September 27, 2010, 11:04 AM — Many of today's cost-conscious food shoppers buy store brands -- like Costco's Kirkland or Stop & Shop's Nature's Promise -- rather than national brands. Industry figures show that nearly 1 out of 4 products bought in U.S. supermarkets last year was a private-label brand.
For Daymon Worldwide Inc., which helps retailers market private brands, the industry boom required a major overhaul of IT and business processes to support 5,000-plus suppliers, over 120 retailers and 500,000 products. "We've had to quickly change to stay ahead of the market and keep up with growth," says Abhishak Beniwal, senior director of IT.
A key step was to get control of the company's sprawling collection of product and supplier data, by using a set of processes and technologies called master data management (MDM).
Case Study: Health Care Service Corp.
Implementers are quick to say that master data management initiatives are only as good as the processes and people surrounding them. To that end, Rick Biederstadt, divisional vice president of enterprise information strategy and management at Health Care Service Corp. (HCSC), took steps to ensure that momentum would continue on the organization's MDM initiative.
The health insurer turned to MDM primarily because it wanted to start viewing its 12.5 million members as individuals, rather than as a big collection of members, and to lower health care costs by supporting each individual's wellness. That goal required creating a unique identifier for each member and collecting profile data in one place, to enable a 360-degree view of each person's interactions with the health care system, Biederstadt says.
He chose MDM technology from IBM for the project, which began in early 2009. By July 2009, HCSC had completed its first data load and established governance processes. By late 2009, the MDM system had gone live and, according to Biederstadt, was generating business benefits.
For instance, obtaining a single view of a member led to better retention and improved customer satisfaction scores. The improvements in data management also reduced the organization's exposure to regulatory compliance penalties.
These successes would have been impossible, Biederstadt says, if the overall culture at HCSC hadn't also undergone a transformation: As part of the MDM effort, employees were encouraged to embrace accurate customer data as an important corporate goal.
The key was changing the mind-set of employees about who owns the data, a change that requires executive sponsorship, careful governance and continual communication. HCSC even had cards printed with a capital "E," for "Enterprise," and asked employees to affix them to the back of their ID badges. This was meant to remind them that data is an enterprise asset, Biederstadt says.
"When people started to think locally or divisionally about data, we asked them to turn their badge around," he explains. "Anyone could hold up their E card and start thinking of data belonging to the enterprise again."
--Mary Brandel
Before Daymon began its MDM initiative last year, its product and supplier information was maintained by numerous people in 200 offices around the world, and each change had to be made directly in every line-of-business application.
Today, one centralized group validates the data, which flows to an MDM system from Kalido Ltd. The data is stored in an enterprise data warehouse and is routed to the appropriate line-of-business applications. Invalid or incomplete data is routed to the right individual in the business who can correct it, to maintain data quality.
Now, when a new product is introduced or new packaging is requested, the change is "a simple business exercise" that can be accomplished without touching operational systems, Beniwal says. Furthermore, the cost of managing supplier information has decreased, and Daymon can move into the types of advanced analytics that will enable it to capitalize on future growth opportunities in the private brand business, he says.
So, What Is MDM?
As companies such as Daymon tackle today's business challenges, many are facing the hard truth that they need to go back to the mountains of poorly managed customer, product, supplier and employee data that has accumulated over the years and make some sense of it. That's where MDM comes in.
In a recent survey of 131 companies by analyst firm Information Difference Ltd., 42% of respondents said they had implemented or were in the process of implementing an MDM project. Nearly one-third reported having deployed two or more MDM programs. Just 22% said they had no plans to implement MDM.
