1. Master Data Management for Materials
Prepared By: Surya Kumar Baldwa
In this document we will discuss about Material Master data. We will discuss the
Observations, Problems due to defined observations, Root cause of such problems and the
Actionable.
A) Observations : There are certain Observations in the present material master data which is require
to be analyzed for proper Accounting, Inventory controlling, MRP & Reporting.
1. Profit center: We have some common material which is being used both in EM & HIP.
These materials are assigned with one of the profit center which needs to be corrected
such that any posting can be done at respective profit center only.
2. Split Valuation: We have materials which are having both domestic & import procurement,
also materials produced in-house & procured externally. There are some materials which
are not categorized accordingly and need to be corrected.
3. MRP data: We are running MRP from SAP and the entire requirement comes according to
the information available in SAP, Such information includes Lead time, Minimum order
quantity, MRP controller, Rounding Profile, Safety stock etc.. There are certain materials
which are not having correct lead time, undefined MOQ etc. which needs to be corrected.
4. Material Group: We are categorizing our material with the help of material group. This
information is very useful from reporting point of view. For ex. We are having the material
group resistors, in case we need to find the procurement & consumption for resistors
during the period we can simply find it with material group. There are certain materials
which are having wrong material group which need to be corrected.
5. Others : All other information such as Serial number profile, Quality data, Account
assignment group, Costing data, Storage location extension for materials also need to be
check.
Apart from the four major issues described above all the other issues such as conversions, material
duplicates will also be addressed during the correction process.
B) Problems : There are certain problems which we are facing due to above observations
1. Wrong profit center will get to wrong reporting & accounting in terms of profitability
analysis on basis of segments.
2. The uncategorized material in terms of origin and receipt leads to wrong accounting and
because of this we will not be able to get reporting for purchase and consumption on the
basis of origin and nature of purchase which is an important part of audit and balance
sheet. It will also lead to wrong accounting.
3. Wrong lead time may lead to wrong purchase requisition in terms of release date etc., also
if the MOQ is not defined then system will not be able to generate PR’s etc. It will lead to
wrong ordering and inventory controlling
4. Wrong material group will lead to wrong reporting. This will also play a major role where
we are proposing the purchase requisition release strategy based on the Material group
basis.
5. Wrong account assignment group can lead to wrong accounting in sales transaction,
wrong storage location extension can lead to wrong postings.

2. Master Data Management for Materials
Prepared By: Surya Kumar Baldwa
C) Root Cause analysis: There are certain reasons which results in such problems in material master.
1. Material created with reference to another material but the information not changed for
copied material.
2. Material created for EM is either used in HIP BOM or Vice versa.
3. Wrong profit center assignment.
4. Material not defined with valuation category.
5. Material defined with valuation category but not at all plants.
6. Wrong valuation class assignment with valuation type.
7. Information not provided by the respective buyer and the master creator put the values as
per his/her choice.
8. Material group not provided by the requester.
D) Action Points :
I) Immediate
1. Identify the materials with incorrect data and need to be corrected. In this we need to
analyze which material master data can be corrected with the existing master data & which
materials need to blocked. (MRP data can be corrected without any prerequisites but the
accounting data such as profit center, Valuation class can be changed only when there is no
stock exist for the material and also there must not be any transaction done in previous
period).
2. Implement any checks if required in the material master data maintenance.
3. Correct the existing Material Master data.
4. Create the new Material Master data for the blocked Material Master data.
5. Replace the New Material master data in the Bills of material.
6. Replace the New material in all open PO’s and open PR’s , wherever required production
order will also be changed.
7. Transfer the stock of old materials in new material.
II) Long Term:
1. Bring more checks in the system by introducing some mandatory fields for ex. Valuation
category, planned delivery time, safety stock etc..
2. To introduce the Material master creation format where the entire respective material
master view owners (Respective department) need to provide information.
3. Material Master Data must be reviewed frequently for any discrepancy.
III) Standard Operating Procedure:
The standard operating procedure need to be defined keeping views from the entire
respective department with the predefined responsibilities of all the respective process
owners for maintenance and changes in the master data.
IV) Review Mechanism:

3. Master Data Management for Materials
Prepared By: Surya Kumar Baldwa
Material master must be review for all the above observation on frequent basis and
Close watch on any transactional errors and issues must be check for any corrections and
Changes in the material master.
E) Project Plan : To execute the material master correction we will be working in accordance with
below mentioned project plan
S.No. Activities Time Line
1. MDM Approach Note 05.04.2014
2. Material Master Approach Note 15.05.2014
3. Meeting with HOD’s & approval 31.05.2014
4. Team formation 10.06.2014
5. Identification of incorrect Material Master data
30.09.20146. Correction of Material Master data
7. Review for GAP & Correction
8. Prepare SOP for Master Data Maintenance 31.10.2014
9. Prepare Review mechanism document
F) Impacts : Correction of master data will have the following impact
1. Old Material Number will be blocked across all the plants
2. New material number will be created across all the plants
3. All open PO and open PR will be replace with new material number across all the plants
4. All BOM will get replace by new material number across all the plants
5. Stock of old material number will be transferred to new material number across all the
plants
6. Duplicate raw material for different profit center across all the plants
G) Benefits: Correct Master data will benefit organization in the following ways
1. Accounting: It will help to get the reports directly from the system without making any
outside calculation.
2. Profitability Analysis: Correct profit center in the master data will give correct statement
for segment wise profit.
3. MRP Run: MRP results will be more accurate and the correct delivery time will have more
efficient inventory control.
4. Time: It will reduce the time for preparation of MIS, Balance sheet etc.
5. Business Intelligence: Correct data will help to think more strategically and analytically.