Master Data Mastery – Strategies to improve procurement performance

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 abartolini@ardentpartners.com

Copyright © 2014 - Ardent Partners LLC

Verdantis Automated MDM Solutions

Arthur RaguetteExecutive Vice PresidentVerdantis, Inc. Arthur@verdantis.com

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

SWITCH A/B LIMIT 802T-BTPSW,LMT;PUSH;PLUG IN OILTIGHT;22.2 N

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

info@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: info@verdantis.comor visit: www.verdantis.com