Digitalization has shown that it is possible to make processes and decisions more intelligent, but it has also made it clear that bad data makes the Purchasing sector even more inefficient than before, when these processes were manual.
Furthermore, in an increasingly digital world, dirty data harms negotiations, relationships with suppliers and, most importantly, decision-making, which becomes inconsistent, increasing risks and negatively impacting business. The problem is that few companies know the real cost of this incomplete data., outdated or simply wrong and how vulnerable they are to the risk of supply shortages due to choosing a supplier with problems.
According to a study by Kaggle, a platform focused on data science, 49,4% of professionals in the sector stated that dirty data is the biggest barrier to implementing an artificial intelligence solution in companies.
And, of course, this has practical consequences, such as closing a contract with a supplier, believing that they are operating normally, efficiently and meeting deadlines, and discovering that the company was close to bankruptcy, with delayed salaries, debts to several banks and with several late deliveries.
Lack of visibility
Dirty data can obviously harm the factory floor, causing unscheduled interruptions due to lack of inputs, due to supply problems not detected in time. In other words, this creates an unexpected cost, since the company will have to look for a new supplier, make an urgent purchase and pay more for it, in addition to running the risk of delaying the delivery of the product – which is no longer being produced – to the customer.
This lack of visibility and knowledge about the supply chain itself can have tragic results for the company's reputation, problems with product quality and, consequently, losses in customer satisfaction.
Unfortunately, many companies only realize this problem too late, when their decisions prove ineffective and costs spiral out of control. And this can turn into a vicious cycle: bad data leads to bad decisions that further undermine confidence in the use of information held by the company, further damaging decisions…
What to do to avoid problems?
According to IDC, by 2020, humanity had produced around 400 zettabytes, or 40 trillion gigabytes, of data. Each person produces 117 gigabytes of information per year, and the projection for 2025 is that this number will reach 300 gigabytes. So, the challenge of keeping information clean and reliable is enormous.
Database hygiene is closely linked to how a company manages corporate information. For example, whether data is stored in separate databases and how often this information is checked to eliminate inconsistencies. Keeping data clean helps reduce costs, of course, but it is also essential to maintaining the company’s reputation.
Audit the data
Data can come from a variety of sources, and if they’re stored in silos that don’t talk to each other, they can be difficult to organize, access, and analyze securely—one of the main problems that lead to dirty data. By centralizing the storage of this information, you can more easily spot inconsistencies.
Remove junk data
Much of the information captured may not be necessary for business, and some may be duplicated. This data must be removed from the database so that analytical resources are more efficient. In other words, data auditing is essential to understand the information held by the company and eliminate what is not useful.
Set rules and restrictions
Standardization and consistency are essential to keeping data clean and creating databases that can be easily analyzed. Studies show that 60% of dirty data is the result of human error, so automating data entry can eliminate many of these errors.
Update the data
Maintaining a routine for updating and checking data is essential to keep it consistent – ideally, this process should be automated. Outdated data negatively affects analysis and generates inconsistent insights, which can harm a negotiation.
Seek specialized support
Having the support of a company specialized in data strategy, which identifies, collects, organizes and analyzes information for the company, allows you to carry out the best negotiations and make decisions based on accurate and reliable data.
COSTDRIVERS optimizes the time of company professionals who need to obtain relevant information for business. Talk to one of our experts and find out how we can help your company.