Why should discrete and process manufacturing executives care about master data

To most executives, the very concept of master data is unfamiliar. However, master data is the silent force that drives any business. It is foundational and business-critical information used every day.

“Generally, executives have zero idea how much money their companies are losing because their master data is incomplete,” says Juha Nieminen, Director of Offering and Operating Model Development at Etteplan. “On the other hand, when master data is good, it supports efficiency, scale, competitiveness, and artificial intelligence.”

Gaps in master data are common – and lead to operational, financial and reputational losses. When the quality of master data is low, problems tend to accumulate across the business.

For instance, the product portfolio of a discrete manufacturing company can look controlled on paper. Yet the company can sell something it can no longer build or support efficiently.

“In one case, a company discovered they were producing three generations of the same product simultaneously. Old product structures had never been retired, and sales kept offering variants they were familiar with,” recalls Nieminen.

This is not unusual. As organizations grow, merge, or expand globally, information fragments across teams, acquisitions, and systems. Before long, the company discovers it no longer has a single, authoritative definition of its processes, products, or assets.

The result is that similar data is managed in separate silos and treated differently within different units. The business is suffering.

Nieminen emphasizes the importance of maintaining consistent master data. In his experience, industrial companies often have master data management systems. Their sheer existence is no guarantee.

“Master data is a comprehensive domain that enables numerous aspects of business. Comprehensiveness reflects digital maturity. In other words, master data can be good in one place with all its attributes, but without comprehensive management, master data alone is not enough,” Juha Nieminen states.

Poorly organized master data shows up in everyday operations. A sales team cannot configure the right product. A factory receives an incorrect Bill of Material (BOM). Procurement orders for parts that do not match the latest design. A service technician arrives on-site without knowing what configuration was delivered. ”In a worst-case example, a company manufacturing and selling products doesn’t know what exactly they have delivered to end-customers and what spare parts are necessary. This makes them incapable of providing proper customer service and support.”

Executives can easily make serious errors and view master data as an IT- or engineering-related nuisance. Consequently, the C-level may simply urge the IT department to purchase new software. “However, technology is not the solution for fixing master data. The only right thing to do is to fix the lack in data governance”, Nieminen says.

Symptoms of missing governance:
• No clear ownership for data
• Data standards, including metadata, vary across departments
• Multiple versions of data in multiple systems
• No common rules for naming, revising, or retiring data
• Product or asset lifecycle information scattered across functions

Data governance transforms master data from a technical artifact into a strategic capability. It makes people treat data in the same way and follow the same processes. It enables consistent product or asset definitions, high service quality, and predictable manufacturing operations.

Companies want to use data to enhance their operations. With good quality data, new customer applications or solutions can be created and, at best, even enable new business models. “Today, master data is the enabler to do this, and the accelerator here is artificial intelligence. This is exactly why master data needs to be in good condition: without it, nothing can be accelerated”, Juha Nieminen concludes.

Do you want to learn more about raising the digital maturity of your company? Check out this e-guide and find the roadmap for master data success!