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MDM • 9 min read

What is Master Data Management (MDM) and how will it fuel my business?

Joeri Moors | 06-05-2020

Imagine working at a CPG company selling foods and getting the dreaded call that a customer became very ill after eating your new snack. The cause is peanut allergy, even though your product doesn’t contain peanuts… or does it? As you struggle to trace all the used ingredients back to their suppliers and check the product data, one thing becomes immediately clear: all of the products need to be recalled. What you are lacking is called Master Data Management, and it’s seriously impacting your business.

In the 21st-century global economy, data makes the difference in creating great experiences or business processes being poorly executed. The need to create, manage and deliver a single source of truth is what drives digital transformation for many organizations today. Providing a superior product or customer experience is fueled by having your data in order with a clear data strategy.

But as the example shows, bad data can seriously impact the business, costing a company up to 30% of its revenue. Gartner Research found that organizations believe poor data quality to be responsible for an average of $15 million per year in losses. And as information environments become increasingly complex, this is likely to worsen. Especially organizations with multiple locations and business units in different regions with many products, customers, suppliers and employees will inevitably face the challenge of mastering their data. Because no matter how good a business you’re running, the business value gets destroyed by poor data quality.

What is Master Data?

In an age driven by data, data is your most critical corporate asset. Most companies today collect customer data through loyalty programs, sales and surveys. For making your online and offline sales you require product data that is accurate, rich and up to date. Master data represents all the different types of data that flow through an organization. Customer data and product data are just the start. Master data can also contain information about employees, suppliers, materials, recipes, assets and locations. Any data your organization uses to operate and create business value, is defined as master data. Most organizations are already collecting master data, but a considerable number are still struggling with it. According to Aberdeen Group research, 45% of businesses can not locate their master data effectively, and that’s creating challenges with business impact:

Master data challenges

  • Master data locked in different data silos that hold duplicate versions or are incomplete;
  • Inconsistent and incomplete data used throughout the business and pushed to different channels;
  • Data errors that result from manual entry and low quality resources;
  • Loss of trust in data, not knowing which elements of your data are outdated or incorrect.

The underlying issue? Growth. As your business grows, your business landscape becomes more complicated. Acquisitions, expansion into new markets and new countries may result in your business running multiple systems, applications and technologies. This creates significant data management difficulties. You need an organizing approach to your master data to increase the quality of your data: Master Data Management.

What is Master Data Management (MDM)?

Master Data Management (MDM) is the core process to define, manage, categorize, synchronize and enrich master data according to the business needs. MDM centralizes all the critical data in a central repository to provide a single source of reference. Through identification, linking and merging of information across all data sources, data is identified, collected, transformed and repaired. This way, MDM feeds business initiatives and processes with accurate, consistent and up-to-date data throughout the organization.

The benefits of Master Data Management

To create the business case for MDM, it’s key to translate MDM features into MDM benefits. What does it mean for your business when data from all your systems – including ERP, CRM and e-commerce – are connected, shared and managed?

With MDM you can for example:

  • Increase revenue: Focus your product, service and business efforts on the activities that increase sales.
  • Connect customer data: Deliver a highly personal service and engagement experience.
  • Create business value: Enhance customer experience by using data insights to improve your business performance.
  • Improve analyses: De-prioritize unprofitable activities that drain time and resources.
  • Cut costs: Save resources by automating and streamlining essential data processes.
  • Improve business processes: Improve operational efficiency by aligning organizational and operational data along business workflows.
  • Align with partners: Increase collaboration between internal and external groups.
  • Comply with regulations and privacy laws: Reduce risks associated with regulatory compliance such as the European GDPR.

Scenarios for MDM

From the buying history of your customers to product availability and supplier interaction, master data is essential to transactions and relationships. MDM either comes into play to fix multiple issues surrounding poor data quality, to enable the organization to leap beyond the competition or as a direct result of mergers or acquisitions. When two or more organizations become one, all the master data challenges arise immediately.

The single source of Truth

Back to the CPG example that led to a product recall. With product and supplier data carefully managed and defined, crucial mistakes can be easily prevented. The specific ingredient that contained peanuts would have been found as you put together the new snack, or you could decide to include a warning for people with peanut allergy on the packaging. Any specific need or preference such as veganism can be better addressed with master data that is accurate, up to date and synchronized. The notable difference for the consumer is relevance.

When product packaging contains faulty information or when customer interactions are asynchronous, the customer relationship suffers. But when the product data is correct the customer can trust your business. With each customer interaction informed of all the previous ones, the customer feels there’s a continuous flow of interaction going on. That’s how you build customer relationships. MDM enables you to use the right piece of data at the right moment for the right person through the right channel.  

To read more about Master Data Management, you can go to our dedicated page with more in-depth content. 

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Joeri Moors

MDM Market Development Manager

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