7 Things You Should Know About Materials Management in the Digital Era

For many companies, the journey towards a smart factory has mainly focussed on digital networking with external suppliers, business partners and customers. Faster communication and more precise order management are amongst the many benefits they have been enjoying.

With the arrival of the next wave of Industry 4.0, companies are increasingly concentrating on internal processes. Artificial intelligence and the Internet of Things should enable intelligent, ideally autonomous business processes in the area of production.

We will focus on one area that is often neglected in the discussion about the next development stage of tomorrow’s smart factory: materials management and the quality of master data. We have summarised the seven most important things you should know about materials management in the digital era.

1. Nothing Works Without Correct Materials Master Data

Poorly maintained materials master data is not uncommon, but at the same time it is one of the main reasons why digitalisation initiatives fail. Many companies are apparently already aware of this: according to a study conducted by the Business Application Research Center (BARC), data quality and master data management are high on the list of priorities for employees and decision-makers who deal with the topic of data in companies.

In order to achieve optimum data quality, you should firmly embed data management as a task vital to the success of your corporate strategy. Correct data is not a nice-to-have requirement, but rather a decisive factor for the operational capability and agility of your company in times of digital transformation. Read more about this in our blog post entitled Four steps to effective master data management in production.

Poorly maintained materials master data is not uncommon – and at the same time it is one of the main reasons why digitalisation initiatives fail.

2. Request Materials: Digital from the Very First Step

It is not surprising that consistently digitalised business processes are still the exception in most companies. In everyday business, rehearsed behaviour patterns and familiar workflows are often characterised by manual workarounds. However, a business process is only truly digital if every single step is carried out without media disruptions from the outset.

The digitalisation of materials management begins with requesting materials. Does one of your engineers often need new materials? If so, then you’ll be familiar with the conventional process – although in many cases this is not even a real process.

The applicant contacts the responsible department by email, telephone or even in-house mail and requests new materials. The amount of time spent coordinating is huge, not to mention the high susceptibility to errors. If you want to avoid media disruptions in materials management, start with the request procedure and provide applicants with a self-explanatory input mask. This means that the initial data is transferred to the central system from the very beginning and can then be monitored and processed from there.

Requests for materials by email, telephone or in-house mail are predestined to be sources of error – digital is far superior.

3. Complete Process Transparency Is Only Available Digitally

Requests for materials are followed by process steps such as testing and approval of the materials. Numerous departments of your company are usually involved in this process and this is where it becomes interesting: you can only speak of digitalised materials management if each individual process step is displayed in a transparent, comprehensible and digital way.

Manual processes require a huge amount of coordination. All those involved must be coordinated so that all relevant material views are properly maintained. In addition to the high error susceptibility of manual processes based on emails or paper, there is also the issue that the current status in materials management is often difficult to track.

In the worst case, the entire process comes to a standstill. Long processing times are the result, and in the end hardly anyone knows what the status of the individual process is. Only a completely digitalised process makes materials management transparent and enables continuous monitoring and control of all processes.

4. Get the Most out of Your SAP Investments

Like most companies in the manufacturing industry, you are likely to have invested in IT systems in recent years and decades. With the help of your SAP system, you can control your business processes efficiently and transparently. However, this system can only be fully effective if the underlying database is correct.

In other words, don’t miss the opportunity to get the most out of your IT just because the data doesn’t really work. With the help of an SAP-integrated software solution for setting up the master data, you can accelerate process cycle times, increase master data quality, create better process transparency, reduce error rates and automate many tedious data management tasks.

5. Digital Helpers Support Data Maintenance

Grown ERP systems are often complex and overburden your employees. Occasional users who do not work regularly with the system and are therefore not very familiar with the user interface often take far too long or make mistakes when creating new materials master data.

Automated tools such as our EASY PCM materials management solution support your digitalisation process and assist your employees with data maintenance across departments – but there is no magic involved! Thanks to the efficient helpers, you can simply create a clean, correct database without duplicates.

6. A Question of Profitability

If you establish order in materials management, you are laying the foundation for the successful digitalisation of all your business processes. The many benefits your company reaps can also be financially substantiated within the framework of an ROI analysis.

Does your company suffer from high indirect process costs caused by many expensive errors in master data maintenance? If so, we estimate that the cost of digitalisation will pay for itself within one year. Other key factors that you should consider when assessing profitability are the number of processes and the number of locations.

For example, a plant manufacturer can quickly create up to 15,000 new material master records per year. If the company has numerous production sites for which different material views have to be created, the process costs for manual processing go through the roof. Here you can achieve a fast ROI through digitalisation.

7. Thinking Outside the Box Is Reassuring and Motivating

Digital transformation is a long-term process and we are probably still at the very beginning. This is not supposed to be a sedative pill, neither is it a reason to sit back and relax. But thinking outside the box provides valuable insights and motivation simultaneously. For example, the Bitkom Digital Office Index has shown that a quarter of companies have still not digitalised a single paper file.

Although 75 percent of companies work with digital content, a quarter has not yet digitalised a single paper file.

The dream of a paperless office is far from being a reality in all companies. In addition, materials management still has a long road ahead of it, even if we have already come a long way. That should give us all real cause for optimism and, at the same time, serve as an incentive to implement the next steps of the digital transformation.

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