Your company may be considering moving to SAP S/4HANA, but pockets of cynicism probably still exist about ERP and its benefits. Building broader support requires listening and addressing concerns. This blog is about one of those topics of cynicism—weak material master descriptions that harm maintenance and supply chain performance in the energy and utilities businesses. I limit my discussion to maintenance, repair, and operations (MRO) material catalogues in the energy and utilities space (where I’m experienced), but I suspect these issues will resonate among a much broader base.
Digital transformation may be the journey you want to be on and SAP S/4HANA may be the platform you've identified to get there, but marketing concepts do not address the maintenance manager who says, “My team spends too much time on confusing materials searches and we end up with too many wrong materials that raise costs and risk production.”
If you’re just going to “load what you have” like your company might have done when you launched SAP or any other third-party projects, then you’re going to get the same poor results. Your maintenance manager will likely respond, “I’m not interested in a new ERP system. Save the big bucks on your fancy new system because it won’t address my real problems.”
Getting to the Root of the Problem
There are two main areas of concern with the scenario above:
- Material master descriptions are unstructured, lack standardization, and are arbitrary. All of this makes user searches problematic.
- The material master life cycle is not integrated with the life cycle of the assets they support. This opens the door to adding items arbitrarily and often without consideration of a maintenance, procurement, or stocking strategy. Poor descriptions compound the problem, because weak identification masks duplicates.
These are long-standing industry problems. Understanding the root causes, however, means they are fixable. There are a few steps you can take to lead to a high rate of return on your investment and to earn you converts for the journey to SAP S/4HANA.
5 Steps to Transform an MRO Material Master Catalogue
Step 1: The first step is to define and approve your Material Catalogue Description Standard. A useful standard has a set of nouns, each with associated modifier terms and their defined key attributes in a set order. This provides a predictable structure or metadata to identify items. A standard must do more than be mapped to a broad standard like UNSPSC, PIDX PIDD, or eOTD. In terms of explicitness, these are barely better than saying your standard is mapped to the English language. A coherent standard will:
- Show which synonyms are allowed and their mappings;
- Show which hierarchy levels are used as nouns in particular cases (example: Chemical versus Glycol); and
- Have rules defining when and how collective nouns are used (example: Kit, Assembly)
Step 2: The second step is to rationalize which material masters are valid. Use historical transaction data from your ERP to determine which items are unnecessary going forward and flag them for deletion. Define specific criteria to determine redundancy. Anecdotes have shown 10% to 50% of your items may be unidentifiable or obsolete. Actual deletion of material masters is very challenging because of archiving dependencies. Adapt material search methods so that only valid current materials are presented in business user searches.
Step 3: The third step is to apply the approved description standard to the remaining items. Decide on the appropriate tools and methods for this step. It may be supported by specialized data cleansing consulting services, or possibly combined with either master data loading software or a master data governance software system.
Step 4: The next step is to align your material master life cycle administration and asset life cycle processes so they are integrated. This is very important to get the operations of new major projects working effectively from when they are commissioned and started up. It also helps with legacy operations. If you add hundreds of materials each month without new assets, check the material master-asset life cycle disconnect. This step may be the most challenging, as it integrates parts of companies that have historically been disconnected.
Step 5: The final step is to enhance your governance processes.
While moving to SAP S/4HANA may be your best path to digital transformation, don’t ignore the bridges from the digital core connecting to your people. They are part of the system that either works as a whole or underperforms on your expectations. Transform your MRO material catalogue so that it represents the items currently needed to operate and maintain your assets and has coherent structured descriptions. This will not only help you upgrade your ERP on its own, but also complete an important step on the road to successfully implementing and getting what you need from SAP S/4HANA.
Register today to join your peers at the SAP for Utilities conference, Oct. 21–23, in San Diego. Or register for the ASUG Experience for Enterprise Information Management (EIM) Oct. 28–30 in Minneapolis to learn from peers how to manage your data and meet business goals.