Posts Tagged ‘Inventory Management’

Informational Data Handicap Score (IDHS) for your BI analysis and reporting

Thursday, October 20th, 2011

I believe that every Business Intelligence report or analysis should have an informational data handicap score (IDHS) listed as a reporting element. The handicap includes the sum total of data scores for accuracy of context, standardization, structure of use, completeness and ability to extract the information for reporting.  The Informational Data Handicap Score should be applied to all reporting and analytics used in every business decision where data is the foundation of information. The cold hard fact is that BI reports and analyses are used in critical business decisions, budgets and plans and are made from data that may be inaccurate, incomplete or unavailable. A report or analysis with your IDHS is a true informational element for BI.

I spend a lot of time analyzing the product data quality, missing data elements, system accessibility because the data elements are impossible to pull out of the system or not collected to support our clients’ enterprise requirements for purchasing, engineering and maintenance decisions. I have to admit, I am always astonished by what I see (or don’t see) and the time and cost to pull data from a system. The reality is the data entered in these systems and the systems themselves are considered a support function (indirect or non-product activity) and not the core revenue generating stream for the business however the data is the life support of BI, accurate and available data is critical for smart and efficient business decisions. The missing gap in most business intelligence programs is a foundational flaw, referred to as data integrity and data quality or the lack thereof.

A business has two options, augment their BI decisions with a data quality scoring model, IDHS, a simple example “I am confident that our inventory budget should be 1 million dollars this year, based on the IDHS (+/- 30%) the actual budget could range from 700,000 to 1.3 million.”  The easiest reality is to budget the 1.3 million, with the plan to come in under budget, .3 million provides a safe cushion. This also alleviates the over budget spending and the tedious tasks of re-budgeting or canceling other important initiatives mid quarter / year.

The other option is to incorporate a structured and standardized Master Data Management process with Data Governance to collect, manage, cleanse (legacy / new data), enrich and disseminate information to the various systems. The goal is to create one master record set to ensure that decisions are based on accurate and complete data sets to implement meaningful BI reporting and analytics.

The results of data quality improvements are because of the requirements and processes of MDM. My definition is “An MDM program includes the Data Governance to define data requirements (structure, format and content), and the data processes to manage data activities such as collecting (extraction of BOM data or the data request web form), evaluating, matching (auto and mismatch), structuring, verifying and enriching to minimum data requirements, tracking history of change and data use, quality-assurance, reporting and distributing data (MAXIMO, ORACLE, SAP or another client’s systems) throughout an enterprise to ensure consistency and control. The MDM program will also include an on-going data maintenance process to manage data updates for this information.”

The following elements of data quality should be part of the governance program for your master data. This is critical to support a global enterprise. The discussions and metrics should include:

Accuracy: We intellectually understand the meaning of accuracy. An email address is either right or wrong, however in the product information world it can be a little more complex, this is where data governance is instrumental. The same spare part can be purchase from the manufacturer (one part number) or maybe a supplier (another part number)? A part number can be many different versions; for instance, a master org record is setup with a part number to purchase safety gloves, except one part number can’t buy you safety gloves; you must include the size as a description element in order to purchase. The result of an inaccurate glove record is you may receive all small gloves, but you really wanted large or you may not receive any gloves. Different manufacturers and suppliers have different ordering and purchasing rules.

Standardization: Is absolutely critical to BI reporting. Standardization is the map to how data is entered, referenced and stored to support ease of data access. The data elements should include classification naming, attributes, part numbers including formats, unit of measures, manufacturer and supplier names, addresses, web urls, relationships to parent companies and so forth.

Structured to support multiple uses: If you have one master organization and are only concerned with purchasing systems then structure may not be a concern, but to a global enterprise with multi-systems, the structure of use is extremely important as the data is disseminated to maintenance or inventory systems. In a purchasing system a ’Bearing, Ball’, part number ‘12345’ should only be set up once but in an “end use” structured environment, that ’Bearing, Ball’ is referenced to many pieces of equipment located  and used on other equipment and in other plants, it is also listed in engineering drawings, etc. If the multiple use structure is set up correct you can report “where used” for inventory sharing, internal purchasing programs supporting reduction in inventory.

Completeness: Having all data elements entered into the system required for the safe and efficient use of each item. If your data set has some missing prices and a report is provided the value of the inventory, obviously the report is inaccurate. The governance requirements include minimum required data elements. In the world of product data, the process may require a special speedy set up for a critical item that is urgent, however the MDM processes includes going back to acquire the missing information.

Accessibility: The ability to pull information from a system is the foundation of reporting. This is a continual struggle when I am working with a new client. I often ask the questions, “Is the expertise available to be able to query and pull data as needed from existing systems?”, “Is the data stored parametrically or as concatenated text fields?”, “is the table structure extremely complicated?” Accessing the businesses information and providing the ability to slice / dice the information critical to BI.

In this fast moving, big data intense world of collecting and storing information for businesses, the reporting and analytics to enable meaningful decision making is critical, so I ask the question “What does data have to do with business intelligence? EVERYTHING”


 

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The Master Data Management and Governance of Maintenance Data

Monday, March 14th, 2011

My strong belief in Master Data Management (MDM) incorporates the management of data from the entry point and multi-channel uses throughout the enterprise. This philosophy results in a holistic understanding of the data content and uses achieving data quality enterprise wide. Yes, an overwhelming task but it can be achieved if you take a step back from the one-dimension software thought process . . . . centered around one software product. Through my experiences, the lack of ownership within the enterprise results in a chain of isolated data islands with only the concerns to perform the isolated activity. MDM is much more than a single data activity or transaction within the operation or a software system to perform said activity.

In the perfect MDM world, naturally not only does the data (product, services, spare parts) adhere to governance, structure of classification, quality and content but also a data structure of location of use. An example of structure could incorporate naming standards for location of use, for example plant or office. Within the plant, the use could be referenced to a department, referenced to a piece of equipment and to a specific location within the department. This type of structure is preset in a MDM plan and will benefit the maintenance data structure. The MDM data plan and structure meets the requirements of the complete enterprise, the purchasing department may only require 5 or 6 data elements but the maintenance department will require 10 or more. This is why Master Data Management requires a complete view of all data concepts and use.

Think of how powerful the analytics are if the enterprise is set up with established standards through governance for plant / facilities location structure, location names, equipment location structure and equipment naming standards. The benefits include the ability to view equipment and spare parts enterprise wide enabling the initiation of common spare parts strategies, spare parts sharing programs supporting inventory planning and reduction.

This type of MDM planning also supports equipment moves or disposals with the view of spare parts associated to the equipment. The spare parts can be packaged and moved or disposed of at the time of the disposition of the equipment. I can’t count the number of times that I have been told that I am not even sure if we still have this piece of equipment that these inventoried spare parts are used on.

Now the beauty, yes I said beauty, is that the required data structure can be set up with templates, written into requirements and contracts to equipment suppliers and when the bill of material data deliverables are sent to the engineering department of the enterprise (entry point) ensuring the data location governance structure is audited and at that point accepted to start the data cleansing and purchasing setup or rejected to fix the data structure errors. Other key data elements are classification, verification, enrichment and translation before the data is setup in any of the enterprise systems.

The by-product of the well executed MDM governance plan is that once the spare parts data is processed, the cleansed record is then propagated into the purchasing system, engineering library and maintenance system. The maintenance system is fully loaded with spare parts information associated to equipment and locations of use ready for the maintenance staff to set up their tasks for the equipment maintenance and planning strategies.

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What do you say to . . . I get all the spend details from the supplier and quote this on occasion.

Thursday, July 29th, 2010

And he continued to say “That’s the area where we would need the least amount of help given that we’ve outsourced these parts ten years ago and the low hanging fruit is not around any longer. What do you say to the outsourced scenario of the management of use, cost and inventory out of control the buying teams”?

My first question is “how you would get information when it’s not in your system”? Does your supplier manage inventory for all of your plants and facilities resulting in a global view of spend? Does your supplier manage your data to the OEM or to suppliers so you have duplicate inventory costs?

Just considering the MRO items, the information could come from engineering or the integrated supplier. Logically, the integrated supplier would have been provided the part information from your company in order to setup and purchase the items in the first place. It is likely that they have the records as they were given them and they are linked to item setup in the purchasing system. The top level source would have been engineering who would have either had the equipment constructed or been responsible for the equipment purchase and the parts along with them. If after or during the purchasing activity the “key” item record is setup in the purchasing system using the part supplier information versus the OEM information, this will lead to item duplication. Duplication then will create overstock, variant pricing, variant lead times and other inconsistencies that add unnecessary cost.

Based on what you are saying it sounds like items in your system are based on either the part supplier data or specifically identified by the integrated supplier (their item number). The best scenario is when the OEM part is what is setup as the key item, having the purchase action to the OEM directly (OEM setup as a supplier) removing the “middle man” cost. Second after that is having the OEM part as the item, linked to the specific supplier(s) for purchase. Local purchase suppliers are still linked to the same item also. Having the same item record used across the enterprise is optimum.

I would also add that there should be a means to discover OEM part information as a reactive purchase need comes from maintenance. Parts are typically identified physically with OEM information. For example an Allen Bradley/Rockwell module with have the Allen Bradley part number physically stenciled on it. If a part breaks and maintenance needs one, there must be a way to find out if that part is in stock and a way to buy it if is not.  We believe that enterprise wide viewable, verified and standardized OEM part information will reduce the cost for maintenance by eliminating the time consuming discovery of part information in your systems and the correct parts are stocked. This approach also enables part sharing between facilities that is limited without common data. Part sharing in turn reduces overall cost through reduction of inventory.  With plants here in the U.S. and worldwide, this type of advanced planning is where the true brunt of the savings come through.

Obviously, much depends on the specific agreements with your integrated supplier. But consider the following questions. If the data stored in your system is not the OEM information then it’s logical to assume that it is data created by the integrated supplier from the OEM data.

    1) How does your company know that the information is accurate? Are there any checks between the data given to the integrated supplier and what you have in your system?

    2) How does your company know if they have the correct parts setup in the system and stocked appropriately? It seems that there is an opportunity for the integrated supplier to setup and stock items which aren’t necessary and would only be discovered through data transparency.

    3) How does your company know that you are getting the best price on parts? Even if there is a cost savings agreement with the integrated supplier, if there are duplicates the opportunity for piece cost reduction is lost when the true usage is not known because of part duplication. 

My second question in this. It seems from your response that everything is running quite smoothly. But is that true in Manufacturing? Do they ever experience loss of production because a vital part could not be found or was out of stock? How about Maintenance? Inventory management? Engineering? These are the departments that should be surveyed because there is a benefit for them too.

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