Many managers are happy living with inaccurate or superceded data. For some it provides a great way to hide performance issues; whether in production, the supply chain or sales & marketing. In other instances senior managers give thanks for data inaccuracy as, despite all odds, it doesn’t just hide issues but actually makes them look good. For weak managers, accurate data is something to be avoided at all costs.
All of our data is grossly inaccurate … but I need data in order to manage.
When it comes to the supply chain, accurate data is as important to the food and beverage industry as any other sector. The idea that it matters less because the demands are often more immediate and erratic is, in fact, quite opposite to the truth, and for many businesses it is the key to unlocking greater success.
Despite this, our experience across many clients indicates that supply chain data accuracy is generally poor, and that planning and production activities are, as a result, seriously flawed.
If I concentrate hard enough and pretend that the data is good, everything will be fine.
As an illustration of the consequences of poor data integrity, let’s look at the experience of one of our Dairy industry clients.
Good standards or not, planning were still expected to live up to their name and create a plan. In theory a challenging, cost effective and realistic plan. However, with incorrect OEE assumptions built into the model, and little understanding of the extent to which OEE varied, multiple issues were inevitable.
The errors in the planning standards and the assumption that planned efficiencies reflected actual performance rather than just an average resulted in the need for frequent plan changes. At first sight this may not seem to be too much of a problem, but the constant firefighting prevented management from focusing on improving performance and added significantly to the cost of achieving service.
Mountains of data, get over it.
Big data is here to stay. In the food and beverage industry data is expanding fast as more sources (sauces?) are used to make decisions, especially around operations. From internal master data to social media feeds to syndicated or Point of Sale (POS) data, organisations need to capture it and turn it into information.
As much as external sources of data are important for the decion making process, most organisations fail even earlier, they fail on their own master data. They miss the point that operations cannot function effectively without master data management.
Master your data, don’t let it master you.
Master data is the critical, underlying data that feed the applications and processes that drive a business. Yet many food and beverage organisations fail to understand what their master data really is. Without this understanding it is impossible to create a process to manage it.
Figure 1.0 highlights the types of data that exist in many organisations and their underlying links to business management. These are just the tip of the iceberg for food and beverage manufacturers and there are many other data elements used to underpin the wider organisation:
- Supply centric data: material information, BOM, vendor information, material costs, lead times, units of measure, commodity groups, …
- Business centric data: seasonal indices, forecast generation parameters, time horizons, product shelf life, product parameters, warehouse locations, logistics costs, logistics network information, …
￼Getting good and accurate supply centric data is an essential first step for many businesses as it leads to more accurate planning. However, without correct business and customer cetric data, plans can still be meaningless.
As a recent Aberdeen Research report highlights, 50% of poor business decisions are the result of weaknesses in the quality of data. With supply and business centric data being critical to operations, inconsistencies lead to a high proportion of decisions being made counter to the long term interests of the business.
If, for example, your business centric forecasting data is incorrect (incorrect forecast model parameters, data structures & linkages, e.t.c.) the impact on decisions relating to inventory, production and procurement will be significant, as will be the effect on customer service.
Get it right the first time.
Our experience in the food industry has shown time and again that there are key focus areas (as highlighted in figure 2.0) which need to be addressed for enabling effective MDM.
Step 1 – Master data creation: Make sure processes are in place to capture the right data at the right level. Assign responsibility for specific data generation, i.e. planning creates certain elements of the material master whilst technical define the BOM
Step 2 – Master data management: Ensure there is a process for maintaining the existing data structures. It is all very well to assign roles and responsibilities for master data creation, but it will soon be of little value if it isn’t ￼maintained.
Step 3 – Information Systems: This is not the information itself but the underlying systems for data capture and storage. Data capture is only as good as the systems used to collect and store the information. Excel is not a database and many organisations use it as one. Invest the time and effort to have the right systems to support your data.
Step 4 – Advice, Training & Support: Everyone thinks MDM is simple and it is. However, without the proper training and support, this simplicity will not result in integrity. Every food arganisation requires a MDM support programme.
Step 5 – Performance metrics: Of all areas MDM is the one that tends to lack appropriate metrics. Performance metrics such as no. of SKUs with incomplete data, number of inaccurate BOMs are examples of common metrics for best-in-class MDM. Organisations need to implement the appropriate metrics and monitor them to close data accuracy gaps.
The decisions are in the data.
Master Data is a key asset for a food organisation. Its effective management ensures painless accurate reporting, regulatory compliance and the ability to make effective fact based decisions; especially in operations.
It also makes running an organisation much more efficient (more effort spent on delivering business objectives rather than data cleansing and analysis) and responsive to changing market conditions, improving the organisation’s competitive advantage..
Although it is simple, effective MDM is a big step change for the food and beverage industry. Getting it right will revolutionise the way your supply chain operates and prepare you for the future.
Written by Sam Rabi, Coriolis Supply Chain Principal￼