master data mastery – strategies to improve procurement performance
TRANSCRIPT
Quality Master Data for Improved Business Performance
“Master Data Mastery – Strategies to improve
procurement performance”Presenting:
Andrew BartoliniChief Research Officer
Ardent Partners
Featuring:Arthur Raguette
Executive Vice President
Verdantis Inc.
Master Data Performance Solutions
Verdantis, Inc. is the evolution of Zynapse – a division of Zycus, Inc. to its own company with its own corporate
identity
Verdantis comes from the Latin word for truth – veritas - and the word verdant – meaning abundant and
sustainable
Agenda
• Introduction• MDM in a Data Driven World (4 W’s)
• Best Practice Approach (How?)
• Recommendations• Q&A
Copyright © 2014 - Ardent Partners LLC
Background
Andrew Bartolini Managing Partner & Chief Research Officer, Ardent Partners Publisher, CPO Rising – www.cporising.com
Summary Recognized expert in sourcing, procurement, and supply management Named a “Pro to Know” by Supply and Demand Chain Executive three times Former VP of Global Supply Mgmt. research at Aberdeen Group; Benchmarked thousands of
enterprises across all facets of their supply management operations
Experience Leadership roles in sales, marketing, and services at Ariba and Commerce One.
Rich experience in strategic sourcing, business process transformation, and software implementation. Background also includes consulting and investment banking
Education MBA – Indiana University BA – College of the Holy Cross
Bartolini Bio
Copyright © 2014 - Ardent Partners LLC
Business Trends That will Continue this year
Globalization– Companies– Customers– Supply chains
Complexity– Business Models– Trading Partner
Relationships– Enterprise/Corporate
Structures
Automation– Transactions– Business Functions– Holistic Processes
Technology– Enterprise Shift from
“Systems of Record” to “Systems of Engagement”
Business Trends That will Continue this year
What These Trends Mean:
More data is available More analysis is needed
at each level:– Business – Function– Employees– Customers – Suppliers
What These Trends Mean:
More data is available More analysis is needed
at each level:– Business – Function– Employees– Customers – Suppliers
We are living in a Data-Driven World
Oh, One Other BIG Trend
Procurement’s Rise Will Continue Unabated
Procurement Considerations
What does the growing importance of data mean to
procurement?
MDM in a Data Driven World
Master Data Defined
Q: What is Master Data?
A: The “proper nouns” of a business– Person – employee, customer, supplier, etc.– Place - plant, office, region, etc.– Thing – products, parts, assets, etc.– Concept – contracts, licenses, warranties
Master Data Defined
Q: What is Master Data?
A: The “proper nouns” of a businessPerson – employee, customer, etc.Place - , ,region, etc.Thing – products, parts, assets, etc.Concept – contracts, licenses, warranties
What ‘s Important to Procurement
?
Plant,Office
Supplier
Master Data Defined
Q: Where is Master Data?
A: “Systems of Record” - The Source of Truth….
ERP
Master Data Defined
Q: Where is Master Data?
A: “Systems of Record” - The Source of Truth….
ERPWhere ‘s
Procurement’s Master Data?
Material Master
Vendor Master
Master Data Defined
Q: Who uses (or “reuses”) Master Data?
A: Almost everybody
Master Data Defined
Q: Who uses (or “reuses”) Master Data?
A: Almost everybody - The Entire Value Chain
Procurement & APSuppliers
Product
Manufacturing
Supply Chain
Finance
Sales
Marketing
Customers
Master Data Challenges
Emanate from inherent flaws of ERP which are not designed to maintain an integrated, de-duplicated, accurate view of data:
• Lack of standards• Poor visibility• Poor integration• Poor usabilityBut Also• Too many source systems (ERP instances)• Rise of different application areas to support business functions
like procurement & accounts payable
What is Master Data Management ?
• The technology, processes, and tools that organize, cleanse, enrich, and maintain the Master Data to ensure that it is:– Accurate– Clean– Current– Standardized (Harmonized)
Why is Master Data Management Important?
• The simple fact that Master Data is shared/used/ propagated across many systems magnifies errors and duplicates within it.
Why is Master Data Management Important?
• The simple fact that Master Data is shared/used/ propagated across many systems magnifies errors and duplicates within it.
Why is Master Data Management Important to Procurement?
Errors in the Master Data can correspond to negative impacts on Working Capital, Savings, & Risk
MDM Impact on Working Capital
Example: InventoryConsider the issue of
duplicates and poor alternatives:
• Excess Inventory• False shortages• Inefficient use of enterprise
resources and capital
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MDM Impact on Savings
Example: SourcingWithout MDM, sourcing
teams may miss opportunities to:
• Rationalize suppliers• Standardize specs• Aggregate demand• Source the best deal• Procure from the best
supplier
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MDM Impact on Risk
Example: Poor attributesEnterprises may make
decisions using partial information and take on unwarranted:
• Revenue risk• Product risk• Operational risk• Legal/Liability risk• Financial risk
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Best Practice Approach to MDM
Ardent Partners’ Approach to MDM
Identify Design Execute Maintain
Ardent Partners’ Approach to MDM
Identify Design Execute Maintain
Source SystemsKey StakeholdersProject Team Data Owners Data Masters
Ardent Partners’ Approach to MDM
Identify Design Execute Maintain
Source SystemsKey StakeholdersProject Team Data Owners Data Masters
Collect DataData ModelToolsInfrastructure
Ardent Partners’ Approach to MDM
Identify Design Execute Maintain
Source SystemsKey StakeholdersProject Team Data Owners Data Masters
Collect DataData ModelToolsInfrastructure
Generate Master DataTest and TweakTest and TweakEtc.
Ardent Partners’ Approach to MDM
Identify Design Execute Maintain
Source SystemsKey StakeholdersProject Team Data Owners Data Masters
Collect DataData ModelToolsInfrastructure
Generate Master DataTest and Tweak
Training MarketingMetrics
Recommendations
Recommendations for Procurement Leaders
• Recognize the potential MDM issues and their impact on procurement
• Get procurement involved early by explaining MDM’s impact on working capital, savings, and risk
• Design the project with the enterprise’s end game in mind
• Design the model with privacy, regulatory, user/usage needs in mind
• Remember MDM is a collection of processes, technologies, tools, and expertise; it’s also an ongoing strategy
Copyright © 2014 - Ardent Partners LLC
34
For more information please visit: www.cporising.com AND www.ardentpartners.com
Q&A (and Contact Details)
34
Andrew Bartolini Managing Partner & Chief Research Officer
Ardent Partners [email protected]
Copyright © 2014 - Ardent Partners LLC
Verdantis Automated MDM Solutions
Arthur RaguetteExecutive Vice PresidentVerdantis, Inc. [email protected]
DATA DRIVEN PERFORMANCE
Challenge: Global, Complex, Multi-Enterprise World
• Continued High Consumer expectations Changing Business models Heterogeneous Systems Increasingly Regulated Processes Partner sophistication, capabilities, • and preferences Customer, Sourcing, Distribution, and • Fulfillment channels
Globalization Creates Opportunities
To take Advantage of: Common suppliers Common materials Common processes Common customer
Corporate Factors History of acquisitionsChanging from country-based to global line ofbusiness organizationLimited or no shared servicesLack of visibilityNeed for global best practicesFrequent AcquisitionsDisparate accounting practices globallyIT Operations Costs
Supply Chain Factors Common suppliers Common materials Common customers Multiple manufacturing locations Multiple Distribution locations &
methods for same products
Consolidating ERP and Legacy Systems highlight…
Supply Chain Leaders…
MDM Issues: Consistent Item/Product Information Customer Requirements Logistics Characteristics Supplier Quality Expectations
MDM Issues:Harmonized Material InformationHierarchy of Locations
MDM Issues: Accurate Item Information Up to date pricing and promotion information
DELIVER MORE PERFECT ORDERS
HOLD LESS INVENTORY
ARE PAID MUCH FASTER
THE BOTTOM LINE – SUPPLY CHAIN LEADERS HAVE A SIGNIFICANT COST ADVANTAGE
Process, Technology and Best Practices Combineto Improve Productivity
MDM Issues:• Master Data Governance• Technology Enabled
Source: London School of Economics–McKinsey survey and analysis of top 100 companies in France, Germany, United Kingdom and United States
Hurdles to ERP Value – The prominent Tradeoff’s
ERP Vendor Implementation
Business
Patching
Global Rollout
24x7x365
IT
Quality
Consolidation
Upgrades
Data Quality Maintenance should be an integral part of ERP blueprints
Handling of the key masters during data migrations is the key to unlocking the ROI from an ERP investment
Master Data Management(MDM) results in significantimprovement in operationalefficiency, reporting andfact based decision making
Suppliers
Procurement
Manufacturing
Finance
Supply ChainSales
Services
Customers
Finance
MasterData
Quality
The Traditional Interaction Cycle
Autonomous Business Units Distinct Manufacturing Plants Fragmented Sales/Service Regions
Now Interlocked Business Units Inter-dependent Plants Matrix Sales/Service RegionsInterlinked production lines
Before
MDM – Unlocking Procurement Value
Profits
RevenueCosts
Material
Costs
Write Down/Off
Inventory Holdi
ng
Assets
Inventory Capacity
Availability
CostLiability
Global Visibility in Enterprise Assets delivers required bargaining power to procurement
Fast, Accurate creation & maintenance of Master Data improves procurement efficiency
Material Product
Vendor Customer
Liabilities
Improving Procurement contribution to profitability
MDM breaks Data Toxicity
ITEM_NUM
DESCRIPTION Short Description Long Description
84.00008127
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SWITCH,LIMIT;PUSH;PLUG IN OILTIGHT;22.2 N;TRVL TO OPERATE CNCTS 1.4 MM;MAX TRVL 6.0 MM;TRVL TO RESET CNCTS 0.7 MM;4 CKTS;TOP PUSH ROLLER;NEMA 4,13 AND IP65;-18 TO 110 DEG C;50/60 HZ
84.00019347
SWITCH A/B LIMIT 802T-DPSW,LMT;PUSH;PLUG IN OILTIGHT;13.8 N
SWITCH,LIMIT;PUSH;PLUG IN OILTIGHT;13.8 N;TRVL TO OPERATE CNCTS 1.4 MM;MAX TRVL 6.0 MM;TRVL TO RESET CNCTS 0.7 MM;2 CKTS;TOP PUSH ROLLER;NEMA 4,13 AND IP65;-18 TO 110 DEG C;50/60 HZ
84.00006675
SWITCH A/B LIMIT 802T-KP COILE
SW,LMT;PUSH;PLUG IN OILTIGHT;16.4 N
SWITCH,LIMIT;PUSH;PLUG IN OILTIGHT;16.4 N;TRVL TO OPERATE CNCTS 3.3 MM;MAX TRVL 5.7 MM;TRVL TO RESET CNCTS 1.3 MM;2 CKTS;SIDE PUSH VERTICAL ROLLER;NEMA 4,13 AND IP65;-18 TO 110 DEG C;50/60 HZ
84.00000548
SWITCH A/B LIMIT W/BASE 802T-H
SW,LMT;LEVER;PLUG IN OILTIGHT;0.56 NM
SWITCH,LIMIT;LEVER;PLUG IN OILTIGHT;0.56 NM;TRVL TO OPERATE CNCTS 9 DEG;MAX TRVL 90 DEG;TRVL TO RESET CNCTS 3.5 DEG;2 CKTS;CLOCKWISE OR COUNTERCLOCKWISE;NEMA 4,13 AND IP65;-18 TO 110 DEG C;50/60 HZ;WITH BASE
84.00000537
SWITCH A/B LIMIT W/O BASE 802T
SW,LMT;LEVER;PLUG IN OILTIGHT;0.56 NM
SWITCH,LIMIT;LEVER;PLUG IN OILTIGHT;0.56 NM;TRVL TO OPERATE CNCTS 9 DEG;MAX TRVL 90 DEG;TRVL TO RESET CNCTS 3.5 DEG;2 CKTS;CLOCKWISE OR COUNTERCLOCKWISE;NEMA 4,13 AND IP65;-18 TO 110 DEG C;50/60 HZ;WITHOUGHT BASE
Efficient Management of Procurement Masters Impacts:
• Accounting: Valuation and pricing calculation information • Materials planning and control: Information for material requirements planning
and consumption-based planning/inventory control • Purchasing: Data provided by purchasing for a material• Engineering: Engineering and design data on a material• Warehousing: Information related to the storage of a material • Forecasting: Information for predicting material requirement • Sales and distribution: Information for sales orders and pricing
Legacy Data Harmonization Ongoing Data
Management
Legacy Data Harmonization
Challenges Key BenefitsMATERIAL
VENDORS
•High volumes of data •Multiple languages •Non-uniform commodity coding standards •Poorly classified or incomplete data (missing part numbers)•Poorly structured descriptions (inconsistent or missing specifications) •The unique characteristics of parts (especially MRO) data
•High volumes of data and multiple languages •Incomplete data (original vendor name, address, parent-child hierarchy, etc) •Duplication (rationalization of vendor base by cutting down on multiple suppliers)•Payment & taxation related concerns•Lack of information (source of certifications, W9 forms, insurance certificates, etc.)
•Rationalization of vendor base by cutting down on multiple suppliers •Prevent accounting errors/frauds •Improved visibility to monitor supplier performance •Higher ROI from ERP consolidations
•Inventory optimization and cost reduction •Improved part search and part reuse, leading to greater compliance •Improved visibility into procurement and sourcing •Higher ROI from ERP consolidations
Ongoing Data Management
Challenges Key BenefitsMATERIAL
VENDORS
•Limited search capabilities of existing ERP systems•Lack of proper processes to control the entry of data into item master, which leads to duplication•Poor visibility•Lack of information about the exact specifications of parts while entering new data•Poor data quality of existing item master•Lack of domain expertise
•Limited search capabilities of existing ERP systems•Lack of proper processes to control the entry of data into vendor master leading to duplication•Poor visibility•Lack of information about the details of existing vendors while entering new vendor data
•Normalized and enriched supplier details •Visibility of vendors across all enterprise plant locations •Monitor and improve vendor compliance to enterprise standards •Seamless integration with ERP and other source systems
•Efficient search capability •Provides visibility of parts within as well as across plants •Reduced cycle time to create new item•Enriched and clean item master on a continuous basis •Real time integration with ERP material master, leading to low TCO
Data Governance Technology
• Clean, Enriched material and vendor master data on a continuous basis
• Attribute based search for efficient search capabilities and enhanced results
• Approval workflow for routing of request for new data creation to key stakeholders
• Short & long descriptions generation for harmonized and enriched data
• Interactive dashboard for collaboration • Provides visibility of parts and vendors across
plants/locations
Customer Case Study
Industry Leader
Global Footprint
Diverse Product
Range
The customer is one of the world’s leading manufacturers of tissue, pulp, paper, packaging, building products and related chemicals
This Global 2000 enterprise has over 250 manufacturing facilities spread over North America, South America & Europe and employs over 45000 people
The wide range of processed and manufactured products include large pulp, paper & tissue, gypsum, boxes & packaging solutions, etc.
Deploy Procureme
nt Solutions
Cleanse Master Data
Implement
Data Governan
ce Solution
Implement
Enterprise wide
MDM Solution
The Challenges
Verdantis Automated MDM Solution Suite
VERDANTIS AUTOMATED MDM SOLUTION SUITE
GET IT CLEAN
VERDANTISHARMONIZE
Automated solution for historical master data harmonization
Fully automated solution to cleanse
and enrich historical master data
Offered historically asA turn-key service
Now also offered as Licensed SaaS
Platform
Automated solution for real-time on-going data integrity
VERDANTIS INTEGRITY
KEEP IT CLEAN
MDM/MDG application to prevent duplication, and ensure on-going data integrity
Artificial Intelligence forms the bedrock of Verdantis’ automated MDM solution suite
AutoClass AutoSpec AutoNorm AutoCrawl
Classification into pre-determined codes
Attribute extraction & de-duplication software for Material master
Normalization& validation of MFG, MPN and UOM
Intelligent web spidering tool for Data harmonization
Verdantis KnowledgebaseDynamic content Repository
AI TechnologyAI-based Software ToolsAutoClass AutoSpecAutoNorm AutoCrawl
Verdantis Integrity – Ongoing Data Management
The Governance Structure to Manage Master Data
Realized Benefits of Verdantis MDM
Benefits of Verdantis
MDM
Enriched Master data
Single Version of truth
Reduced Inventory
Effective Search of Parts
Effective Governance
Process
•Verdantis identified that 10% of the items were duplicates
•Inventory reduction lead to ICC (Inventory Carrying Cost)reduction by 4-6%
Master Data Management – The Bottom Line
• Master Data Management (MDM) is a comprehensive strategy to determine
and build a single, accurate and authoritative source of truth of a company’s
information assets and deliver this on demand as a service.
• Master data is an important enterprise asset, and an effective MDM is
critical in maintaining good operational and financial health.
• Harmonized master data is the foundation for companies to enhance their
ROI on ERP projects or consolidations.
• Clean, consolidated and enriched master data optimizes inventory,
rationalizes spend and vendor base, prevents financial errors, and improves
procurement processes.
Why we chose Verdantis?
• Only provider that had a complete solution engineered specifically for what SWT needed
• The Verdantis Harmonize Solution to harmonize existing data and bolt on the Verdantis Integrity
Solution to control new information flowing into SAP
• A detailed Proof of Concept to harmonize a subset of SWT's real material master data was a big
success.
• Verdantis parent company, Zycus already had a relationship with Siemens' Energy business in the
related area of Spend Analysis
• Expertise in the process of mapping Siemens' proprietary ESN materials coding system to the global
standard UNSPSC coding system
• The language agnostic nature of Verdantis artificial intelligence based automated MDM solution and
the ability to handle large volume of cryptic and complex descriptions in a short turn-around time
• The Easy-to-Use and Easy-to-Configure Verdantis Integrity Solution for maintaining data integrity and
providing ongoing data management.
Master Data Solutions
www.verdantis.com
Toll Free +1 866 987 4463
Get access to many more research papers and case studies in our Knowledge hub!
Quality Master Data for Improved Business Performance
Q & A
For more information, email: [email protected] visit: www.verdantis.com