Companies using electronic data interchange and other tools supporting supply chain management are increasingly encountering the problem of master data incompatibility within the chain. The same products have different names and different descriptions among various trading partners. They are accompanied by a more or less complete set of data describing product parameters and packaging methods. This problem has always existed, but it was only the application of modern methods to improve supply chain management that revealed its key importance. It is a bit like wanting to drive a modern car quickly to a place where there are no good roads and properly marked highways. On bad roads, even the best car will travel at the speed of a tractor.
Inconsistency and inaccuracy of data in product descriptions between trading partners is a significant factor that substantially reduces the efficiency of the supply chain in all its links. This is particularly visible in large companies where processes run through many internal departments and involve numerous external partners. Managing the flow of goods then requires the exchange of data between many IT systems, and if the information is not synchronized, errors and inaccuracies are unavoidable. Having the same product named differently in various systems causes unnecessary friction and stagnation both in transactions taking place in the supply chain and in relationships with business partners. This friction can be purely informational or cause a slowdown in the supply chain, for example, through the issuance of incorrect invoices or the shipment of the wrong product. Regardless of the nature of the data inaccuracy and the consequences it causes, every error requires manual intervention, which causes delays in the supply chain, increases transaction costs, and thus reduces market opportunities.
This problem was already noticed in the 1990s, when companies realized that their functioning was significantly hindered by the fact that they used different terminology, protocols, and forms used to describe and store product data. Each of these companies, instead of one universal language, used its own jargon, incomprehensible to others. The result was widespread inefficiency of supply processes and an inability to cooperate on anything other than superficial principles.
The article comes from the magazine “Logistyka” 3/2007.