Procurement’s role in keeping your SAP material master data honest


download.jpgWill the company that has reasonable material master data please stand up!? SAP’s material master data, without a doubt, is the bane of any Procurement Manager’s existence. This will also not be news to any manager in purchasing, with most companies despairingly accepting that master data always has and always will be an insurmountable problem. This, after several failed attempts to fix the challenges that material master data presents, says Steven Freemantle of SweetThorn Thought Leadership in this month’s SmartProcurement.

You may be wondering why keeping material master data honest is procurements’ job. Master data can only make a buyer’s job that much easier. Having good data means less intervention is required in SAP generated requisitions, and in fact, the better the quality of your data, the more likely you can move to using SAP’s automated procurement functionality.

If automation is not motivation enough, you may want to consider this: It is procurement that contact suppliers and promise remuneration in exchange for goods, perhaps it is procurement then that may have a vested interest in making sure that that master data of the goods they buy, accurately represents what they are buying.

There is also no doubt that addressing the issue of master data is complex and daunting, but you will have to begin somewhere. In the interests of getting back to basics, one should come to terms with the following fundamental questions departure point for fixing your material master data

1. Do you have a stocking strategy philosphy – that supports alignment of organisational strategy with tactical execution?

2. Do you know how to translate this philosphy into effective MRP rule sets?

3. Do you have a methodology that will help determine these rule sets?

4. Do you know where to populate these rules in SAP’s four MRP views?

5. Do you know how to use standard SAP tools to measure that the rules are delivering to, or detracting from your strategic objectives?

6. Do you know how to change the rules if they are not helping with the tactical execution of your strategy?

7. Do you know how to use SAP’s supply chain exception monitors to check that the rules are adhered to – every day?

Thumbnail image for StevenFreemantle2.JPGSAP has built a variety of different stocking strategies into the 4 MRP views you find in a material master and when combined through a structured and thought-out approach, will significantly improve not only the quality of your master data, but the outputs of your MRP. In most cases companies typically stick to one set of rules across all materials, implying that all materials, articles or spares behave in exactly the same way, however, it is not believable that this is the case. One way to test if your implementation went this route is to figure out the diversity of MRP Types that you use. SAP has built around 30 standard MRP Types into the system.

Most companies use only one or two. If this is the case in your company then you have inadvertently adopted a “One Solution Fits All” inventory management philosophy. If this is the case in your SAP system, then not much attention has been paid to the questions above, and you most likely have some work to do in getting your material master data to reflect your reality.

There are some standard, quick and easy reports you can use to figure out the ratios of MRP Types your company uses across your inventory. Your SAP support partner or IT department should be able to guide you to these. Understanding how well you are using this one MRP rule is starting point to begin addressing the multitude of other possible master data settings.

As the procurement function considers material master data setting sit is worth noting that procurement cannot function as the sole owner of material master data, but more the custodian. Collaboration and integration across all departments – sales, planning, procurement, maintenance, accounts payable and accounts receivable is paramount to ensuring exceptional customer service, streamlined efficiency and optimised inventory levels. It becomes crucial then that procurement (or any function for that matter) does not dictate the master data setting, but rather collaborates with their customers to at very least ensure a sound understanding of how master data impacts the entire supply chain.

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