Many companies have amassed a variety of old Enterprise Resource Planning (ERP) solutions over the years and haven’t yet completed a significant digital transformation largely because of the vast amounts of data they’ve collected. And within all data, they often find inconsistent entries for components — including spelling mistakes, abbreviations and other languages — due to a lack of governance regarding how part descriptions are submitted to the system.
A common problem is that different people within the same organization use different methods to enter data for the same parts. There’s no cohesiveness, which can result in data volatility and numerous versions. Lack of a clear governance for part cataloging increases the risk of higher maintenance expenses, unplanned outages and wasteful part spending. This can result in millions of dollars’ worth of parts languishing unnoticed in inventory.
There’s got to be a way to fix this, and there is. Companies can benefit from centralized inventory management, and turn it into a business driver by implementing an effective maintenance, repair and operations (MRO) data quality strategy.
Amassing Spare Parts and Problems
Non-standard abbreviations are among the most frequent errors that can occur in the field of operations and procurement. Abbreviations in part descriptions can result in sloppy downstream spelling and "fat finger" mistakes. Inconsistent cataloging metrics within an organization are another prevalent mistake. This includes varying the standard data points — such as model number, size and make — for each distinct part.
It might not seem that important, but it absolutely is. One error can end up costing thousands of dollars. Large enterprises frequently deal with parts that cost more than $100,000 each. Accurately cataloging them will correct these errors. However, many enterprises are unaware until it's too late that they have duplicate parts in stock, or are unsure of where the parts are.
Moving Toward ERP Consolidation
ERP consolidation is crucial for resolving these problems, particularly throughout the M&A process. For example, if you have bought a company, you need to identify which parts belong to the acquired company and which belong to you. Do they overlap, complement, or are they all the same? Has the acquired business negotiated volume discounts with any of its suppliers? How can you streamline purchases throughout the company to take advantage of volume discounts?
Finding the parts you need is a big challenge in industrial manufacturing, since you could be trying to find a replacement part, but another manufacturer you haven’t worked with might make one that’s comparable. Taking an inventory of your existing parts, and figuring out precisely what you have is the main objective of MRO optimization.
Benefits of High-Quality Data
From the governance perspective, you'll need to plan how components are added to the system. There is an entire business process change management for how you can do that. Assigning a name based on brand, model, make, manufacturer and size — always in that order — is one way to standardize the entry of items. Maybe you should design workflows that demand approvals in order to guarantee adherence to those standards. Technology for governance and master data management could potentially be combined. To get everything down pat, standard operating procedures (SOPs) will need to be created.
Going through this standardization process may be overwhelming for companies, because a lot of the work is manual and expensive and frequently involves a huge number of parts. The key to having high-quality data for those parts is to switch from reactive data input to real-time data input as new parts enter the system.
This process can be started before you upgrade your ERP. You can turn to professional services partners to ease some of the burden of manual operations to ensure that data is ready to be optimized. Once the data is clean and high-quality, your data staff can input it into machine learning models to estimate demand, carry out maintenance planning, and ultimately have higher accuracy for budgeting.
Data centralization enables you to benefit from vendor volume discounts. Even though a company may have many facilities handling various products, there are often substantial overlaps in the parts required for the plant itself. Knowing exactly how many parts are required across the board at any given time can help reduce expenses. Particularly if you manage a larger business, the savings you can achieve by improving data quality can be used to pay for your ERP upgrade over time.
It's Time for an MRO Upgrade
The current state of the economy and the mounting push to digitize supply chain processes are between them driving a creative approach to maintaining the integrity of your company's item master. The cost of missing just one part match might be thousands of dollars — meaning it’s more important than ever to improve MRO data quality. To prevent duplicating MRO data, remember to follow the best practices noted above. This will save equipment from breaking down, save money on maintenance, and guarantee dependability and continuity throughout the entire supply chain.
Emily Williams is vice president of product management at Syniti.