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The real costs of Master data errors.

There are some pretty obvious costs to having inaccurate and inconsistent Master Data, everyone quotes 'inaccurate reporting' and the 'time & resources' taken to fix Master Data errors.

However what does this actually mean in real terms. We'll explore this a little later but lets look first at some of the less obvious cost impacts

£ The inability to keep up with new technology - if your Master Data is not up to scratch trying to implement a new Product Management, CRM tool or robotics or even upgrade your existing ERP will be next to impossible without extensive and expensive data cleansing. This is often overlooked and discovered after the project has launched. If your competitors have better Master Data they can stay ahead of you both technologically and commercially.

£ Making decisions on flawed information - often mistakes in Master Data are not immediately obvious and take time to manifest themselves, a different Sales category, a mis keyed decimal point, the single unit that's going out as a pack of 5, disparate sources of Master Data which are not mapped correctly. The inputs could be created months before the impact and it might take many iterations of the same mistakes before they become big enough to notice in your reporting.

£ Loosing customer confidence due to inaccurate E Commerce - we've all been there a website missing images or returning the wrong image, you ordered 1 item and got six, or blue and you got pink, you get to the shopping basket and boom its out of stock !! A recent experience of mine was to order an A/C unit off a well known online retailer only to be told on the day of delivery that it should never have been available for purchase let alone be ready to be delivered !

£ Customer services unable to upsell - as a Customer services representative you are often encouraged to upsell and definitely not encouraged to loose sales. Imagine however you phone up a company to order lets say a specific T shirt, its sold out and because their Master Data is not set up intelligently they are not able to suggest to you an alternative in the same colour or similar style, that's a lost sale and potentially a lost customer. Or they can't tempt you to buy another T shirt in a similar style because it takes them hours to find one..........

£ Wastage of materials - if you work in manufacturing and your Master Data is inaccurate then you risk wasting Materials. Purchasing stock that simply isn't required, packaging that you will never use. Over producing product that sits in the warehouse taking up valuable space and has to be sold on promo or worse still has to be dumped. Manufacturing with the wrong material or packaging, which could be dangerous with some ingredients and risk a product recall or expensive re labelling / re processing of the item.

£ Wasting resources - in some businesses its being able to turn up at the right time to the right location with the right parts. However if you are not maintaining your assets correctly and updating maintenance logs you could find you were expecting to be fixing a seal on a pump only to realise the pump was decommissioned 6 months ago or replaced by another model. That engineers time is wasted and someone will need to make another trip.

This is not a comprehensive list and I would be interested in learning what your 'costs' list might look like, so please feel free to comment below or ask answer questions you might have on the above.

So back to the cost of fixing master data errors. I always remember an experience I had a few years ago. Not long after go live an internal customer rang me to tell me there had been a mistake on their Master data and they needed it correcting asap. They needed the purchase orders to go out as they were already behind. My first piece of bad news to them was that if I change the Master Data, the Purchase orders already created will not be updated, it will only be correct on new orders raised, how many PO's are impacted? It turns out it was in the 1000's. Have any PO's been released? It turns out it was in the 1000's. This now became bigger than just a Master Data Issue.

- The internal customer had to cancel the existing PO's that had not yet been released (£'s) and stop any potential production (£'s)

- The supplier had to stop and re schedule production (£'s)

- SAP support had to help undo the PO's which were in various stages of release (£'s)

- The Master Data team helped with reporting to identify the issues and corrected the Master Data (£'s)

- The internal customer team re raised the PO's (£'s).

- SAP support had to help return the PO's to their various stages of release (£'s)

The process took about 2 weeks end to end.

I hope this illustrates that fixing Master Data errors is often a complex and time consuming business, in this case we knew what was wrong and what needed doing, its not always so straight forward so its definitely worth "investing time in getting it right first time".