The past two years have pushed supply chain management to the top of company agendas everywhere. The COVID-19 crisis, post-pandemic economic effects, and the ongoing conflict in Ukraine have exposed the vulnerabilities of today’s global supply chains.
Now, forward-thinking leaders have a ripe opportunity to future-proof their supply chains — starting with a master data management (MDM) strategy.
Gartner defines MDM as “a technology-enabled discipline in which business and IT work together to ensure uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets.” As Gartner points out, organizations benefit from MDM by creating a “single source of data truth” that leads to improvements across the organization.
For example, an MDM strategy can help organizations uncover data-driven insights to improve customer experience and satisfaction, as well as enable more effective marketing and customer retention. Additionally, it can help the organization mitigate potential risks by identifying overdependence on particular customers.
On the supplier side, MDM can help organizations create purchasing negotiation leverage, expedite procurement and reduce duplicate parts, first article inspections and supplier approvals. These insights can also help organizations mitigate risks by increasing supply chain resilience.
In crisis scenarios, MDM prepares organizations to create a holistic, data-driven response by helping them understand risk management factors and define information criticality horizons, ensuring that their supply chains are under control and prepared for the next unprecedented event.
MDM helps organizations gain visibility to critical information, to understand and anticipate risks across departments and manage accordingly before a crisis occurs. On the inbound supply chain side, for example, large businesses source materials from a complex network of suppliers and manufacturers. In turn, each supplier may source its inputs from many sources. What appears to be a diversified supplier base at the first or second tier might have one specialized supplier at the third tier, creating a single point of failure with the potential to undermine the entire supply chain. In the event of a crisis, organizations using MDM can quickly understand which products depend on which suppliers, the geographic location of suppliers and manufacturers, the availability and sourcing of substitute parts, and which shipping lanes are in effect.
When it comes to managing customer data, organizations can sometimes find themselves in trouble if they have multiple systems that store and track their customers’ data across different departments. Such a setup can prevent them from gaining a clear picture of purchase volumes across their marquee customers. With MDM, organizations can provide an appropriate level of service during a crisis scenario, and mitigate the risk of losing large customers by gaining clear visibility into who their customers are, their contact preferences, where they’re located, and which geopolitical or other threats they‘re susceptible to.
As organizations implement MDM to mitigate future crisis risks, they must understand that there are limitations. Even under an MDM environment it’s nearly impossible to accurately model the entire inbound and outbound supply chain without the proper categorizing strategy. To gain full control of their supply chains, companies will need to segment their suppliers and customers based on business criticality, and categorize each segment within an information criticality horizon.
Information horizons define how much data is gathered by organizations on their customers and suppliers, and how far up and down the supply chain an organization can see, based on critical factors such as the strategic importance of third parties. Organizations should create these horizons depending on how they define their tiers of criticality.
For example, highly mature data-driven companies typically create their information criticality horizons by identifying, gathering, stewarding and tightly governing a set of key data elements produced by strategic customers and suppliers. This ensures that the most critical supplier impacts, both direct and indirect, are under control. As well, a smaller set of data points should be gathered and governed for ad-hoc trading partners. The priority and response levels of the risk mitigation efforts should increase proportionally to the criticality of the suppliers.
Consider the history of nonrecurring losses, realized risks and other adversities that have impacted the global supply chain over the years. Imagine which of those events could have had less of an impact under an MDM environment that gave affected companies advanced supplier, customer and product analytic capabilities ahead of the event.
An established MDM practice is the foundation that supports risk-related and other business decision-making. Companies with established MDM capabilities have clearer visibility into their customers, suppliers and products, and thus are better positioned to deal with the unprecedented, whether it be a natural disaster, pandemic, disruptive competitor or a change in the regulatory environment.
Andrei Tchourakov is a manager with Kalypso.
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