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Master Data Management – Implementation Challenges in a Large Manufacturing Industry*

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases - GSMC, 14 Pages

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Master Data Management – Implementation Challenges in a Large Manufacturing Industry

 

The Corporate Apex Committee of Steel Authority of India Limited (SAIL) met on 2nd March 2005 in the Chairman‘s room to discuss conference and review the Enterprise Resource Planning (ERP) implementation proposal of Bhilai Steel Plant (BSP). It was a special meet headed by SAIL Chairman, Mr V.S. Jain along with all the Directors of SAIL, together with Mr R.P. Singh, Managing Director, Bhilai Steel Plant and Mr V.P. Moudgil, General Manager (IT), Bhilai Steel Plant. The Apex Committee deliberated at length on the policy guidelines for IT projects implementation in SAIL and finally approved the implementation methodology for ERP implementation along with a key decision regarding standardization of codes across all steel Plants. The committee noted that:

“Coding is a critical element in any computerized project. In SAIL, the coding structure is different in different plants vis-à-vis supplier codes, customer codes, contractor codes, asset codes, item codes etc. It is agreed to generate standard codes for SAIL to be used across plants/units. The activity of generating standardized codes for various items is to done by BSP and may be outsourced, if required. ERP at BSP is to be implemented using these new codes and the other plants shall follow the same standard codes.”

That day was a red-letter day for the IT fraternity of BSP as they had being privileged to have the first mover advantage among the SAIL units to experiment with an  enterprise wide IT solution. The whole team was at cloud nine......................

Teaching Note Preview

Master Data Management – Implementation Challenges in a Large Manufacturing Industry

 

Importance of Customer and Vendor Data Integration

Business information on vendors and customers degrades quite rapidly. This means that a large quantum of our information on suppliers and buyers may be  inaccurate and hence ineffective for purchasing and marketing functions. These statistics from Dun & Bradstreet are further indicators of the volatility of business data - a new business opens every minute, a new business files for bankruptcy every 8 minutes, a business closes every 3 minutes, a CEO changes every minute, a company name change occurs every 2 minutes. Add to this the additional complexities of a B-to-B database, where not only do you need basic information like postal address, phone and email addresses, but also data on multiple contacts within a company -- purchase decision makers, purchasing agents etc., company site information, not just an headquarters address and more. And this doesn’t account for other valuable data such as purchase history, competitive product  installed etc. Your customer and prospect lists are the foundation of your marketing efforts. 50-70% of your marketing campaign success is dependent upon your list. (Source CISCO Blog)........................

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Abstract

Master Data Management (MDM) is the focal point for large business organizations whose business is driven by information technology. Bhilai Steel Plant (BSP), the  flagship unit of Steel Authority of India Limited (SAIL), is one such organization which embarked upon its ambitious ERP journey in April 2009. To complement the new IT initiative, a master data management program named Uniform Codification System (UCS) was initiated at SAIL which was akin to laying a new foundation for codification of materials, products, services, customers, suppliers and a host of other master codes.

The challenge of deciding the perfect material code for purchased materials like raw materials and stores and spares materials as well as for the saleable products,  semi-finished products and intermediate codes for a manufacturing industry like steel, was a herculean task which had serious ramifications for efficient working of the production processes. A substantial amount of master data related to materials, customers, suppliers and services were to be cleansed, unified and de-duplicated. The problem was compounded all the more because these codes were to come from multiple legacy applications in a variety of formats.

Almost half a decade into the new journey, the sheen of the master data management governance seems to be waning. Issues related to consistency, completeness, duplicity have slowing but surely crept into the codification process. Business process reengineering with respect to the intermediate product codes has to be done to manage the redundant material codes which were clogging the business operations.

The case provides an overview of the master data management initiative, the major challenges of the master data governance program and the decisions taken for a smooth implementation of the project resulting in a quantum jump in operational efficiency of the business processes. The cases also touches upon the business process reengineering initiatives and ends with a discussion on the mid-course corrections needed to keeping the MDM initiative on track.

* GSMC 2014, IIM Raipur

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