ERP Master Data: A Lifeline for Medium-Sized Business

Now that you are a medium size business, you are most likely smarter; the really key ERP question is whether or not you are wiser. “Smarter” means that you are consciously competent about how your business makes money, what decisions have turned out to be very profitable, and how your processes fit together to ensure efficiency and teamwork. “Wiser” means that you can look at those past success factors, at your predictions of industry and macro-economic trends, and your growth aspirations to determine whether or not you have a viable plan to get from here to there. The achievement of this wisdom comes down to how well you manage ERP master data.

For instance, suppose that domestic sales growth is leveling off, after twelve straight years of double digit growth. You might look at that nugget of ERP master data and interpret it as being an off-year and statistical fluke; there is no reason for growth to plateau. On the other hand, you might conclude that you have saturated pretty much everybody for whom your product or service is an advantage. If you opt for the latter, then you need to take steps to increase your potential market, either through (a) growing your product offering (b) growing your distribution or (c) acquiring someone who would be a good fit.

Skills & Strengths

Suppose under category (b) you make a strategic choice to begin exporting, and growing your distribution by penetrating global markets. You could make that decision in a vacuum, but the better business approach is to assess how effective you would likely be, given your skills and strengths. For instance, if there is no one on your payroll who speaks a foreign language, no one in your shipping department who has ever prepared documentation for an ocean going container, no one who understands doing business in foreign countries, that decision might be ill advised. Likewise, if your ERP system cannot easily support exporting, it might be a poor choice.

What does “ERP…support exporting” mean? It means that ERP can work in multiple currencies and generate orders, invoices, and other pertinent documentation in a foreign currency, if you choose to sell that way. It means that ERP has the capability to utilize other languages in documents. It means that ERP has the capability -or can accept third party software – to handle VAT taxes, harmonized tariff schedules, and incoterms. It almost certainly means that ERP has the ability to conduct business in metric terms as well as English. You need to bake the availability of this type of system support into your thinking. All these functionalities boil down to how well ERP master data is communicated B2B and B2C.

The same thought process is required if you are considering reigniting growth through acquisition. The single most important action in causing two separate companies to act as one is to standardize the ERP systems they use. It isn’t essential to keep your ERP system; what is essential is to only have one system of record. Without this unified system, ERP master data will be a minefield of uncertainty.

Strategy is not easy. Thinking through how your ERP master data informs your business strategy will help you grow from medium to big.

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Richard Barker

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Richard Barker