How to Improve Supplier Information Management: Part 3 - Understanding the Power of Master Data Starts with the 4Cs
Monday, 14 May 2018
Market Development & Innovation Leader
Dun & Bradstreet Master Data
Good decisions made on bad data are just bad decisions you don’t know about yet.
Organizations around the world face the relentless challenge of managing their data. The first step to gaining control is the standardization of data to optimise its use across the enterprise. Businesses need to create a common view of information about their most important business relationships: specifically, suppliers, vendors, partners, customers, and prospects. If this data is not managed effectively and trusted by your organization, you could be making flawed decisions based on incomplete or inaccurate information. After all, good decisions made on bad data are just bad decisions you don’t know about yet.
To find the most value data has to offer, it must be structured. It must align and unify across the disparate sources so that you can extract and distil the most useful and relevant information. Enter Master Data. This is the foundation of any data-inspired enterprise and serves as the fuel that flows through the entire ecosystem of the business. Master Data should no longer be relegated to a back-end system or a clerical process. It is the differentiator between a flood of unstructured and disparate information and a standardized and structured data source that everyone can trust.
Master Data is a single source of common business data used across multiple systems, applications, and processes.
A car will sputter along and stall with bad fuel. An organization can meet a similar fate if it runs its vital systems on unstructured and erroneous data. Your data needs to be accurate, relevant, and actionable. In addition to having healthy data, your organization must have robust processes, governance, and stewardship in place to manage the data effectively and leverage it throughout your enterprise. A Master Data program gives businesses the discipline and process to achieve this.
Classic Procurement Challenges
Specifically, procurement leaders are always seeking new ways to leverage and improve their supplier relationships: from aggregating spend efficiently to mitigating risk by diversifying sources to ensuring the absence of bad actors hidden several layers down the supply chain.
A supplier onboarding and authorisation process will typically:
- Resolve supplier identity
- Ensure there are no duplicate records
- Provide understanding of supplier family trees
- Determine the categories a supplier serves
- Identify markets a supplier impacts
We all want answers to the same simple straightforward questions about our business relationships. Who are our top suppliers? How are we doing in new regions? Are we increasing penetration of key segments? When you ask for the top something, a market somewhere, or a type of segmentation, you’d better make sure everyone is using the same definition. Does your enterprise, division, or even your procurement department have a common definition for any of these fundamental dimensions of your business? To systematically manage those foundational entities, you need a common structure. A simple approach to applying a standard structure begins with the 4Cs of Master Data: Code, Company, Category and Country.
Supplier Code – Is it a unique relationship?
Every record in a database has a code – somewhere. Once a code is put on a record, the record exists in that database. You need a code to make sure it’s unique. But since every system has its own set of codes, you probably have more than one across your multiple workflows, departments and regions. And if you can tie them together, that is your shortest path to a common version of that relationship.
Supplier Company – Who owns it?
You need to know what an entity belongs to through a hierarchical structure – a parent/child family tree. A hierarchy has multiple levels, from the local branch, divisions, and subsidiaries all the way up to a global ultimate parent. Bill-to, ship-to, plan-to, sell-to are all part of hierarchy. The bigger the supplier, the more complicated the hierarchy. Are you engaging with all the relevant divisions or branches of a given a family tree? Do you have a relationship with it already? Is it related to something that increases your risk? Are there terms you could apply because of the ownership that you wouldn’t have known about? You can’t tell unless you have a full hierarchy.
Supplier Category – What business are they in?
You need to know what kind of supplier you are dealing with, especially if you don’t have much of a relationship with it yet. There is considerable granularity and nuance to categories: types and sub-types, channels and sub-channels, segment and sub-segments. Sourcing is often based on category attributes when you try to find potential suppliers based on industry, segment, sub-segment, or market. So it’s important to leverage a standardized category structure wherever possible and practical.
Supplier Country – Where do they operate?
Following along our alliteration with Cs, you also need country and some form of geography. Where is this supplier? Geography has hierarchy too – region, province, city, postal code. Media market, sales market, measurement market – there are many different configurations of geography depending on your use case. But agreeing on a common definition of market will clear up lots of confusion between procurement, product, finance and operations when you simply ask, “How am I doing in London or Major Markets or EMEA?”
- A CODE lets you know a relationship is unique
- A COMPANY lets you know who owns it
- A CATEGORY lets you know what kind of relationship it is
- A COUNTRY lets you know where it is
Imagine how well your data would flow if you knew that you only had unique records (code), that every one of them had a full and updated hierarchy (company), that you had complete segmentation (category), and that you had consistent geographic location information (country and market). This creates a common language between departments about simple but vital elements of your business relationships.
Once the data on your relationships is structured and standardized, it can harmonise and integrate better into your processes, methodologies and workflows between your systems, regions and go-to-markets and externally with other third parties in an ecosystem. As you try to gain a holistic view of your commercial relationships and anticipate future needs, applying these 4Cs of Master Data will align you to your data objectives more quickly. If you can consistently determine where something is, what kind of thing it is, who owns it, and that it is truly unique – and leverage those definitions with your business stakeholders – you can manage and scale your relationships across your company. Not only will that bring clarity and efficiency, but it will also give you the structure and scalability required for your enterprise data journey.
Ready to learn more?
Blog 1 - How to Improve Supplier Information Management Part 1
Blog 2 - How to Improve Supplier Information Management Part 2
Read more about enriched supplier data management on the Basware blog and download the Basware Vendor Manager and Data Enrichment (VDE) fact sheet.
Market Development and Innovation Leader
Dun & Bradstreet Master Data
As Market Development and Innovation Leader for Dun & Bradstreet Master Data, Scott is responsible for simplifying, clarifying, and strengthening the company’s global vision, voice, and vocabulary in the master data space. He has over 20 years of experience creating, selling and marketing master data content, information, media and trade solutions. He can be reached at firstname.lastname@example.org.