Master data is the core data that is essential to operations in a specific business or business unit. The kinds of information treated as master data varies from one industry to another and even from one company to another within the same industry. Master data is an important enterprise asset, and effective management of this data is critical to maintain good operational and financial health.
Master Data Management (MDM) is a comprehensive strategy to determine and build a single, accurate and authoritative source of truth of a company’s information assets and deliver this on demand as a service.
Master data currently has 4 main categories,
- Material Masters
- Accounting Masters
- Customer Masters
- Vendor Masters
When leveraged in an organization through an Enterprise Resource Planning system like SAP or through any linked database, consistent master data descriptions allow everyone to use the same data when planning projects or communicating. A good master data description allows each data-point, whether a material description or a vendor description, to be easily understood and unique from all of the other descriptions.
Consistency in naming is key to maintain accurate master data descriptions. If each department describes a customer or account differently then master data searches become tedious and might not give correct results.
For example, a company may have “Company Inc.” as a vendor. If one department’s database lists its name as Company Incorporated and another as Company Inc. and then a third misspells it as Compenny Inc. Then someone searching for “Company Inc” would only find 2 of the results in the database.
The kinds of information treated as master data varies from one industry to another and even from one company to another within the same industry.
Inconsistent master data can result in mistakes or uninformed business decisions, but correct master data can allow a company to leverage spend, re-target advertising, and quickly pivot in response to market changes. Creating a master data strategy for your company lets your data remain relevant as it grows and empowers your leaders to make informed decisions for the future.