Why Improving Vendor Master Data Quality is Essential for Business Success - and How Modern Data Management Solutions Can Help
What if your company could boost its bottom line by 15 to 25% of revenue? Or eliminate a problem that's costing the U.S. economy an estimated path="https://www.ibmbigdatahub.com/infographic/four-vs-big-data"$3.1 trillion each year? According to research published in the MIT Sloan Management Review, these are the financial repercussions of poor data quality, which is rampant in companies of all sizes across industries worldwide.
When data quality is less than optimal, employees lose time, firms lose money, and relationships suffer. In particular, the accuracy of your vendor master data impacts your ability to maintain correct financial records and control costs, and it determines how well you understand the business ecosystem you inhabit.
Vendor Master Data Is a Key Unlocking Relationships Within the Business Ecosystem
If your organization's vendor master data is riddled with error, you won't have full visibility into your supply chain—and you'll lack a solid basis upon which to evaluate the performance of your vendors.
In a recent survey, 65% of procurement leaders admitted that they didn't have a clear view of the overall network of vendors, suppliers, and service providers with which their organization does business. Even the most advanced supplier information management (SIM) tools or the most comprehensive enterprise resource planning (ERP) solutions won't give you this visibility if incomplete, outdated, or unnecessary duplicate records are entered into them.
This is risky. Without an accurate overview of supply chain relationships, you won't be able to optimize their value—or avoid those that might do your business harm.
Poor Quality Vendor Master Data Creates Legal and Financial Risks
If vendor master data quality is low, decision-makers may under- or over-estimate how much the company is spending with a given supplier. They'll tend to misunderstand how many departments or business units are purchasing from the same vendor. And they may miscalculate their tax obligations, leading the business to incur fines or penalties.
When it's time for an audit, poor quality data can have lasting consequences. Whether the audit is routine, or your company is subject to additional scrutiny because it's competing for an additional round of venture funding or being acquired, being able to supply correct information on vendors and customers is critical during the due diligence process. In the best-case scenario, mistakes and inaccuracies can introduce roadblocks and delay deals. In the worst, it can lower the valuation of your company.
What's more, poor vendor master data quality can leave your business more vulnerable to fraud. Without accurate vendor VAT validation or banking information at hand, it's more difficult to identify imposters—or vendors who lack the legal qualifications necessary for the job at hand.
Improving Vendor Master Data Quality Means Better Supply Chain Relationships
No business is an island. The better you understand—and more accurately you keep track of—your partners and suppliers, the more readily you can give them what they need, including prompt payment, rapid provision of records and reporting, and efficient ordering.
Other benefits of high-quality vendor master data include:
- smoother technology transformation projects, including easier enterprise resource planning (ERP) system upgrades and migrations (such as to SAP)
- maximize supply chain cost effectiveness and procurement efficiency
- ease vendor account maintenance
- better tracking of digital supply chain and trusted business partners
- more accurate tax reporting
Want to improve the quality of your vendor master data quickly and easily? Today's most advanced data management solutions, including CDQ Data Management Services, can automate the deduplication and cleaning process. They also offer thorough and comprehensive reporting on the quality of your data, and some can even integrate with public records and other third-party data sources to verify your data's accuracy. All in all, better quality vendor master data means fewer errors and less frustration for your employees, and reduced risk—and better outcomes—for your business.
Want to learn more about improving vendor master data to create better supply chain relationships? Check out all the ways that CDQ's Data Management Solutions can help.