Four ways in which bad data can hurt your business (And what you can do about it)

Accurately maintaining master data is a strategic step toward profitability and maintaining a competitive edge. Master data refers to the core data that is at the heart of a business and vital to its operations, that is information about the business’s products, customers, vendors, stores, distribution hubs, etc. Master data, whatever the domain, is crucial to maintaining key systems that affect the commercial viability of an organization. It drives decision-making, strategy formulation, and operational efficiency. However, the quality of master data profoundly impacts an organization’s ability to derive meaningful insights and make informed decisions.

Consider these three examples regarding how poor quality of master data affects a business.

• Company A is a food distribution company. They maintain records of all the SKUs they carry, which helps them keep track of their inventory data.
  
  Due to poor data quality, the company’s inventory records didn’t accurately reflect the quantities and expiration dates of products in stock. As a result, the company unknowingly shipped expired products to customers. This led to customer complaints, product recalls, and financial losses from wasted inventory, not to mention penalties for non-compliance with food safety regulations. In the long term, there could be damage to the company’s reputation for quality and reliability.
• Company B is an industrial manufacturer of subsea valves. They procure raw materials from a host of vendors around the world. They have a database of these vendors and use it to track the performance of the vendors and also to time the shipments that they need. Due to inconsistent data entry practices and improper governance, there were inconsistencies, duplicate entries, and inaccurate information in the supplier data. This in turn led. and outdated information, the company struggles to track supplier performance, pricing agreements, and delivery schedules accurately. These disruptions can result in lost revenue, increased costs, and damage to customer relationships.
• Company C is a retail chain that specializes in cosmetic products. They maintain a database of their customers and use that to guide their marketing campaigns and rewards programs.
  
  Due to incomplete and inaccurate data, the company’s marketing campaigns failed to reach the intended recipients, resulting in low engagement and conversion rates. As a result, the company saw declining sales, reduced customer loyalty, and missed opportunities for cross-selling and upselling, limiting revenue growth potential.

These and many more cases illustrate the importance of data quality, and the role Master Data Management (MDM) plays in ensuring data quality.

Hidden hazards of poor data quality

Data quality refers to the accuracy, completeness, consistency, timeliness, and reliability of data. When your master data is not up to the mark in these categories, it can lead to a myriad of issues, including:

• Inaccurate Insights: Decision-makers rely on data to gain insights into market trends, customer behavior, and operational performance which guide the perspectives of the decision-makers. If the data is inaccurate or incomplete, it can lead to faulty conclusions and misguided strategies.
• Operational Inefficiencies: Poor data quality can result in operational inefficiencies, such as redundant processes, errors in transactions, and delays in decision-making. This can hinder productivity and increase costs.
• Risk and Compliance Concerns: In heavily regulated industries like finance, healthcare, and manufacturing, data accuracy and compliance are paramount. Inaccurate data can lead to regulatory violations, financial losses, and reputational damage.
• Damaged Customer Relationships: Inaccurate or outdated customer information can erode trust and damage relationships. For example, sending promotional offers to the wrong addresses or contacting customers who have unsubscribed can alienate them.

Steer clear of data disasters with MDM

Master Data Management (MDM) is a comprehensive approach to managing and governing an organization’s critical data assets. It involves creating a single, consistent view of master data entities, such as customers, products, suppliers, and employees, across the entire organization.

A well-governed MDM ensures that data is accurate, consistent, and up-to-date across all systems and processes. Here are a few ways in which an MDM ensures your data is of the highest quality and reliability:

• Centralization of Data: MDM consolidates data from disparate sources into a single, centralized repository. This integration helps prevent data silos and ensures consistent data usage across the organization thereby reducing the risk of data duplication or inconsistency.
• Standardization and Harmonization: MDM enforces standardized data formats, definitions, and naming conventions across the organization. This ensures that all data follows the same rules and guidelines, improving consistency and accuracy.
• Data Governance: MDM establishes data governance policies and procedures for managing data throughout its lifecycle. This includes defining data stewardship roles, access controls, and data quality metrics. By implementing governance practices, MDM helps maintain data integrity and ensures compliance with regulations.
• Data Cleansing and Enrichment: MDM platforms often include tools for data cleansing and enrichment. These tools identify and correct errors, inconsistencies, and incomplete data. They may also enrich data by adding missing information or standardizing data formats.
• Monitoring and Reporting: MDM provides capabilities for monitoring data quality metrics and generating reports on data health. This allows organizations to track the effectiveness of their data quality efforts over time and identify areas for improvement.

Data quality and Master Data Management are not just IT initiatives; they are strategic imperatives for organizations seeking to thrive in the digital age. Investing in MDM is an investment in the future success and resilience of the organization. By ensuring that data is accurate, consistent, and accessible, organizations can unlock valuable insights, enhance customer experiences, and drive operational excellence.

Contact us to learn more about how Syndigo’s MDM can help improve your data quality and improve the effectiveness of your business processes to suit a rapidly evolving market.