After talking about master data and its target systems in several newsletters, I would now like to take a closer look at the implementation and best practice of how master data can be created for standard and purchase parts in a company.
Master Data Creation & Maintenance
Companies have the choice of whether they either collect and manage master data themselves or have them handled by a third-party provider. Both options have their own advantages and disadvantages.
How much does it cost to create a master data record in an ERP/PLM target system?
It can be difficult to give an exact price for the creation of master data for spare parts in target systems, as it can vary greatly depending on the complexity of the part and the specific needs of the company. However, I can give an average price range for this type of service.
On average, the price of creating master data for spare parts in target systems can range from several hundred to several thousand Euro, depending on the complexity of the parts and the specific requirements of the company. Factors that can affect the price include the number of attributes that need to be created, the level of customization that is required, and the amount of data that needs to be entered.
It is worth noting that some companies set a flat rate for the creation of master data for spare parts in target systems, e.g. 500 Euro internal costs per master data record.
It is also important to note that in addition to the costs of creating the master data, there are also ongoing costs for maintaining and updating the master data. Even a very well-created master data record can be outdated in several months and no longer correspond to the entries made at the time.
Master Data Creation & Maintenance with Own Company Resources
Various challenges can arise when creating master data for standard and purchase parts with your own company resources. Here are some possible examples:
- Misnomer: It is important that the name of the part is unique and correct to avoid confusion. A misspelled word or number can result in the part not being found or being mistaken for another part.
- Missing or incorrect attributes: Each part has certain attributes that must be entered in the master data system. If an attribute is missing or entered incorrectly, it can result in the part not being able to be properly classified or identified.
- Missing or incorrect units: If the units of the unit of measurement are entered incorrectly, it can lead to confusion or incorrect calculations. For example, the length could be quoted in inches instead of meters, which can cause problems when ordering or using the part. Missing attributes, such as coatings on screws, can lead to the wrong spare parts being used and damage can occur.
- Wrong manufacturer or price: If the wrong manufacturer is selected or the price is entered incorrectly, it can lead to unnecessary costs or delays. It is important to ensure that the information in the master data is accurate and up-to-date.
- Duplication of parts: It can happen that a part is entered several times in the master data system. This can cause purchase orders or calculations to be executed incorrectly, as the system may view the part as two different parts. This results in higher storage costs for spare parts, less discount on minor orderings, wrong statistics and usage reports.
To avoid these errors, it is important that the master data creation is done carefully, and that all information is carefully checked before it is entered into the systems. Clear processes and guidelines for the creation of master data must be developed in order to overcome these challenges.
If a company intends to carry out the creation and maintenance of master data for standard and purchase parts with its own resources, it is important that all employees involved have the same level of knowledge, training and a common understanding of this work. This also requires the creation and updating of training materials to continuously train changing people in the team.
However, not every employee in the company should be entitled to create master data, as this would lead to a higher error rate in the above-mentioned points. This would also significantly increase the amount of training and costs. However, if a company intends to use its own resources to create master data for standard and purchase parts, a dedicated team should at least be considered that takes on the responsibility and tasks alone.
Master Data Creation & Maintenance by Third-Party Providers
A company that specializes in the collection and management of master data in the area of standard and purchase parts usually offers services and solutions that support companies in the collection, management, maintenance and use of master data. This may include the following tasks:
- Collection of data: The company collects and records master data for standard and purchase parts from various sources such as suppliers, manufacturers or from public databases.
- Data management: The company organizes and manages the collected data in your target systems to provide a unified and up-to-date view of the master data.
- Maintenance of data: The company monitors the quality of the data and ensures that it is up-to-date by correcting or removing changes or erroneous data.
- Use of data: The company provides the data in a usable form to assist companies with product development, purchasing, warehousing, maintenance, and other tasks.
- Consulting: The company provides consulting services to help companies adopt master data management processes, standards, and technologies.
- Integration: The company enables the integration of master data into the company-wide systems.
Advantages of master data creation and maintenance by Third-Party Providers
Outsourcing master data creation and maintenance to third-party providers has various advantages:
- Expertise: Third-party vendors who specialize in master data management often have a high level of expertise and experience in the field. They can apply best practices to ensure the quality and consistency of master data.
- Increased efficiency: By outsourcing master data management to third-party providers, companies can free up their own resources and focus on their core competencies. This can lead to increased efficiency as the third-party vendors have specialized tools and processes to manage the master data effectively.
- Cost saving: In many cases, working with third-party vendors is more cost-effective than performing master data management in-house. Third-party vendors can leverage economies of scale and spread the cost of technology, staff, and infrastructure across multiple customers.
- Risk mitigation: Third-party vendors that specialize in master data management can help minimize the risk of errors and inconsistencies in master data. They can implement security measures to ensure the quality of the data.
- Timeliness and compliance: Third-party vendors can ensure that master data is always up-to-date and meets applicable regulations and compliance requirements. This can be especially important to meet regulatory requirements and avoid penalties or sanctions.
- Flexibility and scalability: By collaborating with third-party vendors, organizations can respond flexibly to changing needs and scale their master data management as needed. This allows companies to adapt to new business needs and support growth without having to greatly expand their own resources.
- Working with a third-party vendor eliminates the cost of in-house training and documentation that would normally be required to prepare employees to manage master data. The third-party vendors typically take responsibility for training their own staff and documenting their processes and procedures. Not only does this reduce the direct cost of in-house training and documentation, but it can also save time by eliminating the hassle of organizing and executing these activities.
- Third-party vendors who specialize in master data management often have the experience and technology to set up efficient interfaces between different systems. These interfaces can help eliminate duplicate data entry in different target systems by automating data integration and synchronization.
- Automated data entry: Third-party providers can implement automated processes to enter master data once in a central system and then distribute it to different target systems via interfaces. This avoids the need to manually enter the same data multiple times. Errors such as incomplete master data, typos or other designations are thus avoided. Thanks to effective interfaces, the creation of master data in several target systems is faster and cheaper than manual entry by different people.
The written article is based on my personal experiences and my individual selection. It makes no claim to completeness. If something is incorrect, I kindly request information or feedback.
