WHAT THE FUCKING MURA
IS GOING ON HERE?

Mura is one of the terms from the theory of good business practice, in loose translation meaning "losses due to uneven processes distribution": "feast or famine".

We encounter obvious examples of losses due to uneven distribution both in life and business.
For example, retail, especially 24/7, suffers long queues in rush hours and almost no customers during the "dead time". During rush hours the business looses customers who prefer shopping without loosing nerves and time (this is the reason for existence of those convenience stores), during "dead time" the business looses money to pay for idle work hours.
The solution is evident: equalization, trying to channel customers flow from rush hours to the dead time by segmenting clientele and providing different terms and conditions for each stratum.
This is sometimes used ("happy hours" and so on), but we have already mentioned the degree of creativity of our home retailers in the conditions of lack of serious competition.
Sometimes the approach of a "bull in the china shop" leads to the situations when the queues happen at any time out of nowhere, and that no more than half of the checkouts are open at any time. 100 thousands of roubles are "saved" by reducing cashers’ salaries; lousy Adams Smiths.

Any business has losses due to uneven distribution, but not everyone notices such losses (or considers them as losses).

Let’s take for example the approval of customers’ credit in a bank. If the bank has an unexpected flow of clients and the people are waiting to be approved a week instead of promised 24 hours, the bank does not suffers any obvious direct losses, as these are the customers who are loosing time.
But because the retail crediting market is not yet competitive (by rates; by services 99% of Russian banks are still "homemade": there is no single good retail bank in Russia. Alfa-Bank could rate as a decent retail bank, but cannot do so due to shameful queues in the branches, 60% illiterate staff of the front desk and outrageously low efficiency), the client may easily decide to take credit in the neighbouring bank, maybe one percent of interest higher, but the long-wished refrigerator will be purchased now.
Meanwhile the staff of the first bank knock themselves out (even with ridiculous efficiency, as 90% of the transactions are dumb, i.e. creating zero value, but this is a topic for a separate story), the clients are cursing each other in the queues and on blogs and social networks.
The bank’s image is deteriorated; the management of the bank considers it and makes crucial decision to enlarge the business, to hire more staff and to open more branches.
Of course, by the time those people are hired/trained and the branches are open, the market situation will change dozen times, the negative factors will be accumulated and the competitors’ banks will not be looking to share their clientele.

As the result, the staff of the first bank, which did not consider the losses of their client’s time their losses, will dawdle away, the rent for the empty new branches will be being paid, and the profitability of the business will go down.
In order to obtain clients, the bank’s management will directly or indirectly reduce the rates (or invest in advertising, or promise gifts: spend, if put in one word), which in the condition of competitive market, even with the potential increase of turnover, will lead to the loss of profits.

What should they have done?
They should have constantly monitored their level of service and the level of clients’ satisfaction, optimize business processes in constant PDCA mode and enhance staff efficiency. And, of course, solve minor managerial issues: everything which had been written before thousands of times. The clients would be happy (and would need no advertising other than word of mouth) and there would be no need in additional staff, while the sales would increase together with the profit.
We may officially declare that any bank in Russia has potential of 300% increase of the front desk efficiency. We highly doubt that the back desk is in a better situation. But the degree of managerial idiocy in our home banks is unparalleled (there are only a few exceptions, including, which is a surprise, Sberbank under the rule of Mr. Gref: the results are not yet overwhelming, but the amount of efforts and results evoke respect). Marketing (in the proper meaning of the word) situation is even worse: ground zero at all the banks with the exception of TKS-bank and timid attempts of Alfa bank ("we have the lowest deposits rates, but...").

We are absolutely sure that the reader may bring his/her own company as an example.

What is it all about?
It’s about the fact that such losses may be suffered in any business processes, and not necessarily in relation with servicing external clients.

For example, Ulmart experienced similar situation with the suppliers due to its quick growth.
Sales grew, purchases grew respectively, however neither the technology of those, nor the rhythm changed. It is clear that three-fold growth of turnover should not cause three-fold growth of weekly purchases, while the warehouse facilities and the number of employees remain unchanged.
As the result, the same story: it’s feast of famine. Overwhelming amount of supplies in one week, burying the warehouse, creating half-a-day queues for the supplier’s tracks, and it takes days until the goods are accepted (which is direct loss, as the time of goods credit starts on the delivery day), the warehouse operators work 14 hours a day with respective overtime, the inventory suffers losses, the accepting facility is cluttered: the goods are available from the purchaser point of view, but it has not been recorded as received and sent to sales. And no one can buy the goods. Holes in the inventory create huge under-sales (if there is no processor at $100, you can’t sell a computer at $1,000). Torn rhythm of supplies creates peak payments in certain days. As the daily sales remain unchanged, there are huge cash breaches that may only be covered by means of third parties resources, which are not free.
And overall, it’s a mess and lost profits.
Or direct losses.

The solution is obvious — to equalize the supplies.
This is correct.

But how? Trying to persuade the purchasers to buy more often and in smaller batches, to coordinate the delivery schedule with the warehouse or to convince the suppliers to sell machines in parts were absolutely useless. All this could last a couple of days, and then everything would start once again. Indeed, why would they bother? They need to buy a specified amount at a specified price. The more you buy at once, the easier it is: less documents to create and less paperwork. And they can even benefit from a discount when buying more. It’s not their concern. And let the warehouse take care of unload and acceptance.

This does not work.
We need to apply enhanced efficiency understanding device.

Income
log register
interfaceWarhouse
limits
settingsMessage about
exceeding
the allowed volume

Ultima ERP has warehouse facilities capacity schedule. Each day has its programmed maximal volume of goods that should be processed by the warehouse. This programming uses three dimensions: volume in cubic meters, overall price of the goods and integrated index of work-hours (which corresponds to the work-hours coefficient of goods processing).
The purchaser may not create an invoice for the goods that are planned to be delivered (the invoices are integrated in the DB in time of coordinating the order and not in time of the goods arrival at the warehouse — this is important), if the allowed warehouse capacity limit is exceeded at least by one index.
The warehouse will not accept the goods from the suppliers in lack if the invoice is not present in the DB on that day.
At first it took one week to overcome usual for such cases cries, scandals and planned coefficients adjustments;
after which:

• range of amounts of the accepted goods in different weeks reduced from 400% to 30%. More than tenfold;
• this resulted in no emergency situations, no additional expenses for the payroll; warehouse operators overtime reduced to zero;
• overall speed of accepting goods increased at least by 10%;
• the quality of business process of acceptance increased: the number of so-called "problematic" acceptances (i.e. those in which actual delivery differs from the coordinated delivery and thus requires additional revision by purchasers and accounting department for additional coordination of prices, inventory and documents) reduced three times;
• overall goods turnover in the company increased by 17% together with continued growth of sales;
• cash breaches in financing the supplies disappeared.

And, of course, minor issues: for example, when creating warehouse capacity schedule, the company’s sales plans and hiring and training plans had to be coordinated according to the growth of demand created by the warehouse capacity.
These are so-called proactive actions in comparison with the reactive actions of the bank in the example above.

Do you recall now the mura you witnessed in your own practice?
If yes, let us help you fix it
If no, let us show to you where you loose money.
Anyways.