Order Management System (OMS)
Ecommerce Order Fulfillment
Warehouse Management System (WMS)

Item Master: Example and Best practices

Ngoc Lee
Item Master: Example and Best practices
Share this:

By analyzing your DNA, geneticists can determine what makes you who you are, and even what diseases you might be predisposed to. In a similar manner, supply chain experts may examine the item masters for your items and determine the suppliers, utilizing raw materials, and the recommended quantity of inventory, among other details. 

The entire health of your business can only be understood with proper item master management. That is what we will discuss in this post today. Let’s dive in!

What does an Item Master mean?

Every product that your business manufactures and sells needs to include an item master. Your ERP (or enterprise resource planning system) often has a document or record called the item master. When a new item enters your firm, the item master should be set up. The item master should be properly constructed (many businesses employ someone whose primary responsibility it is to maintain item masters) and should at the very least include the following details:

  • Item Name
  • Description
  • BOM (or Bill of Materials)
  • COGS (or Cost of Goods)
  • Manufacturing Routers
  • Lead Times
  • Minimum Order Quantities (MOQ)
  • Safety Stock Levels
  • Order Multiples

But don't stop there. Use other inputs as well. There will be standard fields in your ERP that you can fill out for your item master, but there will also be custom fields that you can utilize to modify the item master to meet the unique requirements of your business. Your ERP will use data from the item master to produce data for:

  • Purchasing Queues
  • Inventory Value
  • Work Orders
  • PPV (or Purchase Price Variances)
  • Manufacturing Variances
  • Financial Analyses

A DNA molecule's gene strands are analogous to the information stored inside an item master. Your DNA will reveal your genetic make-up. Your item master will explain the components of your business. 

👉 Read More: 13 Stages Of Procurement Cycle With Detail Instructor 

How to use an Item Master

How to use an Item Master

Although an item master is a treasure trove of data, you might never actually open one. You could really be barred from entering and changing things to an item master unless your profession is to manage item master for your company. Nevertheless, whether you work in finance or other management departments, or the supply chain function of your company, you'll need to use data that is stored in the item master. The item master contains the cost of goods information for your products. 

Thus, to calculate the cost of your inventory, multiply the number of products available by the costs shown in the item master. Each of those sub-assemblies and parts will have an item master if your goods is an assembly built up of numerous tiers of sub-assemblies and parts.

Inventory items and item master

An inventory item type's records are gathered into an item master. Managers may discover all they need to understand about a certain sort of inventory item from the item master. In contrast to "inventory item data," which often refers to data on a given inventory item or kind of inventory item, "item master data" collects data included in one or even more item masters. 

Item masters are not necessarily all groupings of inventory item data, but item masters have always been filled with inventory item data.

What Is Item Master Data?

Item master data includes all of the data from the item master for each product in an organization's ERP system. 

Item Master Data

The company's capacity to maximize and enhance the financial return they receive from producing, stocking, and selling the product will improve with increased item master detail. An item master should at the very least include the name, specification, and manufacturing cost of the item, as well as its existing levels of inventory, manufacturing lead time, bill of materials, sources and vendors of those materials, and the amounts of supplies that are now on order. 

As a minimum, such fields have to be present in the item master in an organization's ERP. However, top business executives will likely decide on additional features as well as custom fields unique to that firm or product in order to provide the item master data with all the necessary information directors need to make choices in line with the organization's goals. Item master data is an essential component of daily choices and operations, especially in inventory management and supply chain management. 

It provides helpful inputs for studies aimed at streamlining company processes. When paired with sales data and predictions, for instance, excellent item master data will enable a business to make better-informed decisions about the time and the quantity to purchase from suppliers. 

👉 Read More: 10 Steps Of The Procurement Cycle 

An Explanation of Item Master Data

A corporation may quickly and effectively decide which sorts of colors of things move the fastest, what size sells the most, and which variations of product are weak in sales using correct item master data. For instance, if company decision-makers are aware of the most popular T-shirt colors and sizes, they may modify material orders across the supply chain to enable the production of more of those hues and sizes. 

As a result, by keeping their data clean, businesses have a built-in source of operational insight that helps them make more informed decisions, which boosts their sales and profits.

The Importance of Item Master Data

A precise item master record will guarantee ongoing productivity and efficiency without added expense or needless labor. Moreover, accurate, current, and centrally located records regarding items help lessen miscommunications and costly mistakes. Item masters will act as the core repository for information that supply chain operations rely on for execution and adaptation if they are kept up properly. 

If the item master is inaccurate, a business may eventually wind up acquiring materials after they should have, in insufficient quantities, delivering that meet customer needs, or countless other errors that could have a negative impact on the production, revenues, customer relationships, and profits.

What is Included in Item Master Data?

Item master data will often include details about the product, its resources, the commercial activities around the product, as well as financial information relating to the item. Different firms will need to manage different information. 

ATTACHMENT DETAILS What-is-Included-in-Item-Master-Data
What is Included in Item Master Data

As mentioned above, item name, specification, prices, BOM ( or bill of materials), materials suppliers, production lead times, vendors, order quantities, and levels of inventory are typical examples of fields to be included in an item master record. An item master may additionally have more specific data, such as purchase cost, maximum stock levels, and minimum stock levels, based on the organization and product priority. It's crucial to match the data's form to the company's facts. 

For instance, a business with dozens of warehouses and dozens of storefronts will require considerably more intricate inventory management than one with only one facility and online sales. For a business with a single warehouse, understanding how many items the entire organization has on hand is fantastic. 

However, for a business with a hundred warehouses, this information is sometimes insufficient. To accurately inform buying and other notifications given by the ERP to product managers and vendors, the item master, a constantly changing record, must be updated to reflect current facts.

Item Master Data Quality

The accuracy of the data in an organization's item master is crucial to its operations. While both poor information and no data can result in poor judgments, low-quality data still costs money to gather and keep and can provide decision-makers with a low level of confidence. Thus, it is true that low-quality data is even worse than having no data. 

For instance, faulty inventory counts for a consumer good in the months leading up to the Christmas season might generate a shortfall of inventory, and slower material deliveries than expected could result in production delays, order fulfillment delays, order cancellations, and unhappy customers. 

The error might have further led to failed promises to consumers and substantial harm to the company's reputation in circumstances when these issues were brought on by poor data that managers believed was excellent.

Best Practices for Item Master Management 

Item master data development and maintenance depend on the following industry best practices, which include but are not restricted to those on the following list.

Best Practices for Item Master Management

Since item masters contain so many elements, even a minor increase in their mistake rate may result in multiple faults that staff would have to manually track down. This makes it extremely important to set and adhere to effective processes for them.

Create a procedure

Ensure those components are included in each item master as a norm and that you know which areas are most crucial for your company in terms of inventory, purchasing, and analysis. Create a step-by-step guide to take the guesswork out of creating item masters and guarantee the effectiveness of your manufacturing line.

Backtrack from significant decisions

It's usual to ponder what data to gather and what data isn't really relevant while building item masters. What additional data will be most useful to get when the time arrives may be determined by considering the types of decisions that must be made with the given data. The information you decide to gather now will influence the decisions you make tomorrow.

Build a standard template to save time

For each item master record, you do not need to reinvent the wheel in order to ensure data correctness. Create an item master form for the company's ERP so that staff members can effectively enter information for future goods.

Assign a master librarian for items

These workers will be in charge of inspecting every item of master data to guarantee the accuracy of the data and compliance with the process document. Think of this as an additional step to help avoid expensive purchases and inventory mistakes.

Make a plan for the connection of data

When correctly gathered, item master data may be a potent and reliable source of information. But when paired with additional data, like sales projections or accounting data, the data might be much more useful. You can build them ahead to create that interaction simpler and more efficient by considering how to integrate the sources of data.

Manufacturing and Purchase Price Variances

Do you pay the right price for the goods you buy? To learn more, consult the item master. Compare the cost (commonly referred to as the standard cost) in your item master to your actual purchase pricing. Your item master is lovely since it's a live file. 

Someone at your firm (perhaps not you) can change your item master so the standard cost is equal to the purchase price if your item master states that you buy Product A for $10 but you find out that you've been buying it for $9 for the last year. The same will be applicable to production times. 

You can change the item master if, for example, your item master has Product B's manufacturing date schedule up to 50 minutes but, after generating a manufacturing variance report, you find that it really takes you 60 minutes to create Product B.

👉 Read More: 10 Disadvantages And Advantages Of Activity-Based Costing 

👉 Read More: Difference Between Traditional Costing And Activity-Based Costing


Like its finances, an organization's item masters are a crucial data store that must be kept up to date and correct throughout all times for the sake of the company. Accurate item master data keeps businesses better inventory management, prevents shortages and overstocks, and supports strategic decisions about product lines among many other benefits. The process of developing item masters is not really complex, but it does involve a lot of information to be properly gathered and examined. 

Your item master data may serve as another stepping stone toward the success of your firm when used in conjunction with the appropriate ERP software and reliable procedures. 

Hope you have a good time with Efex.

Ngoc LeeNgoc Lee is an Content Creator Manager at EFEX. She wields her long-term expertise in Logistics and Supply Chain, harnessing her top-notch writing and research skills to bring incredibly valuable content. Whether you're a small startup or a well-established enterprise, Ngoc Lee is here to equip you with the essential knowledge of e-commerce, fulfillment, and all things business-related.