Years ago when I was a supply chain leader, my manager liked to use scientific terms like “entropy” and “atrophy” when explaining business scenarios. He was a chemist by discipline, so I guess we can give him some latitude there. You may ask yourself as I did - how do these scientific words apply to Master Data Management? Well let’s examine each word.
En·tro·py (n): a measure of the disorder that exits within a system.
Master Data Management, or MDM, is the organizational principles (a system) used to control and manage the critical data required to operate a business. MDM includes the processes, governance, policies, standards, metrics, and technology (i.e.software) used to ensure this data conforms to the expectations and needs of the organization. It also includes the formal definition of the roles and responsibilities within the organization for these components.
To be effective, a Master Data Management strategy must include all of these elements and define a comprehensive framework where they are aligned with, supportive of, and complimentary to each other.
When work is performed outside of the Master Data Management construct, interruptions to business processes due to data quality issues occur. Examples of this include problems entering sales orders, inability to receive products or goods, and failure to pay invoices. In most cases, these operational problems can be traced back to incomplete, incorrect, or obsolete data (entropy – chaos and disorder!).
At·ro·phy (v): weaken or waste away from disuse
The benefits of a Master Data Management program are realized in several ways across the organization. A successful MDM program will have positive impacts on activities performed by senior executives, all levels of management, and the operational workers.
The ability to accurately report, review, analyze, and improve the organization’s operations and capabilities also benefit from MDM. This includes managerial, financial, and operational performance measures. The accuracy and availability of data regarding customers and suppliers, for example, can provide a substantial edge in gaining market share, negotiating favorable terms, increasing profits, and moving rapidly to take advantage of opportunities. MDM also establishes the ability to be compliant with legal and regulatory requirements related to operational processes and controls.
The impact to an organization for not working within its policies and procedures laid out can cause it to become weak in its market position and waste away from possible scenarios such as incurring product recalls, monetary fines, operational shutdowns, and jail time (atrophy).
So the next time you're discussing MDM, try using "entropy" and "atrophy" to explain the repercussions of not having an effective Master Data Management program. You'll be sure to attract attention and get your message across.
If you’re looking to start or improve your company’s MDM program, you are probably going to consider either using an internal team or hiring a team of consultants. Read the blog post 3 Reasons Organizations Hire MDM Consultants to learn what key questions to ask before making this important decision.