Two experts weigh gains, risks when Master Data joins the supply chain

Dec. 30, 2020
Imagine how many ways managing data greases the supply chain. Yet when inaccurate documentation seeps into the enterprise, everything clogs up the network.
Nils Pedersen
Nils Pedersen

Imagine how many ways managing data greases the supply chain. Yet when inaccurate documentation seeps into the enterprise, everything clogs up the network.

So says Nils Pedersen, vice president of product strategy for Stibo Systems, a global software solutions company that guides managers to unlocking the value in master data.

More than ever, where the auto care industry chases vehicle fitment and on-demand delivery models, each transaction's data input carries a grave consequence. Lapses of vital information drain profitable outcomes, whereas accuracy generates wealth.

"All of those pieces together add up to an efficient supply chain," said Pedersen. "Take out one of those pieces, then you got issues with your shipping, receiving, automatic warehousing and all of that."

But not all data is the same as master data, explained Pedersen, who grew this building block informational infrastructure for nearly two decades. Sales invoices, purchase orders, bill of lading and real time-bound exchanges depend on master data that traces back to a single version of the truth, which resides inside a central repository.

Without a transparent foundation accessible to the organization, incomplete records, outdated records and duplicating abstracts reduces trust in the data, said Pedersen. Examples range from product attribute descriptions to payment addresses to packaging dimensions to chemical products. As he sees it, the key to success is integration, which redistributes the data flow throughout all domains.            

Take flammable sprays that must meet the strict material safety data sheet requirements for resale. "If you think about the information that you need, hazardous information would be one area to your transportation [department] when you're moving product. You have a priority with master data with regulatory compliance," said Pedersen. 

Karen Strobel, a hazardous materials consultant, believes that inconsistent information sharing poses a consequential liability to the industry. Updates require continual fixing when it comes to safety data sharing, she said. 

One costly incident befell AutoZone, whose 600 stores doing business in California drew the state's attention. The Department of Justice alleged that the merchant illegally disposed of used motor oil bottles and chemical aerosol cans — among millions of other toxic items — between 2013 and 2015, which ended in an $11 million settlement with the state's 45 counties. 

Improper labeling due to wrong information can further compound the complexity of selling the same product in 50 states. "The infamous California Prop 65 has cost companies millions in fines," wrote Strobel. "Over-labeling products for Prop 65 can be just as bad as not labeling because of potential lost sales or marketplace confusion."              

Additionally, retailers that interact with their trading partners routinely face unit of measure complications with the deliveries that hit the receiving dock. Pedersen calls this concept "buy-side sell-side" management because each customer or end-user involved in the transaction often has unique inventory stocking requirements. 

Some vendors that sell the same brand products routinely bundle the single units into different case and pallet quantities. That causes both space and inventory problems for the buyer who may not prepare for such variation. In equal measure, it also impacts the seller. "Sizing at each level is important because you cannot fit everything onto the truck. If you have the wrong dimensions, you're not going to optimize things at the shipping level as you now must figure out how many trucks you need to deliver the order."            

Regardless of these knotty details, Pedersen is optimistic that the industry is progressing at its own pace. Most companies he's met embrace the role master data plays but sorting through the abundance of available unstructured data continues to flood the marketplace.              

Progressively since the early 2000s, Pedersen has been quietly cracking silos, the breeding grounds of withholding vital informational abstracts. Particularly with Advance Auto Parts, he contributed to reshaping the merchandiser's e-commerce platform by communicating the features about what there is to be known about chemicals, appearance products, and hard parts to the big-box retailer's consumer base.            

Questioned on what this means to the customer, Strobel replied, "Missing or incorrect product data leads to lost sales, increased returns, and additional costs to correct and maintain data in multiple silos throughout the supply chain."

Next to that project, Pedersen helped launch the application hard part look catalog model for NAPA Auto Parts that eventually morphed into the industry language now known as Aftermarket Catalog Exchange or ACES. 

Indirectly everyone in the industry has benefited from this ultimate form of master data that guarantees automotive fitment, asserts Pederson. This shared language has broken barriers and sped up ordering from the manufacturer onto the end-user. "ACES has given the industry a reference table that is allowing everyone to communicate using the same data." 

Pedersen, alongside Stibo Systems, has spread the gospel of master data management in other ways too. He participated in the recent publication of "Transforming Business with Master Data Management for Dummies." This book covers the foundations to "drive better decisions, experiences, and outcomes that benefit your business and customers."

More improvement lays ahead, cautioned Pedersen. Static data can disrupt inventory management for companies that fall behind updates in the system. "Gathering information might be great," but under an ad-hoc approach, he added, "is when things change and that's where you need the agility in the process," Pedersen advises companies —large or small — to build an operational timeliness procedure.

All summed up, master data brings equal impacts to both the physical and the digital organization. Unlike other industries, he argues, the automotive aftermarket stands out for its unique distribution culture where a sense of urgency with the professional installer never runs dry.

Still, other principals fall back onto common sense, according to Strobel. "There is some cost to righting your product data, including hazardous information," she said. "But that cost is a small insurance payment compared to the potential penalties if the product is sold, shipped, stored, or disposed of improperly."   

About the Author

Alan Segal

Alan R. Segal specializes in project management for suppliers, consultants and retailers. He practiced category management for Sanel Auto Parts Co. and Advance Auto Parts before launching his own firm, Alan R. Segal-Best Business Practitioner. He has worked in the auto care industry since 1991. Connect with Alan on Facebook or LinkedIn.

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