Dave Wallis, OFS-Portal’s EAME representative gave a keynote address to IQPC’s 3rd Annual Oil and Gas Procurement Summit in Abu Dhabi last month on the subject of master data management (MDM) in upstream e-business. Wallis described MDM as ‘the elephant in the room that no one wants to talk about!’ But for companies that want to reap the full benefits of e-commerce, MDM is an essential ingredient of ‘data hungry, rich catalogues.’ The need for quality master data is increasingly felt as data volumes rise at between 30 to 60% per year.
MDM is the key to successful inventory search and management. This translates into tangible benefits such as being able to place timely orders for not in stock items and in an efficient supply chain. A balance needs to be found between the effort required to generate and maintain quality master data and the costs and risks. Wallis offered the following quantification of the cost poor data. For every $1M sold, $35K is lost through supply chain inefficiencies. One in four items in a catalogue has an error that costs between $60 and $80 to fix. A man-year is wasted on duplicates for every 400,000 lines of data.
Effort needs to be focused on quality issues such as consistency, ‘de-duplication’, standardizing formats and using a ‘robust’ taxonomy. This is where the American Petroleum Index (API) PIDX standards come into their own (Wallis is VP of EU API PIDX) offering a consistent nomenclature and leveraging the international UNSPSC code set. The crux of ‘e-MDM’ is to understand which data is relevant, what data to use and what to discard. In this context, one size does not fit all. Commodity, specialty and ‘single source’ items all need a slightly different approach.
Wallis wound up with a brief outline of Kuwait Oil Co.’s successful e-MDM initiative. KOC selected IBM’s Maximo to manage its material master, and commenced implementation this year. Data cleansing was outsourced and a quality data set was input to the new tool. Following a review of industry classification standards, KOC went for—you’ve guessed it, API PIDX. More from dwallis@ofs-portal.com.
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