Incorrect vendor master data entails the risk of incorrect payments. Nevertheless, a large proportion of companies have little or no insight into the extent to which incorrect vendor master data affects their business operations. The completeness and accuracy of this data is at the heart of all processes. How do you get, and more importantly, how do you maintain this data under control?
An annual increase in data contamination
Data is aging rapidly. Every year, 30% to 40% of the data in databases mutates. Companies move, merge, or change names and contacts change jobs. But few managers have a full understanding of the impact of incorrect data on their teams and departments. Therefore, they are unable to give data quality the attention it deserves. SpendLab Recovery observes an annual increase in data contamination among its customers. In fields related to supplier master data this is between 3% and 8% a year.
We notice that the largest percentage of data contamination is due to the fact that regular contact fields are not kept up to date across different data sources. An underestimated risk, which keeps things under the radar. And this is precisely one of the bottlenecks of master data.
The role of the supplier
The supplier plays an important role in maintaining his data correct. The supplier is expected to actively pass on updates. In addition, it is important that these updates are checked and confirmed by the supplier.
Most companies have a centralized process for setting up suppliers. However, once they are created, there are additional multiple departments who own and use the data. This co-ownership makes it challenging to assign a single accountable for maintaining the up-to-date information. Additionally, the problem gets amplified as the data starts traveling and is hosted in multiple data sources. Not to mention that the supplier also has now multiple contact points within the organization.
The importance of vendor master data management
Vendor master data management includes managing the suppliers. When talking about thousands of suppliers within the organization, it can be tempting to simply focus on the ones that seem most strategic and profitable. After all, they provide the maximum return on investment. However, all suppliers and their correct master data must be included in the scope of vendor master data management.
Vendor master data management ensures efficient vendor management. This is essential for all companies, as they need multiple vendors for procuring services, goods or raw materials. Thanks to the additional value that vendor master data management brings, it helps strengthen relationships with suppliers and supports them to be successful, not to mention mitigating incorrect payments.
The challenges in vendor master management visualized:
It is important to remember that suppliers are not made up of only data, but also of real people. Building valuable and genuine relationships with them will only help in the future, and having accurate and complete master data remains the most important route to achieving that.
Does this sound familiar?
To help clients with this, SpendLab Recovery implements a ‘Vendor journey approach’ in AP recovery projects. Specifically, this means that we put the vendor at the center of the process. A vendor’s raw data is then categorized from the various data sources. This approach provides unique insight into the vendor’s risk profile.
Want to know more?
Would you like to know more about the importance of correct master data? Please contact us; we are happy to help.