Master data management using the NIGP Code
Why is it that some governmental entities have data files that are in disarray and resolving issues is neither quick nor easy, while other entities have no such problems? The answer lies in the management of master data.
To understand master data, let’s take a step back and look at the various types of data generated by governmental entities:
- Unstructured — data found in e-mail, memos and other non-indexed media.
- Transactional — data related to requisitions, bids, POs, invoices, inventory issues and other monetary transactional information.
- Metadata — data about other data such as XML documents, column descriptions in a database or vendor categories like MBE/WBE status.
- Hierarchical — data storing the relationships between other data, such as the general ledger chart of accounts or the NIGP Commodity/Services Code. Hierarchical data often is the keystone to describing relationships between disparate pieces of data.
- Master — representing the critical nouns of an organization, master data falls generally into four groupings: people (users, vendors), things (items), places (departments) and concepts (master blanket agreements).
This master data type is the foundation of procurement, as it fundamentally drives the process, e.g., departmental users (people) order an item (thing) from a master blanket (concept) which results in a PO (transaction) which follows an approval path (hierarchical) and is associated with an NIGP Code (hierarchical) being sent to a vendor (people) that is an MBE vendor (metadata).
Managing master data
While the topic of managing master data can (and does) fill books (see source on next page), troubles can stem primarily from a few fundamental steps:
- Understanding the sources of master data — Many organizations do not fully comprehend where the data originates and where it resides. One organization for which the NIGP Code group is coding inventory continues to find agencies and departments with “shadow” inventory systems, pointing to redundant warehouses and excess products held on hand.
- Understanding the producers and consumers of master data — This can take a variety of paths depending on the centralization/decentralization of responsibilities and authorities within the agency. A highly decentralized organization may have significant challenges if a common methodology is not adopted.
- Understanding the metadata associated with the master data — For example, the NIGP Code can be used as a metadata component to tie inventory items to master blankets, vendors to spend data and MBE/WBE goals to actual purchasing trends.
- Understanding the need for data stewards — This is a critical step in which governmental entities typically fall short. Procurement organizations must affirm their role as data stewards for the master data related to purchasing functions. Too often, procurement professionals will cede this role to IT or finance, only to find later that IT and finance will organize and maintain the data in a manner that is most convenient to them, not what makes best business sense for procurement.
- Understanding the need for a data governance model — The creation of a governance group and a model for the management of master data is key to effective operations. For example, the state of Washington has an NIGP Commodity Code Data Standards document and process in place. The document covers stewardship responsibilities, statutory authority, scope, standards and governance for the state in relation to the implementation and use of the NIGP Code.
How can the NIGP Code help?
Is the NIGP Code the silver bullet to solve all data woes for an organization? No. Can it be a tool to help tie together seemingly disparate pieces of procurement data? Absolutely. We often say the NIGP Code is the thread that holds together the quilt of public procurement. As a hierarchical structure, the Code can be used to:
- Provide a classification structure for vendors;
- Provide a stock/master item numbering schema;
- Provide a construct for workflow processing; and
- Provide a metadata framework for reporting.
The process to implement a comprehensive master data management process can be time-consuming and at times difficult. Too often the responsibilities and the corresponding implications are swept under the rug in the hope that no one will notice the growing lump in the middle of the room. Procurement, as both a customer and as a provider of data to the organization, must demand the processes and frameworks to ensure data quality — or suffer the consequences of garbage-in-garbage-out.
SOURCE: “The What, Why, and How of Master Data Management,” by Roger Wolter and Kirk Haselden, November 2006.
About the author
John Walters is the president of NIGP Code Services at Periscope Holdings, the custodian of the NIGP Code on behalf of NIGP. He has been involved in public procurement since 1997 and has served as a consultant, trainer and speaker. Contact him at email@example.com.