Understanding Vendor Master Data
Large companies with multiple production facilities, diverse line of products, and complex manufacturing systems frequently work with several third party vendors globally for a whole plethora of requirements.
Due to the inherent nature of their working relationships, these relationships can get complex, with one supplier delivering their products or services to multiple plants or cost centres across the world.
It’s not unusual for enterprise companies to have a working relationship with 50,000+ vendors, and, as one can imagine, managing them centrally can be quite a task.
This is why vendor or supplier master data has become a distinct discipline, with most enterprise and many mid-market companies now relying on a centralized ‘Supplier Master Database’ to manage supplier relationships and key data points.
A supplier database typically contains the below data points, (also referred to as a “Supplier Data Model”) but also generally differs significantly depending on the company and the ERP system they use.
A Standard Supplier Data Model
Supplier ID: A unique identifier for each supplier, allowing easy reference and distinction between suppliers in the system.
Supplier Name: The official name of the supplier, ensuring accurate identification and communication.
Address: The physical location(s) of the supplier, which can include headquarters, manufacturing facilities, and regional offices.
Phone Number & Email: Communication channels that ensure seamless contact with the supplier for orders, inquiries, and issues.
Supplier Type: The classification of the supplier, such as a manufacturer, distributor, or service provider, helping to categorize suppliers based on their role in the supply chain.
Payment Terms: The agreed-upon conditions for payments (e.g., Net 30, Net 60), which helps in managing cash flow and financial relationships.
Certifications & Compliance: Information on certifications (e.g., ISO) or industry-specific compliance statuses (e.g., environmental or safety standards) that ensure the supplier meets regulatory and quality standards.
Business Continuity Plans: Information on the supplier’s readiness to handle disruptions, emergencies, or natural disasters, ensuring that operations continue without major setbacks.
Lead Time: The typical time required for the supplier to deliver products or services, which is essential for planning and managing production schedules or customer orders.
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Benefits of a Reliable Vendor Master?
While we’ve covered the benefits of a well Managed Master Database separately, there are a few distinct benefits specific to a Supplier Master Database.
A Golden Record of "Truth"
Large companies with a poorly maintained database of suppliers often struggle to understand the working relationships and performance of any given supplier.
This can easily lead to a complete mismanagement of the relationship. Expectation mismatches and uncertain volume requirements can easily to lead clouded judgements.
In many cases, as a requirements scale, better supplier alternatives are also available as long as the understanding of relationship is maintained.
This is, by far, the most touted advantage of Vendor Master Data Management.
Take the example of Company A that procures Ball Bearings for its Plant in Michigan from a world-renowned supplier of Mechanical Components – Supplier X
Due to complex organization structures, Company X also operates another entity (Company Y) that specializes in manufacturing and selling Industrial Fasteners.
In a completely independent transaction, Company A also on-boarded Company Y for procuring fasteners for its manufacturing facility in Detroit.
Both these transactions were equally high in Value, however, in neither of the cases, the company could leverage the high transactional value to negotiate better pricing with the supplier.
When scaled across the organization, many such instances surface, thus unlocking value across the board.
A centrally managed vendor master simply allows for easy procurement workflows. The “Golden Record” that we mentioned earlier maintains taxation information, addresses, currency and parent-child relationship between the supplier and its parent.
This birds eye view unlocks previously unknown value from a transactional and procurement standpoint.
A fully maintained vendor master will ensure that procurement, finance and planning teams have a solid understanding and a reliable view of the cost centres, thus being able to better manage spend, explore alternatives or discontinue some processes altogether.
For instance, alongside a well-maintained MRO or materials master data, a company can allocate wear and tear spend towards a specific type of obsolete Machinery that requires repetitive maintenance and spare purchases from the vendor.
Over time, accurate spend analysis will uncover this high cost which will nudge purchasing and finance teams to replace the machinery altogether.
Tax and Legal Compliance: Vendors often require up-to-date tax forms (e.g., W-9 for U.S.-based vendors) and certifications (e.g., tax-exempt status). Ensuring compliance with regulations like anti-money laundering (AML) or sanctions lists is essential, especially for international vendors.
Data Privacy Regulations: With growing data privacy regulations (e.g., GDPR, CCPA), managing sensitive vendor information such as contact details and financial data requires strict protocols to prevent breaches
Challenges with Maintaining a Reliable Vendor Master
As we’ve detailed, the benefits of maintaining a Vendor Master are abundant but enterprises are inevitably faced with operational challenges while trying to ensure that a reliable vendor master is maintained and leveraged for all the benefits it offers
Inaccurate Information
Due to similar reasons, “vendor requesters” or “data stewards” may simply fail to add critical information, or may make errors while updating the information into the ERP system
This can mean an improperly formatted “address” or a missing email address altogether, thus making it challenging to rely on the vendor record and not being able to see the full picture from “One Single Source of Truth”
Vendor Data Duplication
In complex organizations, loosely governed processes lead to duplicate records being created in the system that is often a result of “Human Errors” which, let’s face it, is inevitable.
This is particularly true during critical times, where, due to an inability to find the right vendor, the “requester” simply creates a new record for the “Supplier” and the system simply allows such duplications to surface.
Access Controls
Absence of access controls to the Vendor Master system is also another challenge. The solution for most of the above challenges typically is to implement a solid Vendor Data Governance system that prevents duplication or inaccurate information at its very source.
While there are a range of technology led solutions for Master Data Governance, this one typically means that specific approval workflows will be triggered before a new Supplier is created in the Vendor Master.
This prevents any one single authority from unscrupulously creating Vendor records and paves the way towards maintaining a solid Supplier Master
Standardizing Vendor Data
This point is true not only for the for Vendor Master but all types of master data disciplines. Typically, points of contact at the enterprise front receive unstructured vendor data in the form of a “Short Description” or a “Long Description” and the information contained therein tends to be the value inputted in various fields while creating the vendor record
This process, relying largely on human-first processes tend to go wrong and certain irrelevant data points may be mapped to the wrong fields.
Moreover, in the absence of a solid governance standard, the data can get muddied, thus rendering the Vendor Master ineffective
Activities in Supplier Master Data Management
Broadly speaking, to achieve the benefits discussed above and to counter the challenges that most companies face with respect to supplier master data management, an organization has to solve for these 5 critical challenges
Data Duplication: Due to lack of clearly established communication protocols, the same vendor onboarding request would have been extended from multiple plants, offices or departments leading to duplication
Data Inconsistencies: Conflicting information across the same vendor record, for example different addresses, email address etc.
Incomplete Information: Missing information can be critical or a good-to-have, in either case, ensuring complete information for any given vendor record can be quite helpful for gathering full context o the relationship
Data Structuring: Unstructured information updated in a master cannot be analyzed, copied or used for any sort of automation if the data in unstructured.
Supplier Data Governance: Precisely to prevent the same issues discussed above from recurring, a governance system for supplier master data will ensure that the issues do not crop up repeatedly and data stewardship standards are maintained while creating, updating or deleting data supplier records. We will discuss this in further detail below.
Supplier Master Data Cleansing
Also interchangeably referred to as “Supplier Data Normalization”, is a broad set of activities that addresses key concerns around duplication, data inconsistencies, incompleteness and structuring;
This is generally a recurring activity performed by enterprises. The frequency of the cleansing activity being proportionate to robustness of the Data Governance system.
This exercise is one has historically been human-driven and manual which can turnout to be quite expensive, and worse, prone to inaccuracies.
However, with AI-driven systems and the ability of algorithms to “Comprehend” supplier records, cutting-edge companies in supplier master management have started using artificial intelligence combined with human-led reviews to address most of these concerns
One of the goals of this exercise is identifying duplicates and either merging them or deleting one of them after reviewing them thoroughly with the client.
Duplicates can be classified as L1 or L2 duplicates and can either be readily identified through a unique key; like a supplier TIN number.
L2 duplicates are not readily identifiable and requires a thorough review before they can be flagged as potential duplicates – For example; a vendor with similar name, and an address in the same locality is a potential duplicate or a child entity that may need additional review.
Structuring the data in fixed fields and format is the secondary goal of this exercise. Here too, specially trained AI systems have learned to extract data from free text fields and map them back into structured fields so that automation and analytics based solutions can be introduced.
Data enrichment is another goal of this normalization exercise. During this stage, vendor records with missing data points can be enriched from first party or third party data sources. For example; supplier records with missing TIN [Tax Identification Number] data can be enriched from data sources like D&B
Supplier Master Data Governance
Supplier data cleansing, however, is more of a remedial measure and corrects historically generated issues with a supplier database.
To prevent cost overruns and ensure sanity of data consistently throughout any given time-period, enterprises should focus on “governing vendor data’ at the source systems instead of periodic cleansing.
While technology-assisted systems can play a significant role here, a precursor to using tech is to clearly define data stewardship roles and approvers in an organization.
After which, processes can be implemented and enforced through software systems that integrate with any and all of the source systems
This generally entails;
1. Defining an Approval Matrix: Setting the right permissions – who will be the individual responsible for creating, updating, approving the record creation, how many approvers does a process need etc.
2.Setting Validation Systems: Ensuring that values are validated and follow a pre-defined format, ensuring required entries are also completed before proceeding and ensuring a specific set of steps are completed befre creating or updating a vendor record.
These processes ensure integrity of the database right at the source, thus resulting in a well-maintained supplier master throughout the course of its operation.
In the next section, we will cover some key strategies that companies adopt when it comes to managing their supplier master.
Strategies & Best Practices for Vendor Master
While the strategies required for maintaining a healthy master data have already been discussed, but the strategies that need to be implicated for maintaining vendor master data are covered in this article. There are a few time-tested tactics and processes that ensure the above challenges are minimized, if not eliminated. Employing a SaaS-based technology or AI-driven solutions is a wise move to address some of these chief concerns around Vendor Master Management.
Some of these practices may seem like mere features but they go a long way as far as ensuring a healthy Vendor Master is concerned.
Mapping Suppliers' Parent Entity
Like we mentioned earlier, it’s not uncommon at enterprise companies to have multiple vendors working with the company at any given point in time.
Often times, different silos in the company are simply not aware of this and they aren’t able to benefit from bulk volume discounts that the supplier would otherwise have extended.
Most ERP & Vendor Master Systems have a dedicated field to map the “Parent Entity” of any given Vendor.
Verdantis’ Vendor Master Governance solutions automatically fetches the parent entity details of any given vendor and maps the same back to the source systems to ensure Harmony of the Vendor data.
The SaaS based solution integrates with Most Enterprise ERPs like SAP MDG, Oracle Master Data Management and makes this implementation quite simple
Leveraging Artificial Intelligence
Duplicate prevention, like we mentioned earlier, is one of the key challenges.
Both preventing duplicates as well as cleansing them are welcome moves and leveraging Machine Learning models for this is a great way to standardize any given Vendor master.
Here are a few examples
AI-based models can automatically crawl all the records in a “compromised” vendor master, club records and return grouped records that have the highest chances of being duplicates (with a reported accuracy score)
An AI-based Vendor data governance system, like Integrity© by Verdantis, can integrate with all major ERPs and highlight potential duplicates before they are entered into the system.
Structuring the data from a “free text” field to fixed field. For instance, an AI model can take a full address and extract “City”, “State” or “Pincode” information to properly maintain Vendor Addresses
Deactivating Vendors
Periodically setting reminders to monitor whether the Empanelled vendor is still actively supplying to the company
Extending Vendors Across Production Sites
Most ERP systems onboard vendors and maintain their records for specific production sites, plants, offices or manufacturing facilities. Quite often, the same vendor is also onboarded across multiple locations, a simple system that extends the vendor relationship to multiple plants is an ideal strategy to ensure data sanity and reduce manual workload
Non Source Vendor Data Enrichment
Publicly available data not available in the source systems can be enriched through Automated bots and web crawlers and map them back to the database after a thorough review. This can be a very useful method of collecting data and ensuring completeness.
Software Solutions for Supplier Data Management
All the managerial aspects pertaining to a Vendor Master Database discussed above typically require a solid Software or Platform that directly integrates with several enterprise ERP systems. While the popular ERPs themselves have built-in solutions for Governance & Vendor data cleansing, they tend to be quite rigid and difficult to use. Antiquated UI further compounds this problem as data stewards and vendor relationship managers are left puzzled.
This is where different types of vendor data management software solutions can help address key data management concerns, we list a few types and their examples below
Vendor Master Data [VMDM] Platforms
These are software solutions purpose-built for enterprise companies and solve for data challenges within their “Supplier Master” that exists as a separate module in SAP, Oracle, MS Dynamics and Infor.
The main issue with these is that Vendor Data gets duplicated, error-prone and inconsistent over time, especially with poor data governance systems in-place.
Software Platforms: Developed by Verdantis; Harmonize© and Integrity© solve for Vendor Data Normalization and Vendor Data Enrichment respectively; Informatica’s Multi-domain MDM suite also addresses some of these challenges along with Dell’s Boomi platform
Supplier Information Management [SIM] Platforms
Supplier Information Management (SIM) software centralizes supplier data, automating onboarding, compliance monitoring, and document management.
It streamlines supplier interactions, ensuring accurate, up-to-date records while enhancing compliance with regulatory and organizational standards. Key features include self-service portals for suppliers, real-time data insights, and seamless integration with procurement or ERP systems, enabling efficient and transparent supplier collaboration
Software Platforms for SIM: JAGGAER, Ivalua, VendorPanel
Supplier Relationship Management [SRM] Software
Supplier Relationship Management (SRM) software is designed to help organizations build, manage, and optimize relationships with their suppliers. It focuses on fostering collaboration, improving supplier performance, and driving strategic value through efficient supplier engagement
SAP Ariba: Integrates supplier management with procurement for end-to-end visibility.
Oracle Supplier Management: Focuses on supplier qualification and performance tracking.
Coupa Supplier Management: Offers robust supplier data insights and collaboration tools.
Verdantis’ AI-Powered Vendor Master Data Management suite is the solution of choice for enterprises globally.
You can schedule a 30 or 60 minute demo with our Vendor Master Specialist and learn about the various strategies that you can leverage for making the most out of your Supplier Master
AI-Driven Vendor Data Harmonization & Enrichment
Seamless Integration with most ERPs
Ask for Industry-Specific Vendor Master Case Studies
Optimize your business operations with a streamlined and accurate Vendor Master. Effective vendor data management ensures enhanced compliance, improved procurement efficiency, and strengthened supplier relationships.
By maintaining clean, consistent, and enriched vendor records, you can reduce risks, improve decision-making, and unlock cost savings across your supply chain. Embrace the power of data-driven vendor management to transform your business today!
Conclusion
Vendor master data is a strategic asset that directly impacts supply chain efficiency, procurement data management, and overall enterprise agility. A well-maintained and governed supplier master ensures that vendor relationships are transparent, standardized, and optimized for performance across every touchpoint.
By adopting best practices such as data cleansing, AI-led normalization, and proactive data governance, organizations can transform fragmented and inconsistent vendor data into a reliable foundation for decision-making.
Vendor master data doesn’t exist in isolation—it plays a critical role across broader supply chain operations. As a foundational component of supply chain master data, accurate and well-governed supplier information feeds directly into key functions like procurement, logistics, inventory management, and demand forecasting.
When vendor records are outdated, duplicated, or incomplete, the ripple effects can be felt throughout the supply chain—causing delayed shipments, incorrect orders, and even regulatory non-compliance.
Investing in accurate vendor data is no longer optional—it’s essential for scaling operations, driving innovation, and remaining competitive in a global marketplace.
Frequently Asked Questions
How to Maintain Vendor Master Data?
The integrity of a Vendor master database can be maintained through governance mechanisms and periodic data cleansing exercises along with reviews
What are the fields in a Supplier Master Data?
The fields in a supplier master database differs depending on the ERP system used but certain fields like address, TIN number, email, supplier name, parent entity, company type, language and banking details are common across systems
What is the Purpose of a Vendor Master Data?
The main purpose of a Vendor Master Data is to get a full view of the relationship with suppliers, introduce analytics and automation systems and improve negotiating power while ensure seamless vendor management overall
What is a Supplier Master in SAP?
Present in both SAP S4/Hana and legacy SAP systems, a supplier master is an out of the box module that stores and maintains all generic information of all suppliers for efficient management.
