Introduction to Vendor Master Data Cleansing

Although we constantly find ourselves promoting, educating, and focusing on the Material Master side of data cleansing, it is important to remember that the Vendor Master also plays a critical role in the maintenance, purchasing, and procurement process.

Similar to materials data, the Vendor Master often becomes corrupt with inconsistent, inaccurate, and incomplete information. Through mergers and acquisitions, ERP implementations, and employee turnover, data is bound to become corrupt at some point without a proper catalog management strategy in place. In every database we typically see multiples of the same vendor, spelled differently, with varying address, payment, and taxation information. It is this type of inconsistency and lack of data quality that leads to many procurement inefficiencies and missed cost savings opportunities.

The same data cleansing process used for material master data can be applied to cleanse, standardize and validate vendor master records as well. Prior to project commencement, a Standard Operating Procedure will need to be developed to outline the standard cleansing policies and formatting requirements. While the Standard Operating Procedure for Vendor Master Cleansing will not contain a Noun-ModifierDictionary, it will articulate Naming Convention, Abbreviations, Payment Terms, Taxation, and Custom Requirements. Once developed, the Standard Operating Procedure will be used to consistently structure vendor master records moving forward. Potential duplicate records will be identified and returned to the client for review and further direction.

Upon completion of the cleansing process, a catalog management strategy must be implemented to prevent future data degradation. IMA’s uManage web-based catalog management solution, which is most commonly used to maintain ongoing integrity of the material master, is also available as a Vendor Management solution. Standard request forms are customized prior to go-live in an effort to capture the required data fields for a vendor master record creation. Role-based user access is provided, enabling designated requesters to submit additions, modifications, and suspensions to the vendor master.

In summary, we must not overlook the vendor master when implementing a corporate data cleansing initiative. As we’ve said multiple times, data is the foundation for operational efficiency, this includes both material AND vendor master data.

For more information on data cleansing and related services, please visit www.imaltd.com or contact info@imaltd.com.

Building Operational Excellence From The Ground Up

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.

The graphic below illustrates the process in comparison to a home building project.

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.