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Divided they fall - master data, category strategies and e-procurement tools

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Most of the purchasing functions fail miserably in tightly uniting three important resources together.

Do you face or hear about the situation of procurement with all its might of ERP, e-procurement and other infrastructure element engines not able to crank up enough power to generate delightful performance? Well you are not alone. The good news is that there is enough help, sound approaches and good people available to help you manage such a situation better.

The classic scenario looks like this at the headline level. Most of the purchasing functions fail miserably in tightly uniting three important resources together - standardized and e-commerce centric master data, robust category strategies created based on such data, other external & internal analysis and their flawless execution through ERP/e-procurement tools (e.g. Ariba, Emptoris). Their stakeholders and bosses complain like this. "We have invested heavily into Ariba but aren't getting results; the adoption of these tools is not increasing; I am still not able to know how much is the spend that I incur on third parties" etc.

At a deep dive level, you find that the devil is in the details. Master data is often not "master" or related to sound underpinning standards but remains a "vulnerable deputy" whose form and shape can be freely altered by anyone inside ERPs. Category strategies are cosmetic exercises then, as poor quality data generates poor reports not amenable to generate even good tactics, leave aside the question of any strategy. Last but not the least, e-procurement tools are easily not used or less used to convert robust category strategies and good quality master data at day to day supply planning to fulfilment and performance measurement levels.

So reflect and contribute. You may agree or agree to disagree. Itching to communicate? Over to you.


Completely agree, CK. I have seen organizations who had started off on the path of data classification using UNSPSC or NAICS but over the years cannot rely on the data during category strategy creation due to data cleansing issues.

Great rendering and perspective. Keep moving.

Indeed this is a marriage that needs to work together. Great perspective CK, looking forward to more posts

Very informative!!! Accuracy & classification of Spend data in indirect material is a big challenge. One of the solution is analysis of data by category expert and not by analytical guy.

Completely agree CK. Data continues to be the most neglected area of Procurement for some reason, when it comes to investments.

Definitely agree we face same issues client after client and implementation and post Implementation, Clients need to understand the importance of right classification for the Business and need to invest in keeping data clean over a sustained period of time, post that the benefits achieved from would keep the business case going.

Absolutely agree with this and valid comments too.

Some of the matured procurement organisations (e.g. automobile, retail) do it in a much better way for their direct materials. So we don’t really need to discover new ways of maintaining master data, creating category strategies and using e-procurement tools. The concepts are already available. I think it’s important to understand that why these concepts are not applied to indirect material/services and in other industry sectors.

•The reason master data (BOM, components and usage ) is maintained perfectly in an automobile company not because procurement wants to. This is driven by the engineering division as a good master data is core requirement to design, develop and produce a car.

•Category strategies in a retail company directly decides what goes on shelf and in turn impacts revenue and profitability.

•Efficient and effective use of procurement tools is critical for all direct materials to maintain a lean supply chain and it has impact on working capital as well

My point is – in all above examples the drive to properly maintain these three elements comes from business – It cannot be left as procurement function’s responsibility. And that’s where CPOs need to a part of a higher decision making process

This is so direct yet so appropriate. eProcurement tools appear to be the most important element of the chain although organizations have failed assuming its the master data that's important. Very well and crisply presented.

Good read CK. Clear and to the point as usual !

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