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“Master” Data Management – The Lean way

Inspired by the spectacular business results enjoyed by Toyota over a sustained period, Academics and
American Business Leaders studied the Toyota Production System and its inner workings. The insights
and lessons from those exercises were incorporated into what is currently now a well-known business
framework called Lean. As a framework, Lean provides fundamental concepts, strategic philosophical
guidance as well as operational tools and best practices that can be applied throughout the Enterprise to
build a World-class organization.

As Lean thinking continues to spread all over the world, business leaders are also adapting tools and
principles beyond the traditional domain of manufacturing, to Supply chain operations, services, retail,
healthcare and even Government. Lean awareness is beginning to take root among senior leaders and
managers in all sectors today. There are applications of these concepts in almost all business functions
today, spanning sales & marketing, managerial finance & accounting, human resource management,
customer service etc.

However, the Information Technology (IT) function that is entrusted with the responsibility of
supporting timely data-driven decision-making for Business Executives has somehow seen tepid off take
of Lean concepts. Also, it is common knowledge that many Lean projects do not involve the IT in their
process improvement initiatives. Why has it come to such a state? The reality of most IT organizations is
that they are chronically over-burdened and reactive, habituated to fire-fighting and problem solving on
the fly. Rarely do they analyze root causes of problem beyond their IT silo, thereby producing piece-meal
solutions that are complex, rigid and easily break with the first change of a given problem context. This
further alienates them from the business users of the IT systems and applications.

We believe that judicious application of Lean concepts to Enterprise Information Management is the
right approach to break this cycle and transform IT into a trusted partner for the business. The following
note is an effort to shine a light on how the key concepts of Lean philosophy map into the master data
management challenges faced by Organizations and how companies (and their IT teams) can apply ideas
from Lean to justify investing in appropriate solutions, tools & technologies that can holistically address
the master data problem. We do not plan to delve deep into the foundational concepts of the Lean
domain, since there is a lot of very good material available for people interested to know more about
this business framework.

IT in Lean: What is Lean IT


There are two distinct ways in which Lean’s applicability can be assessed in the IT domain.

 The application of lean principles to the operations of the IT companies or departments. This is
really about efficiency in IT activities – how do we make better software, how do we upgrade
newer versions faster with minimal disruption to business, how do we better handle threats and
challenges to our data and infrastructure assets etc.
 The effective use of IT in support of Lean Enterprise transformation. What are the information
needs of the different consumers and how are they related? How can we deliver information
timely to decision makers? How do we eliminate redundant data systems? How do we re-
architect our systems to become agile to support changing business needs?

The latter’s scope is the entire Organization and its functions and IT leaders need to especially focus on
this aspect of Lean when it comes to IT – how to become effective first, efficient later.

We propose that the concepts of Lean thinking, especially those around elimination of waste and flow of
information, can be applied to some of the most critical functions of IT operations today. We strongly
believe that IT leaders (CIOs, CTOs, Enterprise Architects, Chief Data Officers etc) should take a much
more closer look at understanding the application of the Lean concepts when it comes to their function.
Especially relevant is the subject of managing master data entities, which we think is one of the areas
where benefits of lean can be highlighted. By embracing Lean ideas to how information about master
data assets is produced, stored, shared and managed over its entire lifecycle, these IT leaders can begin
to transform their function to become a true value-adding business pillar of the organization.

Why master data?


Master data is at the heart of everyday business communication. Where do we ship this consignment to,
who makes the payment, what line items of the order can be drop-shipped, which items are nearing
their replenishment levels, can we approve this customer order based on credit limit policies, which
products generate the most profit margin and why, which regional warehouse had most stock outs the
last quarter, when should we launch a new product – all sorts of operational and analytical questions
and their answers revolve around the context of master data entities such as Products, Suppliers,
Customers, Assets, Work Centers, Locations, Chart of Accounts etc. Master data is employed not just
across the different functions of the organization but also to communicate with partners in the business
ecosystem.

Given its widespread and pervasive usage, master data can provide a long-term source of competitive
advantage when it is mastered effectively. The impact of good master data management can ripple
across many information consumers, both upstream and downstream of the supply chain.

But master data handling in many organizations is in a state of mess. Due to the siloed nature of many IT
systems and applications, master data is stored in multiple places in a redundant manner. This results in
disparate data nomenclatures for the same entity, differing data structures and definitions, inconsistent
use of rules to enforce business constraints etc.

These two factors – importance of master data and current poor approaches to governing master data –
illuminate the urgent need to employ new and better techniques to harmonize master data.

Let’s now turn our attention to understanding the core lean concept of Waste identification and
elimination when viewed from the information management standpoint.
What is information waste?
Central to Lean thinking is the ability to identify and eliminate wastes from the value-creating activities
of the value chain. The classic seven different kinds of waste (Inventory, Overproduction, Transport,
Defects, Motion, Over processing, Waiting) are not too difficult to spot in physical work environments
such as shop floors, but in an IT environment, waste is often intangible and difficult to spot.

In our view, the following types of waste are applicable for processes that manage information.

1. Over production: This manifests in the form of duplicate records that relate to a single real-
world entity. A common example being recording a customer with more than one Identifier, or
creating a Product / Item multiple times with different unique identifiers or keys. The result is
that the data store contains more records than the number of real world entities that the
organization truly operates with.

Another aspect of over production is the redundant storage of master data spread across
multiple backend systems, instances and business units.

2. Defects: This refers to creation of master data records with erroneous values for attributes,
missing information for some elements, partial / incomplete data for certain attributes.
Examples include storing a customer’s address that turns out to be undeliverable, or missing out
on ZIP/Postal codes or creating a new item but without assigning it to any known product
classification etc. When data entry systems do not have sufficient validations and business rules
to enforce at the point of data creation, it often manifests in the form of defective data records.
This renders the master records useless in the consumption of business transactions or
reporting, further downstream.
3. Over processing: In the absence of usable information, data needs to be massaged and
transformed by performing extra operations and consuming additional resources. This would
typically take the shape of costly Extract-Transform-Load (ETL) processes that require
sophisticated knowledge of special tools.
4. Motion: This refers to the additional movement of employees and equipment, required to
accommodate inefficient plant layout, defects, reprocessing, excess inventory etc. From an
information management point of view, a good example of Motion waste is the navigation of
tens of User Interface (UI) screens to create a single Product record in a backend ERP system.
Accessing and closing each screen causes multiple context switches (and lots of mouse clicks)
which makes data entry extremely unproductive and error-prone.
5. Waiting: Business users and Analysts typically wait for data to be batch processed from the
operational systems before they can access data for analysis and business intelligence purposes.
As is explained below, poorly designed processes for data governance & administration cause
delays in making information of the right quality in a timely manner causing the waste of
Waiting.
When master data is inaccurate, incomplete, duplicated and unusable, business processes magnify and
propagate these errors further into other parts of the Enterprise. From a Lean perspective, an
organization that does not manage master data well with end up with inefficient processes represented
as follows:

The waste outlined in the above process adds latency to the key point of getting actionable reports. It
manifests itself as expensive ETL development and maintenance costs of BI solutions. These wasteful
steps permanently leave rework and non value-added stages in the process rather than eliminating the
root cause. And because the root causes of data errors are not eliminated, they often keep recurring
forcing IT to spend significant amount of its time and resources fighting fires regularly.

Making a case for “mastering” data management: The Lean view


By applying a Lean lens to the challenges of data management, IT leaders will realize that a vast
percentage of their current activities aimed at data are non value-adding and waste. When one realizes
that “mastering” data management is really about eliminating waste and making information flow to the
consumers (wherever possible), it brings a whole new perspective to IT leaders who are looking for new
solutions to their master data problems. It helps them to evaluate IT solutions from vendors in a new
light, judging products based on their ability to support lean concepts, rather than just by fanciful lists of
product features & functions quoted by the vendors.

They understand that an effective toolkit for master data management will be one that:

 Helps to eliminate the various information wastes through strong data quality capabilities
 Builds a Process perspective into managing data through the incorporation of robust workflow
features that facilitate collaborative authoring of master data using extremely productive, role-
based User interfaces, while also managing approvals, notifications, escalations etc
 Fosters the setup and implementation of a strong data governance regime supported by
operational data stewardship
 Provides on-demand insight into the hygiene of master data through measurement of user-
defined key quality indicators
 Delivers strong Reporting capabilities around Process performance indicators to measure the
effectiveness of current practices. This process performance data is especially important for
Process Owners and Management and helps in prioritizing continuous improvement initiatives.
For example, by providing insight into the fact that process cycle times for on boarding new
suppliers have shown an increasing trend over the past 6 months, it becomes clear to the IT
team that this is an area where process needs to be improved.

Thus, a Lean view of Information Management can help to make a strong case for investing in tools that
support master data management.

Recommendations:
A) When typical Lean improvement projects such as setup time reduction at a large work center or
layout changes in a manufacturing cell are being undertaken, IT leaders would do well to view
those projects as opportunities to join forces with the business project teams in order to
harmonize the underlying master data pertaining to machines, products, work centers, locations
etc. Because such projects usually involve collection of accurate and detailed data about current
and target conditions for the operations, they present a good opportunity to assess the state of
data in their IT systems and see how it maps to the reality of the shop floor. Once the
assessment reveals opportunities for corrections of master data, a data cleaning exercise
followed by the institution of proper data governance rules will offer IT a more structured
approach to “master” their data management practices.

Both as a beneficiary and as an enabler, IT can thus play an important role in Lean-driven operational
improvements.

B) When creating a business case for justifying investments in MDM systems, mature IT leaders
should complement their financial arguments with insights related to applying Lean Thinking to
Information Management in general, and master data management in particular. They should
present their case in terms of how an MDM project would help establish & strengthen the core
Lean tenets of waste reduction, process standardization, information flow etc to provide highly
trusted source of master data to the Organization. For Organizations that are already on the
Lean transformation journey, this would be a perfect opportunity to incorporate Lean ideas into
a function which has seen very little enthusiasm for lean. For those that are not yet into Lean,
the arguments would expose decision-makers to new ways of thinking about Information
Management practices and help justify investments in tools supporting MDM.
Summary:
Even though Lean practitioners understand the need to extend the Lean philosophy beyond the shop
floor and supply chain functions to build a truly Lean organization across the entire spectrum of the
organizational functions, including the core support function of IT, typically, Lean programs have so far
made very little headway in bringing IT around as a Lean enabler. On the other hand, CIOs, CTOs,
Enterprise Architects etc who are responsible for aligning IT in the support of business strategy have had
very little opportunity and awareness of how they can complement the efforts of the Business teams in
a Lean-driven business transformation.

Shared corporate information entities such as Master data about Products, Customers, Suppliers, Assets,
Locations, etc provide a perfect opportunity for bringing together the Business and IT teams. By applying
a Lean lens, we can understand how the current practices of information management have built in a lot
of process inefficiencies with many non value-adding activities that add cost and complexity to the
whole aspect of information lifecycle management, thus greatly reducing the utility value of information
being stored and accessed by Enterprise Information consumers. By identifying these wasteful activities
and working towards eliminating them through the use of well-designed IT products custom-built to
support Lean operations, Organizations gain a two-fold advantage: While IT can significantly reduce
their costs and efforts to maintain data processes (and consequently, enhance resource allocation
towards strategic IT initiatives), Business teams can accelerate their transformation into data-driven,
Zero Latency Enterprises (ZLE). By delivering such compelling value proposition to both the sides of the
business, Lean Master Data Management approaches have the potential to truly align IT with the
business side.