chain tasks, you need a solid foundation on which to take the most basic of actions. Without robust insight into customer behaviour, supplier constraints and your business parameters, your whole operation is subject to ineffective decision making.

So how can you optimise your Master Data to accelerate the success of your digital initiatives and make better supply chain decisions?

Master Data Laptop Cartoon

The Master Data Challenge

Does your Master Data receive the attention it deserves? To some, the slightest mention of Master Data sends shudders down the spine. But given its importance as a catalyst for transformation, it’s not a topic we can simply brush under the carpet.

Almost all businesses have some form of Master Data. In fact, many organisations have lots of it. So, what’s the problem then?

Well, it is a simple equation: Rubbish in = rubbish out.

Sure, most businesses have an abundance of data. But this doesn’t mean it is correct or complete.

Furthermore, even where the data is in place, are these critical insights used effectively to inform supply chain decision making?

In fact, many of the businesses we help lack the core Master Data essential for good inventory management. And as the inventory expert, Tony Wild, once highlighted: “Inventory is the physical consequence of missing data”.

It’s always the elephant in the room. But, if you haven’t got the basics in place to make the most fundamental of supply chain decisions, your digital transformation initiatives could be severely hindered.

But if Master Data is so important, why is it always overlooked – or worse still, ignored completely? The answer is simple: keeping master data up to date and complete is hard work.

But you don’t need to worry. After working with thousands of businesses across the globe, we understand the challenges companies face. In this article, we will dive into the detail of Master Data.

Master Data Cartoon Question Mark

Why do so many businesses struggle with Master Data?

We all know that Master Data is essential for making effective supply chain decisions.

Equally, everyone knows that keeping Master Data up to date is a painful undertaking. But here is the bitter truth: if your Master Data is incomplete or out of date, you will make mistakes.

Even if the data was perfectly correct when it was first imported into your system, data is easily deleted, corrupted or misinterpreted. Or maybe the data is no longer a true reflection of the reality.

Imagine if you use a different supplier, or maybe your supplier has changed the way they fulfil your demand. What if your own storage costs have changed? Warehouse space is in short supply and isn’t as cheap as it once was.

The point is simple: the quality of your Master Data erodes over time. And if you want to make effective inventory decisions, you need a robust basis of quality data.

Defining Master Data in the context of your organisation

Before we delve further into the topic, we must first outline what Master Data is comprised of.

According to Wikipedia, Master Data can be defined as, “data about the business entities that provide context for business transactions”.

But in the context of supply chain management, Master Data is the fundamental bits of information that determine the ‘what’, the ‘why’, the ‘how’ and the ‘who’ of every action we take.

To give just a few examples, Supply Chain Master Data typically encompasses the following areas:

  • Product details
  • Supplier parameters
  • Inventory parameters
  • Customer transactions and sales history

Product Details

Typically, this includes the specific detail about the products such as, SKU number, price and technical characteristics.

Supplier Parameters

This includes data such as delivery lead times and agreed minimum order quantities, as well as prices or volume discounts.

Inventory Parameters

The data grouped in this category includes the physical location of the products, the target service level the height and value of the stock as well as the reorder point.

Customer Transactions and Sales History

This is the fundamental information required to efficiently maintain the commercial relationship with the customer.

As such, this includes payment terms, delivery times, purchase history and contact information. For many businesses, historical demand is also included within this category.

Where does Master Data fit in your digital transformation journey?

Master Data management is a strategic and structured process that involves creating, organising and maintaining a set of accurate and consistent Master Data information.

The purpose of this process is to establish and maintain a single, reliable “point of truth”.

Master Data plays an integral part of supply chain transformation efforts. It underpins various initiatives, including data visibility, analytics, process efficiency, supplier collaboration, risk management and customer experience.

From helping you to understand your current situation as you embark upon a new digital initiative, to underpinning the execution of process improvements and tracking the results, robust Master Data is a prerequisite for success.

Furthermore, effective Master Data Management should ensure that the right information is available throughout the organisation. And therefore, enables seamless collaboration and fully joined up planning.

How can better Master Data help you attain operational excellence?

The value of Master Data in supply chain transformation is clear. But how can a robust data foundation enable your people to make better tactical and operational decisions?

From helping your team to optimise inventory levels, to determining the best response to disruption, Master Data provides a robust foundation that supports efficient and effective processes throughout your supply chain.

Master Data Cartoon Typing On Laptop

Data-Driven Decision Making

Operational excellence relies on informed and data-driven decision making.

Master Data provides the necessary foundation of information, enabling stakeholders to make informed decisions at all levels of the organisation.

With reliable, accurate and comprehensive Master Data in place, supply chain executives right up to the C-suite have the insights required to analyse trends, identify patterns, and gain visibility into performance metrics.

By empowering stakeholders with the right information, your team can take more proactive decisions and solve supply chain challenges with confidence.

Process Efficiency

To enable joined up planning, the whole business needs to be “singing from the same hymn sheet”.

When we talk about demand planning and forecasting, the goal is to provide a single source of truth that the whole business can depend on. This same logic applies to Master Data.

Take supplier lead time for example, if your purchasing team are planning based on a 3 month lead time, but your logistics team are working on a 2 month lead time, this will result in operational inefficiencies.

Reliable Master Data ensures that accurate and standardised data is available across various operational processes, such as procurement, inventory management, production planning and order fulfilment.

But more importantly, robust Master Data is essential to automate routine processes with a high degree of accuracy.

By eliminating manual errors, reducing rework and optimising resource allocation, you can create process efficiency, reduce operational costs and facilitate faster cycle times.

Supply Chain Visibility

To attain operational excellence, you need a high degree of supply chain visibility. By having accurate and consistent Master Data, organisations can gain real-time visibility into various aspects of the supply chain, such as supplier performance, availability, obsolescence risk and investment of working capital.

As a result, your decision makers become better positioned to proactively identify bottlenecks, address issues, and optimise supply chain operations. Furthermore, with a solid basis in place, this can more effectively facilitate collaboration with suppliers, customers and different departments throughout your organisation.

Inventory Optimisation

Inventory optimisation is all about striking the right balance between flawless availability, optimised cost, and maximised supply chain efficiency. However, to understanding which levers you need to pull to attain the best results, you need robust data.

Master Data provides accurate information about product details, stock levels and demand patterns, enabling organisations to rebalance inventory levels and minimise holding costs. With reliable Master Data, organisations can accurately forecast demand, improve replenishment planning, reduce stockouts, and align inventory levels with customer requirements. This leads to improved customer satisfaction, reduced working capital and increased profitability.

Continuous Improvement

Operational excellence is an ongoing journey of continuous improvement. Master Data plays a crucial role in enabling continuous improvement initiatives by providing accurate data for measuring performance, identifying areas of improvement and tracking progress.

With reliable Master Data, you can establish performance metrics, benchmark against industry standards, and implement targeted improvement projects.

This fosters a culture of continuous improvement, drives operational excellence, and ensures that the organisation remains adaptable and competitive in a dynamic business environment.

Who should ‘own’ your Master Data?

Throughout this article we have explored the crucial role of Master Data in enabling supply chain transformation, as well as underpinning your pursuit of operational excellence.

However, across your operation, you will probably have millions (if not billions) of data points. To update all of these would be a huge undertaking. So where do you begin?

The first step is to determine exactly who should be responsible and accountable for the Master Data in your business. Should it be the IT, Finance, Operations or even Management Team?

This is a difficult question. And many businesses don’t have a clear-cut answer. You probably think that it depends on the business in question … and to a degree, you would be correct.

There could well be a technological process or system that the IT Team need to support. However, Master Data is everyone’s responsibility.

But should management really be expected to spend their time updating data? It’s true that this might not be the best use of their time. However, they must set the boundaries and ensure that all teams are doing their bit.

Ultimately, from the Demand Planner to the CEO, we all have a duty to keep it clean. Because then, everybody benefits.

Master Data Frequently Asked Questions

Master Data refers to the core data that is fundamental for the operational and decision-making processes of an organisation. Master Data typically includes information about products, customers, suppliers, locations, and other essential entities within an organisation.

When applied to supply chain management, we are referring to the fundamental pieces of information that determine the “what”, the “why”, the “how” and the “who” of supply chain action that we take.

Supply Chain Master Data Management (MDM) is a set of practices, processes and technologies that a business puts in place to ensure the consistency, accuracy and reliability of an organisation’s Master Data across different systems, departments and business processes. It involves creating a single, authoritative “source of truth” that serves as a trusted reference for all relevant stakeholders.

In inventory management, Master Data is essential to determine the optimal level of inventory for the forecasted demand. For example, robust Master Data is required to determine the reorder point and order quantity. It is also used to decide whether, for a given item, a fixed or variable review period is set based on its strategic importance and its volatility of demand and supply.

Master Data is a special category of data that is considered to be the primary source and authority for critical information within an organisation. Its primary goal is to provide a consistent and reliable foundation for other types of related data, ensuring data integrity and quality across the enterprise.

Supply Chain Master Data typically encompasses the following areas:

  • Product details
  • Supplier parameters
  • Inventory parameters
  • Customer transactions and sales history
Supply Chain Tactics