The three pillars of retail Master Data Management
We have already explored “What is Master Data Management”, if you haven’t read that article we suggest you do so first as we will be applying some of that theory in a retail setting here. In retail, a Master Data Management strategy is grounded on three critical data sets: Product, Customer and Supplier. In this article we will explore what each data set contains, why they’re important and, finally, the benefits of good MDM when applied in a real-world retail environment.
As we explored in our first article any data set can be split into three broad categories:
- Master data: Creating the ‘Golden Record’. Tying together the unique identifiers that relate to the object in question. In retail this might be a product SKU code, or item barcode.
- Reference data: The associated attributes that describe the object in question, such as supplier name, product dimensions, VAT rate, etc.
- Transactional data: The data that relates to the business-critical activities associated with the Golden Record. In retail this might be price adjustments, promotional activity, margin integrity.
In the retail environment, the product data is the nucleus around which all other data sources are formed. Creating a master (or golden) record for your product data will save time and money in a real and practical way, as we will explore later.
Customer data is often talked about as CRM, Customer Relationship Management. In this data set you will find all customers’ personal information, contact details and transaction history. Advanced CRM will use this to predict specific customer habits and customise promotions. Nectar is a great example of this. Other retailers, with less advanced systems, might use CRM to segment their customers based on loyalty or spend. Either way, the advantages to the retailer are clear; greater customer loyalty, higher value of spend, increased frequency of spend
Having good supplier data builds trust. Supplier-retailer relationships built on trust are less transactional and more collaborative meaning both parties are better placed to succeed. The basis of this trust is the golden record for products being supplied and sold. Shared visibility of trusted data sets, with the proper governance, enables smooth and accurate invoice reconciliation, leaner stock management and margin protection on both sides.
But why is all this so important to a retailer? What is wrong with how it has always been done? Experian reports that 69% of organisations agree that inaccurate data itself undermines their ability to provide an excellent customer experience. GS1 values the data opportunity at around £21bn in the grocery sector alone. They go on to suggest that suppliers who adopt MDM practices stand to increase their sales by up to 3%, whilst simultaneously decreasing their cost of sales by 5%. With numbers like this it is easy to see why retailers who adopt MDM as the foundation of their business are better placed to succeed compared to those who don’t.
This article is part of a series aimed at demystifying the sometimes-complex world of Master Data Management. At rascal we work hard to avoid jargon and make our approach as clear as possible. To discuss how we do this, or to suggest a topic you think needs clearing-up, please get in touch.