Thousands of organizations have upgraded their MMIS and ERP systems in the last 10 years so that they could manage multiple inventories, track non-stock purchases, and automate their requisition to accounts payable functions in real-time to greatly increase their productivity. However, what hasn’t improved but has gotten worse over time is the quality of the data that is streaming through these MMIS or ERP systems.
Your new MMIS or ERP system has given you more speed, connectivity, and technical prowess, but it has also given you more typos, translation and logic errors, and software glitches than you ever dreamed were possible. Not infrequently, a combination of human errors and system architecture inadequacies can bring your supply chain to a halt, as it did for an organization we worked with a few years ago whose service levels to its customers dropped below 80% due to: (i) little training for their system administrators, (ii) decentralization of critical audit and control functions, (iii) bringing their system online too quickly and, (iii) not understanding the compounding effects of their decisions on their MMIS system’s logic and interactions.
Beyond the challenge of having the smooth flow of error-free information within your MMIS or ERP, there are two basic areas that need immediate attention at half of the nation’s companies to improve the quality of their data: (i) uniform pricing company-wide and (ii) developing a common language (or standard) to describe the data elements (vendors, manufacturers, commodity groups, products, product numbers, descriptions, unit of measure, unit of purchase, etc.) in your MMIS or ERP systems that are holding back great leaps forward in savings. Some examples include:
Uniform pricing
50% of the assessments that we have performed this year for members have one thing in common; their prices are different for hundreds, or sometimes thousands, of the same products they are buying annually from the same manufacturers and vendors. This anomaly is due to a lack of policies, procedures, and controls in an organization’s pricing maintenance function. This challenge can quickly be conquered once an organization realizes that it has this problem. And 50% of them do!
Standardized Nomenclature
It has been said that “winners don’t take shortcuts.” Neither should your company when it comes to designing and structuring the data elements in their MMIS or ERP systems if they want to data mine for savings opportunities over time. The most egregious shortcuts that we have found to date are:
- Combining descriptive data with numerical data
- Abbreviating vendor, manufacturer, or product names and descriptions beyond recognition
- Missing data fields (manufacturers, product numbers, etc.)
- Unintelligible or non-existent commodity categories
- Commodity categories too broad or too narrow to be meaningful
By taking these shortcuts or due to a lack of controls, organizations impede or make it nearly impossible to data mine for price, standardization, utilization, or contract savings in their data warehouses.
Computer code and overly feature-rich software accounts for a lot of the snafus with MMIS or ERP systems today, but it’s human intelligence that ensures the quality of the data that is entered into and generated by MMIS or ERP systems. The most successful MMIS or ERP implementations we have seen have exceptional data quality due to the careful and diligent planning, structuring, input, and maintenance of data elements; thus enabling these corporations to have a clear picture of what, when, who, and how their dollars are spent. Remember this for exceptional data quality: Winners don’t take shortcuts.