Steps to Ensure Decisions and SC Optimization Activities Are Based upon Timely, Accurate, and Complete Data
I have worked with multinational organizations on SCM Optimization initiatives for many years and am still amazed at how often senior management makes allowances to keep and manage critical data outside of the ERP system in … you guessed it, spreadsheets! One would think that having spent vast sums of money on an ERP system of choice, senior managers would insist on using the system more effectively, both personally and throughout the organization. I do not deny for a moment that a trusty spreadsheet is a great tool. But in ERP terms, SAP where we operate, this practice shifts the business away from having all its data in one place. A single source of the truth, so to speak. Rather it proliferates to multiple sources of the truth held by multiple people across the organization. Ultimately this leads to a breakdown of trust in the data that is in the system and a continued move to workarounds outside. Under these circumstances, it is not possible to realize the ROI expected from the investment made in the SAP ERP system.
Business Value from Timely, Accurate and Complete Data
In a single source of the truth approach data flow within and across the supply chain is improved in terms of visibility of information that is complete, accurate and timely. It encourages us to build that visibility around the correct business rules and standards supported by transactional data that is an expression of accurate master data setup in the system. It drives what we would call cross-functional integration. This means aligning data definitions across sales, procurement, inventory, warehouse, production, inbound and outbound logistics, and order fulfillment and then ensuring the accuracy of the master data to suit. This integrated approach will increase confidence and enable the shift in thinking necessary to make the change required and get all our managers to use the system.
Who Owns the Master Data?
We all know the importance of accurate data, of correct master data rules and of people effectively executing against these agreed rules. We are less clear on who should own, manage, and govern these rules. This is critically important because as we move increasingly to automation any misalignment will simply help us automate chaos and get us into trouble faster than we did before. So, it is incumbent on us to make sure that we have a good model of governance with a mix of centralized and decentralized master data management. This will be the subject of a future blog but for now, we accept a balance between the two is essential for optimal performance.
Balance Service, Process Performance, Inventory, and Costs
Getting the single source of truth into your SAP ERP system enables us to effectively balance service levels against cost and drive process performance improvement so that we can ensure the right levels of inventory at the right place at the right time. This is outlined in Reveal’s supply chain performance model depicted above.The drive is to increase service levels and manage costs based on effective process performance and inventory optimization. All of which requires that we return to the original hypothesis “that success on the journey to supply chain optimization requires us to drive decisions based upon timely, accurate, and complete data that needs to be contained within our single source of the truth rather than disparate spreadsheets outside the system”.