Master Data: The Cornerstone of Your Supply Chain
During our work with clients, nearly 100% of them face challenges related to the management of their master data. Whether it's errors in customer information, incorrect product dimensions, or poorly defined units of measure, these critical data often go unmanaged, leading to costly delays, shipping mistakes, and operational inefficiencies. This article aims to raise awareness among supply chain decision-makers about the importance of master data quality, offering concrete examples and highlighting the financial impact of errors.
This article is aimed at logistics managers and decision-makers, explaining three common issues in master data management: errors in customer data, errors in units of measure, and errors in product dimensions, and their impact on the supply chain.
1. Customer Data Validation: Addresses, Phone Numbers, and Emails
Explanation
Errors in customer data, such as incorrect addresses or duplicates, can result in failed deliveries, delays, and additional costs for returns. Implementing an address verification tool and validating phone numbers and email addresses helps reduce these errors.
A company shipping packages could face issues with incorrect customer addresses. If an order is shipped to an incorrect address, packages may be returned, incurring additional costs for reshipping and return handling.
Impact of Incorrect Addresses: Cost of Errors
In Canada, the average cost to ship a package ranges between $22.29 and $41.61 depending on the service used and the distance . In the event of an incorrect address or failed delivery, these costs are often doubled to cover the return and reshipping fees.
For example, a company that ships 10,000 packages per year and experiences an error rate of 2% would have around 200 packages with incorrect addresses each year. With an average cost of $100 per incorrect package, the company could spend up to $20,000 annually due to these errors.
2. Errors in Units of Measure
Explanation
Confusing the purchase unit of measure and the sales unit of measure can lead to incorrect shipments and significant financial losses. It’s essential to properly define these units in the management system. The purchase unit of measure is used when receiving products from suppliers, while the sales unit of measure is used when selling those products to customers.
If these units aren’t aligned in the master data, errors in ordering, receiving, and shipping can occur.
Example
Imagine a company receiving products in packs of 10 units. The master data indicates that the purchase unit is 10 packs of 10 (i.e., 100 units), but the sales unit is packs of 10. If this isn’t clearly set in the system, an employee may mistakenly ship 100 units instead of 10, leading to stock shortages and losses.
3. Errors in Product Dimensions
Explanation
Product dimensions play a critical role in warehouse management. Mismanagement of these dimensions in master data can result in storage errors, poor space utilization, and disruptions in pallet and transport management.
For instance, a product may measure 30 cm x 20 cm x 15 cm (approximately 11.8 x 7.9 x 5.9 inches). When grouped into a master pack containing 8 units, the total dimension becomes 62 cm x 42 cm x 32 cm (approximately 24.4 x 16.5 x 12.6 inches).
Impact of Dimension Errors: 5 cm Modification
Imagine the height of the master pack is incorrectly recorded as 37 cm instead of 32 cm in the master data. The consequences can be immediate:
Reduced storage capacity: Pallet capacity would be reduced by 20%.
Costly reorganization: Staff would need to rearrange pallets, increasing costs.
Transport issues: Loading errors could occur, increasing logistical costs.
Conclusion
These examples show that poor-quality master data can severely disrupt critical operations. Rigorous management of these data is essential to avoid financial losses and maintain a smooth supply chain. At Trencadis, we help our clients take control of their master data so they can focus on growing their business.
Contact us to learn more about how we can help you!
