Master data management or MDM acts as the single source of reference, capable of integrating all records and data from distributed and diverse systems across an organization for unmatched consistency.
The purpose of master data management (MDM) is to help businesses improve the quality of their critical information/data — product data, customer data, employee data, location data, and their quality across the enterprise.
What is Master Data?
Master data is a repository of all important data of various individuals/entities captured at the enterprise level for conducting smooth business. This data includes clients, potential leads, vendors, employees, locations and approving authorities. For example, product master data management enables businesses to get an overall view of all product data.
Similarly, vendor data management enables the review of the reports generated by analyzing various parameters of a vendor, such as assessing the risk to the enterprise by evaluating its past performance and strategic importance.
Importance of MDM
Data being an indispensable part of day-to-day business management, MDM assumes strategic importance.
Many companies don't have a single view of their customers as customer data differs between systems within the company.
For example, customer records in the sales system would vary from shipping or customer service systems. Variations could crop up in the names, addresses and other attributes.
Thus, at the time of shipping, the address in the system may be incomplete compared to the sales system or may not reflect the new shipping address in the shipping system leading to a major fiasco.
Benefits of MDM
- Without MDM, managing/processing the increasing volume of data becomes difficult if not downright impossible.
- Quality of data is assured for better operations and to optimize business processes.
- MDM creates standard master data for use across systems in an organization, eliminating duplicate customer records and ensuring clean, complete, and unified data available to all executives. Tasks such as reporting and onboarding of employees and vendors get easier.
- The entire supply chain becomes more visible, ensuring a better understanding.
- Strategic planning and decisions can be taken based on accurate data.
- Data compliance is better.
- Easy data edits are visible across the organization.
MDM is as much an organizational process as it is a technical one. Therefore, it is advisable to implement an MDM solution by changing business processes and controls to get optimal results.