The move to Shared Services for many large companies with multiple locations and business units has provided tangible benefits that go well beyond cost savings, with improvements to the accuracy and efficiency of many related work processes. As Shared Services organizations have increased the scope of their services, they are increasingly including processes that are most critical to the business, including overall responsibility for Master Data Management; the DNA of a business that provides structure to identify customers, suppliers, locations, hierarchies, and chart of accounts.
Recently a PeercastTM featured a global manufacturing and retail company on the topic of “Transitioning the Master Data Management Function to Shared Services”. With manufacturing taking place in over 20 countries, and with sales in over 120 countries, having master data that was consistent and accurate across the enterprise was increasingly important.
Prior to implementing Global Data Administration, the featured company experienced multiple pain points, including unit of measure errors when changes weren’t effectively coordinated between business units, logic errors in EDI mappings delaying invoices and impacting cash flow, under-billing of customers, inaccurate customer shipments, and inconsistencies in financial reporting between business units.
Creating a global process wasn’t easy. Implementation challenges cited by our feature company included:
- Impact of currency differences on intercompany processes
- Language and translation issues for master data descriptions and terms
- The complexity of processes at different size businesses
- Differences in legal requirements between countries
- Requirements for supporting multiple time zones
- Unexpected difficulty in driving consistency across a large and diverse customer base
A Global Data Administration team was created that had responsibility for all forms of master data used in the company. Examples of specific responsibilities include:
- Maintaining accurate master data in a timely, efficient, service-oriented manner
- Developing and maintaining global standards across all businesses
- Streamlining processes and systems associated with master data maintenance and administration
- Managing the archiving and purging of obsolete, inaccurate and redundant data
- Educating users in the business on the impact of master data on system integration and business processes
- Developing service level agreements with individual businesses related to master data
A supporting iPollingTM question explored how member companies organized their Master Data Management function. For 47% of member companies, Master Data Management is performed in Shared Services, with a mix of other reporting structures including Centralized IT, Centralized Finance, Centralized by functional area, and decentralized in the Business Units. Here are the details:
The follow up question explored plans for including Master Data Management in Shared Services. As expected, 52% had already implemented, with an additional 9% having approved plans to implement. At 18% of member companies, moving Master Data Management to Shared Services is currently being evaluated, with 21% of companies reporting that they have not yet evaluated the opportunity.
Following are some of the comments added by members:
- Although Master Data Management is primarily within our Shared Services department, there still are pieces of Master Data that have not yet been integrated into the department; for example, Customer Master Data.
- At our company, it is a split responsibility with some Master Data in Shared Services and some in Centralized IT.
- We created a GPO MD role a couple of years ago. Scope is Customers, Suppliers, Banking data, GL accounts, Denied Party Screening. Do not do part numbers (not harmonized globally) and other areas – yet.
- The vendor management/entry is split between Purchasing functions and AP function. Purchasing manages supplier name/address and other header level info and AP manages all banking info.
- Currently only Vendor Master Data Management is managed in Shared Services.
Is your company performing the Master Data Management function in Shared Services? If yes, have you included all elements of the Master Data Management process?
Who are your peers and how are you collaborating with them?
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