MDM for GMA Forum

FORUM 41G M A / F P A E X E C U T I V E C O N F E R E N C E / G R E E N B R I E R I S S U E 2 0 0 7
M A S T E R
M A N A G E M E N T
By THOMAS WROBLESKI, MANAGING DIRECTOR,
GAURAV GULATI, MANAGER, CONSUMER MARKETS PRACTICE and
MICHAEL FORHEZ, INDUSTRY DIRECTOR, CONSUMER PRODUCTS PRACTICE
I
MAGINE, WHEN THE RECENT PET
FOOD CONTAMINATION PROBLEM
BROKE, , that it would have been
possible to see via a private search
engine exactly what trans-global
trading partner was responsible for a
key product additive that has pet
owners so upset.
Imagine being able to trace the
movement of that additive through
the supply chain at every point up to
and including where the final prod-
uct was on the shelf.
Imagine this, and you can see what
could have been possible in a master
data management (MDM)-enabled
world.
Before MDM
Despite the buzz around “master
data management,” only a handful of
manufacturers and retailers have
truly implemented such initiatives.
In an industry where competition is
fierce, margins are tight, and product
quality is everything, having accu-
rate facts about your suppliers, prod-
ucts, customers and transactions,
including the ability to tie all these
together, has become more crucial
then ever. This article explores how
master data (information) manage-
ment initiatives can empower the
CPG / retail value chain.
“KNOWLEDGE IS POWER,” OBSERVED
FRANCIS BACON IN THE 1600’S. .
Yet, 400 years later we are still strug-
gling to empower knowledge across
our organizations.
In the 1990’s, technological advance-
ments enabled us to capture data
from every transaction that compris-
REDUCING YOUR WORRY QUOTIENT with
DATA
RECENT FOOD SAFETY CONCERNS RANGING FROM SPINACH TO PEANUT BUTTER TO
PET FOOD HAVE BEEN ON THE MINDS OF EVERYONE LATELY –– including con-
sumers and customers, government agencies, corporate boards, and, of
course, shareholders. In the rush to figure out what went wrong, and where
and when, we are seeing –– in the most dramatic way possible –– just how
important is the need for trusted information –– at the ready. IS IT TIME FOR
YOU TO GET SERIOUS ABOUT MASTER DATA MANAGEMENT?

FORUM42 G M A / F P A E X E C U T I V E C O N F E R E N C E / G R E E N B R I E R I S S U E 2 0 0 7
Lead formulation and
implementation of the
strategy and vision of
the company
Create an environment that
enables growth by making
well-informed decisions
Plan, organize, control and
direct overall operation of
the company
Ensure financial stability
of the firm at all times
Make sure all systems
and processes that
impact financial reporting
provide clear and
accurate information
about the company
Serve as a technical
expert on profit and
loss (P&L)
Ensure seamless
integration of people
process, and technology
within the company
Make sure strategic
objectives are supported
with enabling technologies
and methodologies
Lead information
management, security
and quality
More hands-on then the
CEO responsible for
day-to-day management of
operations of the company
Manage overall issues
related to marketing,
sales, production and
personnel
Propose organizational
charges to carry out the
organization’s strategy
and vision
CIOCFOCEO COO
es our businesses. At the time, we
thought that capturing this data
would provide or reveal insights that
would impact the business.
It wasn’t until the earlier part of this
decade that the momentum for busi-
ness analytics picked up and we
began to get a clearer picture, up
from the transaction level, about
consumer behavior. Soon, the prob-
lem became too much data and not
enough business information.
As of today, a considerable amount of
time and money has been spent to
capture and analyze this data, to gain
competitive advantage and to opti-
mize operations from point of manu-
facture to point of sale and even to
point of return.
That said, how does an organization
ensure that it is getting the most value
from all available information,
whether gathered internally or from
second and third parties?
A variety of efforts have transpired
over the past two decades to address
the information quality and reliability
issue, such as:
■ Efficient Consumer Response
(ECR)
■ Enterprise Content Management
(ECM)
■ Global Data Synchronization
(GDS)
■ Collaborative Planning,
Forecasting, and Replenishment
(CPFR)
■ Vendor Managed Inventory (VMI)
■ World Wide Retail Exchange
(WWRE)
■ UCCnet Data Registry
T
HE ABOVE EFFORTS (AND MANY MORE)
HAVE ATTEMPTED EITHER TO ADDRESS
ORTOIMPROVEINFORMATIONMANAGE-
MENT. All such efforts were geared toward
streamlininginformationuponwhichspecif-
ic operational processes relied, often –– but
notalways––withthegoalofcostreduction
and/orrevenueincreasesinmind.
These efforts have created a more effi-
cient operating environment for many
companies and for the industry as a
whole by better managing the costs of
raw commodities sourcing, reducing
inventory levels, improving stock-outs,
and introducing new products, thereby
improving margins.
THE MISSING THREAD TO THE ABOVE IS
MDM, which would make possible a
linking of all these data subjects in
order to gain deeper insight –– and
make more appropriate and timely
decisions about –– our businesses.
To get to this idea, however, one
must put aside a common miscon-
ception that MDM enables only a
single view and/or provides a single
source for products, suppliers and
customers across the organization.
Although certainly true, the vision of
MDM is not just that; it is also the
idea of preserving the quality and
control of information and ensuring
that your organization is able to
KEY STAKEHOLDERS: Responsibilities Tied to Information Management
MASTER DATA MANAGEMENT

achieve trusted, consistent, sustain-
able value from information gathered
year over year.
In addition to the above, we are all so
focused today on decision support
systems (DSS) including replenish-
ment forecasts, customer segmenta-
tion and marketing mix models,
trade promotion optimization and
other efforts and initiatives intended
to help people manage more proac-
tively and effectively.
BUT WHAT IF THESE TOOLS RELY ON
INACCURATE DATA?
Just count of the number of off-line
spreadsheets your teams work with
each month, and it is easy to imagine
the potential for compound errors.
Taking an MDM Approach
ARBITRAGE OPPORTUNITIES IN THE US
FINANCIAL MARKETS LAST ONLY A FEW
SECONDS. MDM has the potential to
reveal similar opportunities within
your organization, opportunities that
may have gone unnoticed for years,
by connecting disparate data that
might not easily be visible or accessi-
ble to those who need or want it.
I
F THE UNDERLYING OBJECTIVE OF A
COMPANY’S LEADERSHIP IS TO
INCREASE SHAREHOLDER VALUE, why
not exploit this untapped resource
and reap its benefits?
Customization of products at the
request of retailers, localization of
planograms at the store level, replen-
ishment models, pricing strategies,
analysis for new product introduc-
tions, product recalls –– the success of
each of these leans heavily on the
quality and availability of trusted
information within the value chain.
CONSIDER THE FOLLOWING: A cup of
yogurt comes in five flavors. A con-
sumer decides to buy one vanilla, one
peach and three strawberry-flavored
yogurt cups. At the register, the
cashier scans the vanilla yogurt and
punches in the quantity as five.
Over time, such false spikes in
“demand” can lead to replenishment
orders that are not aligned with real
consumer demand.
INFORMATION MATURITY MODEL: A Defined Path
Data quality is a strategic initiative, issues are either
prevented or corrected at the source, and best-in-class
solution architecture is implemented. Focus is on
continuous improvement.
Information managed as enterprise asset and well developed
engineering processes and organization structure exist.
Data quality is part of the IT charter and enterprise
information management processes exist.
Awareness and action occur in response to issues.
Action is either system or department specific.
There is awareness that problems exist but the organization
has taken little action regarding data quality.
Level 5
OPTIMIZED
Level 2
REACTIVE
Level 3
PROACTIVE
Level 4
MANAGED
Level 1
AWARE
HIGH
LOW
InformationMaturity,
Accuracy,&Organizational
Confidence
Today, we are all so focused on decision support systems (DDS) (and tools) to help people
manage more proactively ... But what if these tools rely on inaccurate data?

SO, HOW DOES MDM PLAY A ROLE IN
THIS SCENARIO?
MDM helps identify the root causes
of such issues and can enable the right
actions and key indicators. Being
aware of the root cause allows you to
put controls in place to correct errors
and the anomalies that result from
them.
Smart companies are also starting to
develop “leading indicators” that trig-
ger alerts to an occurring change.
Understanding the information flow
across end-to-end processes leads to
improvements in the capture and
traceability of transactions. This can
ultimately yield deeper insights about
your entire business, which in turn
enables a better understanding of
consumer demand.
The question here is: What are you will-
ing to do to ensure a clearer, more accurate
picture of brand, category, product and SKU
level consumer demand?
LET’S EXPLORE ONE LEVEL DEEPER THE
IMPLICATIONS OF MDM FOR PRICE
ELASTICITY MODELS. Many factors play
a role in pricing strategy –– product
substitution and cannibalization,
cross-category sales, material cost,
and –– most importantly –– the con-
sumer’s willingness to pay for any
product on a given day or time.
Not having the ability to accurately
tie together this information within
your organization can lead either to a
surplus or a short-ship. You could
also price yourself completely out of
the targeted market or segment.
Although historical price points for
existing or similar products do give
some insight into consumer demand,
the key determinant is actually the
quality of the data.
Taking an MDM approach would
enable you to identify and monitor
where the breakpoint or inconsisten-
cies in your data lie.
Potential issues could be related to
off-invoice and bill-back allowances,
promotions not being tied accurately
to sales, or to a simple data entry
error.
T
he capacity to identify and take
corrective action before mis-
takes are made can have a
demonstrable impact on everyone’s
bottom line.
As another example, consider the
possible impact of RFID –– when or if
this technology takes hold –– on the
amount of data we will have to man-
age and analyze. If we do not have this
future data house in order, the impli-
cations will be felt throughout the
supply chain.
Successful retailers pride themselves
in achieving supply chain excellence
through the adoption of enabling
technologies and by successfully
incorporating them within the busi-
ness.
But what has really led to their suc-
cess, apart from enforcing strict oper-
ational compliance with their trading
partners? The key element has been
the liberation of information.
Empowered with information (point-
of-sale, loyalty data, store inventory
levels, factory shipments, etc.), manu-
facturers and retailers have been able
to more accurately forecast and
reduce inventory costs.
When you consider the benefits
already realized among trading part-
ners –– with data transparency ––
just imagine the possibilities with
more accurate and reliable informa-
tion across your own organization.
Poor data quality and the lack of an
information management program
not only adds costs and time to the
supply chain, it also limits the ability
of new supply chain programs to
deliver their forecasted value,
whether these are initiatives geared
towards reducing inbound or out-
bound freight, improving direct-
store-delivery (DSD) receiving capa-
bilities, or improving replenishment
times.
CPG companies that have adopted an
MDM approach are able to improve
supply and demand management effi-
ciencies from raw suppliers, through
G M A / F P A E X E C U T I V E C O N F E R E N C E / G R E E N B R I E R I S S U E 2 0 0 7

all points of the distribution channel
up to and including the final moment
of consumer purchase. A recent study
of the benefits of GDS, conducted by
the GMA in 2006, revealed that one
manufacturer’s data audit efforts
resulted in a $2.2 million annual sav-
ings in transportation cost for one
product line alone!
SO, WHAT IS THE RETURN ON INVEST-
MENT (ROI) OF AN MDM INITIATIVE in
your organization? The answer: It’s all
in the approach and who gets involved.
The Nuts and Bolts:
MDM and C-Suite Involvement
MDM IS A POWERFUL EQUATION
COMPRISED OF PEOPLE, PROCESSES, AND
TECHNOLOGY. It is not a one-time
effort, but rather one that is regular-
ly refined and updated. It is also not
just another implementation of a
software application package, but
rather an idea that is embedded in
how you gather and manage data
within your organization.
Successfully incorporating MDM
can lead to improved product quali-
ty, business efficiency, customer
service and, ultimately, corporate
valuation.
The first step on your MDM journey
is a survey to identify the initial set
of pain points, baseline the current
MANUFACTURER RETAILER
Out of Stocks
Shrink
Inventory Turn
Inbound/Outbound
Freight Costs
DSD Receivings
Gross Margin
Time to Shelf
BENEFITS REALIZATION: Key Metrics Improvement

FORUM 47G M A / F P A E X E C U T I V E C O N F E R E N C E / G R E E N B R I E R I S S U E 2 0 0 7
state and develop a business case
that justifies the desired results from
both a quantitative and qualitative
perspective.
This process should include an
impact analysis on the three vari-
ables in the MDM equation (people,
process, and technology) that tradi-
tionally comprise any enterprise ini-
tiative.
The next step includes designing the
future state and strategic roadmap.
This will be followed by the execu-
tion of the required transformation.
Overall strategy around information
management for an organization
generally falls under the responsibil-
ity of the CIO.
H
OWEVER, TO OBTAIN THE
DESIRED IMPACT, THERE NEEDS
TO BE A CONSENSUS across
the entire C-suite in order to ensure
corporate commitment to the consis-
tent flow of valuable, business sus-
taining information.
Why? Because, not only do you as a
business rely on this information, but
our entire ecosystem –– from suppli-
ers of the suppliers to retailers to
consumers to shareholders –– rests
on your ability to operate and report
against reliable data.
Therefore, to empower your organi-
zation with a well-executed master
data management initiative, you will
want to:
■ Look hard at where you fall within
the Information Maturity Model
(IMM), opposite page.
■ Start with the key components
that fall under master data and work
through the entire value chain
■ Understand your data flow as it
relates to your business processes,
including suppliers and customers
■ Evaluate current metrics and con-
sider other possible key measures
The hidden costs in your organiza-
tion will appear in a number of areas.
B
UT THERE WILL BE AREAS TO
CONSIDER OTHER THAN COST-
TAKEOUT. As suggested earlier,
MDM is more than having processes
and the enabling technology where
necessary. It’s about improving, sus-
taining and protecting your business
through a continuous stream of
available and actionable information.
Data Beyond Borders
AS YOU FOCUS ON GROWING YOUR
TOP LINE, IMPROVING YOUR BOTTOM
LINE, CAPTURING UNTAPPED SEG-
MENT(S), and maybe even creating
the best chocolate-coated ginger
mint –– all while setting up manu-
facturing and distribution plants in
China and Mexico –– ask yourself
the following question:
How is my organization going to ensure that
business-critical information is available,
reliable, consistent, and borderless?
Most of the Global 500 have taken
globalization to heart and begun
tackling it head-on. Now is the time
to undertake the globalization of
information to make well informed
decisions that will ensure success in a
world without borders – filled, inci-
dentally, with a world of new con-
sumers.
Francis Bacon’s famous words prove
to be truly timeless: “Knowledge is
power.” ■
EMPOWERING THE ORGANIZATION: How It All Comes Together
LEADERSHIP
OPERATIONS PEOPLE
STRATEGY
Insight
Knowledge
Information
Data
Information
Architecture
Information
Maturity
MDM is more than having processes and the enabling technology where necessary.
It’s about improving, sustaining and protecting your business through a continuous stream
of available and actionable information.

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