One of our challenges in lean manufacturing is to try to level unevenness, called mura, through the value stream is improve the flow. Mura is one of the 3 M’s along with muda (waste) and muri (overburden).
When thinking of mura, we typically think of the demand pattern for our product or service. A cyclical demand profile is fairly common with many products especially seen in seasonal products like lawn mowers, snow blowers, Christmas trees, fruit cake, swim suits, etc. Even caskets have a seasonal pattern, believe it or not. It seems to be the nature of most products and we accept it.
But what about self inflicted unevenness?
I was visiting a company (not a client) recently that has a problem with mura (unevenness). Every month 50% of the total monthly sales occur in the last week of the month. This pattern is pretty consistent each and every month. As you can imagine, the impact through the value stream is like a pig going through a python every month. During the last week of the month, the plant is running high overtime to meet this demand and the following week they are having down days due to low demand.
I learned that they have a monthly sales target to hit every month. This metric is one of the “Must Do” metric driven by management with all the normal rewards and punishments the go along with it. Hit the target means raises, bonuses, promotion and keeping you job. Missing the target means poor reviews, no increase in wages, performance turnaround plans and job loss.
Under this “Must Do” metric, the sales department made decisions and acted to meet the target every month which, in this case, meant making “deals” that cut the price at the end of the month. It did not take long in the market for the savvy customers to see the pattern of price deals towards month end. So as you can imagine, more and more customers waited until the last week of the month to buy which exasperated the situation.
Bottom line, this mura has not only resulted in higher cost but lower sales revenue (however they are making up for it in volume, right?)
I have seen the same push at year end especially when bonuses are at risk. Do anything to make bonus is the primary short term mindset. Is this happening at your company this time of year?
The main problem with goals like monthly targets, quarterly targets, year end targets and bonus driven targets is they potentially can drive the wrong behaviors. Goals and targets are not bad things to have either professionally or personally, they are great things the have. Just be aware of the behaviors and actions that go along with effort to achieve them.
For simplistic countermeasures: Stop doing that. In this case, don’t make the ritual price cuts at the end of the month. Look deeper at how sales promotions affect the value stream. Try to think more long term and figure out what behaviors (ie number of customer touches) are desired to achieve the results (sales generated). Focus on these behaviors deemed to have the most impact. Brainstorm with your team (sales and operations together) to find a better way.
When thinking of mura, we typically think of the demand pattern for our product or service. A cyclical demand profile is fairly common with many products especially seen in seasonal products like lawn mowers, snow blowers, Christmas trees, fruit cake, swim suits, etc. Even caskets have a seasonal pattern, believe it or not. It seems to be the nature of most products and we accept it.
But what about self inflicted unevenness?
I was visiting a company (not a client) recently that has a problem with mura (unevenness). Every month 50% of the total monthly sales occur in the last week of the month. This pattern is pretty consistent each and every month. As you can imagine, the impact through the value stream is like a pig going through a python every month. During the last week of the month, the plant is running high overtime to meet this demand and the following week they are having down days due to low demand.
I learned that they have a monthly sales target to hit every month. This metric is one of the “Must Do” metric driven by management with all the normal rewards and punishments the go along with it. Hit the target means raises, bonuses, promotion and keeping you job. Missing the target means poor reviews, no increase in wages, performance turnaround plans and job loss.
Under this “Must Do” metric, the sales department made decisions and acted to meet the target every month which, in this case, meant making “deals” that cut the price at the end of the month. It did not take long in the market for the savvy customers to see the pattern of price deals towards month end. So as you can imagine, more and more customers waited until the last week of the month to buy which exasperated the situation.
Bottom line, this mura has not only resulted in higher cost but lower sales revenue (however they are making up for it in volume, right?)
I have seen the same push at year end especially when bonuses are at risk. Do anything to make bonus is the primary short term mindset. Is this happening at your company this time of year?
The main problem with goals like monthly targets, quarterly targets, year end targets and bonus driven targets is they potentially can drive the wrong behaviors. Goals and targets are not bad things to have either professionally or personally, they are great things the have. Just be aware of the behaviors and actions that go along with effort to achieve them.
For simplistic countermeasures: Stop doing that. In this case, don’t make the ritual price cuts at the end of the month. Look deeper at how sales promotions affect the value stream. Try to think more long term and figure out what behaviors (ie number of customer touches) are desired to achieve the results (sales generated). Focus on these behaviors deemed to have the most impact. Brainstorm with your team (sales and operations together) to find a better way.
8 comments:
Hi Mike,
Very nice post! Yes, it seems that most mura is self-induced. Kind of crazy.
Merry Christmas,
Mark
Great post. I was thinking about something similar in regards to Black Friday. If everyone buys a lot on Black Friday and not the rest of the year, is it because things are finally priced at what the market demands? Talk about unevenness!
Amazing that Mura and Muri is not talked about more. Often, they are the root cause for Muda.
Great Pic!
Hi Mark,
It is crazy that some companies operate this way and even crazier to accept it. Merry Christmas to you, too!
Hi Brian,
Black Friday is another great example. The whole commercialization of Christmas is mura. The media plays right into this marketing plan to keep building this hype and the consumer herd follows. If customers don't need it we will market it so that they think they do. What a cycle.
Hi Business 101,
I agree that they are linked and I hope that we can expand our lean thinking to include Mura and Muri more often. It will also mean that we expand our lean thinking beyond the shop floor and include sales and marketing. What a great Christmas present that would be for a lean company!
Great post.People manage the measures and this often creates behaviours we don't want.Reminds me of a general manager I knew who once measured a production manager on Uptime alone. he then got 6 months overproduction (in 1 week) of a simple running product which consumed raw material destined for other products. A few weeks later the customer changed the design so the whole lot was scrap - but the accountant classed it as an asset so it wasn't physically scrapped for 2 years. Duh!
It's like in "Dinner for One": "The same procedure as every year, James!"
Have experienced something similar. A company run a special sale from October to December where you could get a TV, a PS3 or something similar as Bonus. After some years, August and September were always very bad month because customers waited till October!
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