An Approach for Improving Master Data Maintenance: Better than MDM Software

Executive Summary

• The State of Master Data in Supply Chain Planning Systems.
• What Approach has Tended to Work Versus those that Have not Worked?
• Why There are So Many Opportunities to Improve Master Data in Supply Chain Planning Systems.

Introduction

The state of master data concerning supply chain planning systems offers a continual opportunity for improvement. It is surprising how companies repeat the same mistakes concerning master data. More often than not, the initial parameter setup did not match what the business wanted because how the system worked was not adequately exposed to the business by the consultants who performed the implementation.

Confusion on What the System Does

Software is often sold as a magic elixir by software vendors. However, detailed analysis is required to set the control parameters of any application correctly to say nothing of the configuration work needed. The application cannot tell you what the right lot size, safety stock, or the other inventory control parameters are. Secondly, these values should not merely be determined by operational personnel based upon “what makes sense.” They require a thorough analysis that considers all of the parameters — such that a policy can be created that can allow parameters to be applied across the entire data set. Many implementation teams assume that the business will have these values. However, they often find that the values are far less complete than anticipated. Many implementation consultants want to take the previous system’s parameters and place them into the new system. Therefore the parameters can end up being a no man’s land — where both the business and the IT implementation team think that the other is responsible for getting the parameters right.

Many companies implement an ERP system or an external planning system and find the key performance indicators going down. When one analyzes, these systems’ parameter settings are quite barren, which may be years after the software has been live. When one thinks of the massive amounts of money billed by the major consulting companies, the average state of parameters in both supply and production planning is quite shocking. It’s difficult for me to see what many of these consultants are spending a year or two years to implement systems — if, after the fact, the systems have such barren setups.

Explaining the Master Data Parameters

Another common issue is that the relationship between the various parameters and their controlled parameters was not fully explained. Interestingly, when the software fails to meet expectations or gives “weird results,” it’s typically the software itself that is blamed rather than the easy-to-change parameters. The first step to this process is extracting all the parameters from a supply chain planning system and going over them in detail with the business. We do this most often with SAP ECC and SAP APO, both of which are highly encapsulated systems that lack transparency. Over time I have developed an approach that uses relatively inexpensive tools to improve the controls with the system.

Conclusion

Experiences on multiple accounts have shown that it’s easy to have confidence in providing great returns from this analysis. It is an important first step to any further improvement in the systems. I perform master data parameter analysis in ERP and advanced planning systems in my consulting practice and always find improvement opportunities. This is a practical, real-world master data improvement that can show benefits quickly and sustain long-term improvement in system output.