How good data hygiene can save you money

One of your regular customers places an order that contains an item, but you’re out of stock. You placed an order four weeks ago, and your spreadsheet shows a lead time of three weeks, so it should have arrived by now. You chase your supplier, and they tell you the lead time is — and always has been — eight weeks, so you’re going to let your customer down. Even an urgent, expensive air freight order won’t help, as your customer needs the items today. 

This isn’t the first time this has happened, and it won’t be the last, because you don’t know which lead times are correct in your spreadsheet. Even with the best intentions, you forget to update lead times when you realize they’re wrong.  

Keeping data clean and up-to-date tends to fall to the bottom of the to-do list when you’re juggling thousands of SKUs from multiple suppliers to meet customer demand and switching between paper and electronic data. However, poor data hygiene leads to lost customers, unbalanced inventory levels, poor supplier relationships, and increased costs.

If you constantly find yourself battling incorrect supplier lead times, minimum order quantities (MOQs), order dates, or actual demand, then it’s time to get on top of your data hygiene to improve efficiency and save money.

In this article, we highlight the impact poor data hygiene can have on a company and provide some best practices to help you keep your data in shape.

What is data hygiene?

Just as we use hygiene to keep other areas of our lives clean, data hygiene keeps data clean to maximize efficiency and take full advantage of opportunities. Keeping data clean and organized makes life much easier.

Data hygiene challenges

Duplicate records

When you’re managing thousands of SKUs, having multiple entries can cause significant problems, as demand won’t be tracked correctly, or you could double-order. This will lead to over-ordering and excess stock.

Inconsistent formatting

If everyone has a different way of entering data, you’re going to end up with a mish-mash of data that makes it hard for everyone to use. Without standard data entry techniques, it will feel like you’re running multiple spreadsheets within one sheet, and simple tasks will take much longer than necessary.  

Inaccurate or incomplete data

Without key supplier data — such as lead times, MOQs, MOVs, and order and shutdown dates — you’ll always be on the back foot. Adding random data or standard lead times for all suppliers will misalign your expectations with reality, affecting customer service. If your BOMs aren’t linked, you risk missing key components, which can lead to missed customer orders.

Outdated data

If your spreadsheet contains inactive SKUs that are still showing as active, they could be triggering repeat orders even though they don’t have any upcoming demand. Your warehouse will continue to fill with items that never sell, taking up valuable space and money.

Missing data and KPIs

Are you tracking the right KPIs to answer basic inventory management questions? Can your spreadsheets tell you:

• Which of your items drive the most sales?
• How to classify your stock by demand profile?
• If you have seasonal demand for items?
• How much cash is tied up in stock?
• If your supplier order sizes match actual sales patterns?
• Your actual supplier lead times rather than their promises?
• If you’re accepting bulk orders that don’t match demand?
• The top 50 products your customers expect you to always have?
• How many lost sales you have due to stockouts?
• The correct safety stock levels for each item?
• If your reorder points include safety stock?
• Which MOQs don’t fit your demand?
• supplier on-time and in-full delivery rates?

If you can’t get the data to answer these questions, your purchasing will be off track.

Multiple data sources

If you’re importing multiple spreadsheets into your ERP system, it’s essential to ensure that they all reflect the same information. If multiple data sources aren’t aligned, then neither will outputs. If you’re still working from paper documents as well, you can’t guarantee that the information matches what’s in your ERP or spreadsheet. You need one clear source of information to save you from spending your days in a constant state of confusion.

Time-consuming manual effort

There’s never time to sort out the data, so it just gets more out of date and less helpful. You have to dig through the information to find what you need, which wastes time unnecessarily. With manual data entry, spreadsheets are open to human error. One wrong entry could cost the company thousands without you realizing.

What are the benefits of data hygiene?

Cost savings

Poor-quality or missing data, such as incorrect lead times or inactive items still showing as live, leads to misinformation and poor business decisions that cost time and money.

Regular cleaning and validation of your data ensures you’re making smart, data-driven purchasing decisions that reflect demand. This puts you in control of your inventory, reducing the risk of stockouts and ensuring you can provide high service levels to customers without relying on expensive rush orders.

This enhances your reputation and makes you the go-to provider for your market.  

Reduced administration time

Data hygiene can seem like a drain on time and resources when you have so many other activities to attend to, but poor data hygiene is a bigger drain – particularly on cash.

Investing the time in getting your data clean and sorted up front reduces the time you need to spend maintaining it. Instead, you can implement a light-touch control to keep it clean. Your future self will thank you when your inventory management is en pointe.

Easier integrations

Clean data will make connecting to new systems, such as ERPs or inventory optimization software, a dream. Your outputs are only as good as your inputs, so getting the correct data in means you’ll get the best, most accurate data from your connected systems.

Overcoming data hygiene challenges

If you’re looking at your spreadsheets, wondering where to start, here are some data hygiene best practices that you can implement.

1. Invest the time in a data-cleaning exercise to get everything in order.

Rather than trying to block out days to get through everything, make yourself a task list and allocate an hour a day to data.

Don’t try to take on everything yourself; allocate tasks to team members where possible. Giving people ownership of tasks makes them feel more involved and improves engagement.

Have regular catch-ups to check in with each other and celebrate small wins.

2. Establish a data governance framework.

Once you’ve got good data, it’s essential to keep it that way. Create clear policies and processes for data collection and storage, so that employees can maintain clean data.

Regularly review the policies and adapt according to changing business needs.

3. Educate and train employees.

If you’re the only person who knows what the policies are and why data hygiene is important, your clean data will become a mess pretty quickly. Ensure you share the policies and processes with the broader team and that they understand the importance of good data hygiene.

Training sessions don’t have to be long. These could be regular, short sessions to get everyone up to speed. Ask for ideas and demonstrate where clean data has made a difference to the company. For example, correcting supplier lead times has improved service levels, and updating BOM information has enabled complete product assembly.

4. Standardize data formats; use consistent formats and naming conventions.

As part of your data governance framework, establish standard data entry formats. If possible, use predefined values, drop-down options, or categories to avoid variations and duplications.

You can also implement data validation rules to prompt users to correct mistakes so bad data doesn’t enter the system.

5. Schedule regular reviews to ensure data stays clean and functional.

You should have a checklist to work through, including tasks such as checking for duplicates or updating supplier lead times. Instead of trying to do all suppliers in one go, break it down so you’re checking one supplier or one product group a month.

6. Use automation or workflows to streamline the data cleaning process.

If you can use software to help you, you’ll reduce the risk of human error and save on administrative time.

Connecting inventory optimization software like EazyStock to your ERP system can automate updates to your inventory management data. It will help fill in the gaps in your data so you can say yes to the questions asked earlier in the blog.

EazyStock helps reduce the need for manual updates across your data. For example, if your supplier lead time changes, EazyStock can recalculate reorder points and dates to ensure you maintain stock levels.

Combining good data hygiene practices with automation will balance your stock levels, reducing excess stock to free up cash, lowering holding costs, improving stock availability, and saving admin time.

More information

To find out more about how EazyStock can help you overcome your data hygiene challenges, please get in touch with our experts.

Want a quick win?

Start with the basics. Run a free ABC classification to see which items drive demand, where your data might be letting you down, and where to focus first.