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Customer and Supplier are NOT Master Data Entities!

This post was prompted when I received some feedback after I ran a webinar on MDM.  The feedback highlights some of the structures and thinking surrounding some MDM ‘solutions’ that, contrary to what they are sold as doing, actually contribute to MDM fragmentation.

Have a read of the feedback and my response and let me know what you think.

“John, It was a nice presentation and very different thought process from the traditional thinking of MDM implementation although I am not convinced on some of the concepts around modelling. I have been using SAP MDM for past 8 years and SAP standards data models are restricted by entities like customer, vendor etc. and never created as a single model for party.

Based on my experience it has worked great to have models based on entities as they address needs of different business functions, different set of hierarchies being followed by for each entity and there attributes of entitiy specific to banks, sales, contacts, address linked to the relevant functions they have been used.”

My response to this was as follows.

Thank you for your feedback. It is remarkable how so many ERPs and MDM packages (even mainstream packages) have made the huge mistake of modelling and implementing Customer, Vendor, etc. as separate Master Entities!

The reality is that these are not Master Entities. They are merely Roles played by the true Master Entity ofParty, as are Roles  such as Agent, Guarantor, Referee, Employee, etc, etc.  This fundamental modelling error is one of the main causes of MDM fragmentation globally. 

This is not just an academic modelling error. It causes huge operational problems and can also put enterprises at serious commercial risk.  This is most apparent in sectors like insurance where one Party can play many roles in a life insurance policy, such as Purchaser, Guarantor, Beneficiary, Agent, Authoriser, etc.

The approach that the packages you mention take would create each of these as a different Master Entity and expose the enterprise to significant risk.  I have even seen the crazy ‘Data Quality’ solution to this of trying to identify where a Purchaser, Guarantor, Beneficiary, Agent, Authoriser have the same name and try to ‘link’ them!!!  Why would you be crazy enough to create them as five separate entities and then see if they are the same thing?  All, you have to do is create one occurrence of Party and assign all of the necessary Roles to that Party!

This whole problem is acerbated and perpetuated by the silo mentality that pervades so many enterprises. People in Sales only see Party in the Role of Customer and people in Purchasing only see Party in the Role of Supplier and, with this myopic and blinkered view, many actually come to believe that these are different things.  Others just don’t care.

Identifying Party as the true Master Data Entity is crucial in achieving true MDM and eliminating the pains and losses that this causes enterprises worldwide.

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Work With Me

If you would to work with me and prevent these MDM Fatal Errors occurring in your enterprise then  email me at john@kiwi-dreams.co.nz  or Skype me on johnowensnz. I look forward to connecting with you.

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