We’ve all
been exposed to the latest industry buzz terms such as “Big Data”, “Master
Data”, “Data Integrity” and “Data Quality”. Many of you may have heard or read
that data is the foundation for operational excellence, which is absolutely
correct, but what does this really mean? The misconception manufacturing
organizations commonly have is that data quality alone will deliver all of the
desired cost savings and efficiencies that they are looking for. However, many
purchasing and procurement professionals struggle when building a business case
for data cleansing, simply because they are not focusing on the larger scope. While
there are several immediate cost savings opportunities and maintenance related
efficiencies to be gained from a data cleansing project, most finance
executives want to see a much larger ROI related to inventory and procurement
savings. In order to achieve this vision, purchasing and procurement teams must
leverage clean data to implement further cost savings initiatives such as
excess inventory disposition, stock level optimization, and spend leverage. Reality
is, operational excellence is not a one step process. It requires several
phases, none of which can be performed effectively without first having quality
data to work with.
As previously mentioned, data quality acts as the foundation since all future cost savings initiatives and business decisions are driven by this valuable material and vendor data. Without a solid foundation, the rest of the project would be weak, unstable, and eventually come crumbling down. Once the foundation has been laid and data is finally in an accurate, consistent, and usable state, the inventory optimization process can begin. The inventory optimization process is comparable to the bulk of a home building project, including key components such as framing, roofing, windows & doors, exterior, and of course, plumbing and electrical. All of these tasks are completed throughout a specific project management plan, which is critical to the end result. Much like building a home, it is important to perform the tasks of an inventory optimization project in the proper sequence to ensure that the correct data and statistics are available for accurate analysis and calculations. As you can see, the inventory optimization process involves product group segmentation, item analysis, stock level optimization, inventory disposition, and spend analysis. All of these tasks are driven by the initial cleansed material master data and transactional purchase history, which if implemented properly, can deliver significant inventory and procurement savings.
The
finishing touches and interior of the home building project can be comparable
to the strategic sourcing phase. By using accurate purchase history and
data-driven statistics, you now have the ability to leverage spend and
establish preferred vendor programs.
Finally, the
keys represent compliance. Traditionally,
compliance has been a relatively “grey” area for most organizations. Too often
buyers disregard preferred vendor programs, with no repercussions, just so that
they can buy from the local supplier whom they have an existing relationship
with. By establishing a strict compliance program at the SKU level, users are
forced to buy from preferred vendors, with the exception of emergency
breakdowns and part unavailability. If nothing else, this process instills
ownership and accountability, as end users are aware that upper management is
monitoring their purchasing habits. Let’s be honest, there’s no point in
establishing a preferred vendor program if you’re not going to honor the
contract down to the finest detail.
For more
information on Data Cleansing and Inventory Optimization, please visit www.imaltd.com or contact info@imaltd.com.
Your blog very nice and good information. you can also visit same Operational excellence, Social Intranet Software, Insurance dashboard
ReplyDelete