What is Master Data (Management) or MDM?

Master data represents the business objects that contain the most valuable, agreed-upon information shared across an organization. It gives context to business activities and transactions, answering questions like who, what, when, and how and expanding the ability to make sense of these activities through categorizations, groupings, and hierarchies.

It can cover relatively static reference data, transactional, unstructured, analytical, hierarchical, and metadata. Also, it is the primary focus of the Information Technology (IT) discipline of Master Data Management (MDM).

Organizations often view master data as non-transactional, but they may encounter gray areas where they consider specific transactional processes and operations as part of their master data. For example, information about customers, products, employees, materials, suppliers, and vendors can be included in master data. In rare cases, if this information exists only within transactional data like orders and receipts, without separate storage, organizations may consider it part of their master data.

The master data required for a logistics process is different from, for example, an accounting or medical process. Logistics mainly involves critical product data such as length, width, height, and weight, possibly supplemented with color, barcode, packaging specification, etc. It is essential to determine what the master data for your logistics process are, which data are of critical importance, and for optimal logistics handling.

Master Data Management (MDM) is a method used to define and manage an organization’s critical data to provide, with data integration, a single point of reference. The mastered data may include reference data – the set of permissible values- and the analytical data supporting decision-making.

Challenges in Master Data Management

A Master Data Management tool can support master data management by removing duplicates, standardizing data (mass maintenance), and incorporating rules to eliminate incorrect data from entering the system to create an authoritative source of master data. Master data are the products, accounts, and parties for completing business transactions. The root cause problem stems from the business unit and product line segmentation, in which the same customer will be serviced by different product lines, with redundant data being entered about the customer (a.k.a. party in the customer role) and account to process the transaction. The redundancy of party and account data is compounded in the front-to-back office life cycle, where the single authoritative source for the party, account, and product data is needed but is often redundantly entered or augmented once again.

Master Data Management (Wikipedia) aims to provide processes for collecting, aggregating, matching, consolidating, quality-assuring, persisting, and distributing such data throughout an organization to ensure a common understanding, consistency, accuracy, and control in the ongoing maintenance and application use of this information.

The term recalls the concept of a master file from an earlier computing era.

Master Data Management is simply the complete management of master data. It includes the cleaning, governance, tracking, and controlling of all master data. Master Data Management consists of processes, disciplines, and technologies.

Master Data Management in Practice

It is a broad concept related to complete processes and business operations. In that broad perspective, Master Data Management is the entire policy aimed at visualizing and managing an organization’s critical data.

MDM collects all these master data in a file that can be made available to departments or officials when necessary. From the world of logistics and order processing, this definition can be translated into obtaining and managing critical product properties so that they become available in the supply chain when necessary.