When master data puts the brakes on: data quality as the key to ERP efficiency

The benefits of an ERP system depend crucially on the quality of the data. However, it is precisely in this area that many medium-sized industrial companies have some catching up to do. Christian Biebl, Managing Director of Stuttgart-based ERP manufacturer Planat, puts it in a nutshell: «Master data, for example, is often not adequately maintained, particularly in the manufacturing industry. The consequences are far-reaching, from stock shortages in the warehouse to faulty production and outstanding deliveries. The effects are almost impossible to keep track of.»

Master data - including article information, customer and supplier data, work plans, parts lists as well as classification and communication data - form the foundation of all ERP-supported processes. They are not static values, but must be continuously maintained and updated. In many companies, however, this is neglected. While transaction data is often consistently recorded in day-to-day business, master data often remains incomplete or gradually becomes outdated. «Inadequately maintained master data can become a key bottleneck for efficiency, transparency and decision-making over time,» says Biebl.

The consequences of neglect are often serious

The consequences of this neglect have an impact along the entire value chain. Even small inconsistencies in the database can cause considerable efficiency losses. In production, inadequate data maintenance leads to incorrect planning, as information about work steps, time windows or material availability is missing or inaccurate. In materials management, this can lead to duplicate orders or production downtimes if existing stocks are not mapped correctly. At the same time, incorrect scheduling data results in unnecessarily high stock levels with corresponding costs.

There are also direct effects in sales and customer management: Incomplete or outdated data in the CRM system means that customers are addressed incorrectly or not at all. This not only impairs operational communication, but also reduces the potential for additional business and customer loyalty. In controlling, on the other hand, key performance indicators and management decisions are based on data from the ERP system - if this data is incorrect, the analyses and forecasts derived from it also lose all meaningfulness.

Biebl warns: «The economic impact of inadequate data maintenance can be serious. Even minor deviations in the data can multiply across process chains and lead to efficiency losses in the double-digit percentage range. At the same time, delivery times are extended, which has a direct impact on customer satisfaction.»

Data growth exacerbates the problem

The problem is exacerbated by the increasing volume of data. Companies record an average annual data growth of more than 40 percent, much of which is generated by materials management and CRM systems. Without structured data maintenance, this quickly results in confusing and redundant databases that slow down processes instead of supporting them.

«Data quality is not a purely technical issue, but an organizational challenge. Many companies lack a clear definition of responsibilities for master data, as well as defined processes for quality assurance,» says Biebl. Studies by Gartner, KPMG and Bitkom show that only a very small proportion of companies rate their own data quality as very high, while the majority work with incomplete, incorrect or outdated data.

Systematic master data management as an obligation

The consequence is clear: investments in software alone are not enough if the database is not given the same importance. Rather, systematic master data management is required - also supported by software, for example via workflows - that establishes data maintenance as an integral part of business processes, defines responsibilities and ensures continuous updating. Companies that do not consistently maintain their database run the risk of digitalization projects coming to nothing and efficiency potential remaining untapped.

In addition to the ERP implementation, Planat also provides companies with comprehensive advice on increasing efficiency within their own processes. «In this phase, the processes and responsibilities for the ongoing maintenance of master data should also be precisely defined,» advises Biebl.

More information: www.planat.de