What is Trade? When you buy something for a penny, sell it for a pound, you are coining it like the devil. It doesn’t take a rocket scientist. Roughly speaking, it looks something like this in the eyes of the common people (and not just Russians). Naturally, you cannot easily answer a standard question "Why do you sit idly and are not coining it like there’s no tomorrow?".
As a matter of practice it goes otherwise (in the competitive free market, and we do not write about anything else): you buy for a pound, sell for a pound and a little something — and you have to squeeze in that all your expenses, or you’ll be cadging. Still, you must squirm to make a customer come exactly to you, not to your market colleagues who reduce this little one in every possible way through price competition. A consumer benefits — and also the smartest, the most energetic and the luckiest merchants who survives. That is how evolution works a.k.a. natural selection of free economy.
The smartest, the most energetic and the luckiest ones survive thanks to innovations that allow to spend less or gain more — raise this little one. Reducing costs basically comes down to boosting production efficiency by resource saving and/or increasing labour efficiency (actually, the labour is a particular resource); but experience has proved that such innovations are quickly adopted by the competitors which leads to the efficiency growth of the industry on the whole. Both customers and the whole society benefit, but in the middle — and longer term it in no way enlarges competitive advantages of a particular enterprise (who was the first bank introducing computers? the first builder -to use diggers? in agriculture — to use combines? No one even remembers, and in fact it doesn’t matter. Everybody has already been using them everywhere and in like manner for a long time).
There is much more potential emission in building up the amount of the modicum.
How? If digest the facts up to primitive — a) you offer products/conditions/services that set you apart from the competition for the better and b) that can hardly be adopted (actually, we have already concerned the matter slightly the other way round). Now everybody understands the difference for the better, but they are slow on the draw and do not get the theme of hard adoption.
As we noted, the easiness of industrial improvements adoption sinister to the marketability of one particular business before now we consider the following example of the building up the little one.
The super classic example is a loyalty program of airline companies which are the boringly same for every one: for voyages they give "miles" that can be exchanged for white elephants at the twofold price, or with a heap of restrictions for tickets that no one needs for money. By default, they assume that such "programs" increase customer loyalty and in the long run increasing in sales and profit of relevant airline company.
During current state the whole "programs" puzzle with intensity of idiocy (which is common on the core to the extremely large overregulate business):
However, the irrational stupidity of the current situation is obvious to everyone and for the very airline companies in the first place. How did it happen then?
In 1981 American Airlines launched the first such program obviously with a view to epic win. Captains of the yankeefied aircraft business had not enough I-don’t-know-what to figure out the situation in advance meanwhile it was very easy to figure out:
The second variant has worked out — exactly like in the classic ghost shit joke.
Let us get just a little back to the case "Knockin" on Heaven’s Door" mentioned before. A curious reader will surely interrogate: dear comrades, how does your example of Ulmart’s bonus scheme differ fundamentally from the much-criticised airline companies" analogues?
With competitive environment, dear reader.
American Airlines had as the competition let us say the same companies, with round about the same technological base, way of thinking and organizational culture. In case of Ulmart almost everything was different (at the time of creating the program — then the situation became much less positive and by no means because of the competition’s progress): the competition is either small or silly and lazy; Ulmart’s IT infrastructure was based on dia$par — then it was the only one from big companies.
Generally, here is the present result — Ulmart’s the loyalty program engineered by us was and stays effective through its unique character. Up to now no one of the competition has adopted it due to the right grasp of competitive environment again in the first place.
Let’s pick up the narrative thread by-and-by getting hot. Given instance of organizational idiocy from American practice is not at all something abnormal. This is more like the sad rule. Here is one more demonstration of loyalty programs of household appliances and electronics producers for resellers.
Retracing technically step-by-step the tough path of American Airlines and all world Airline industry, triggering a backflash of dullness and unwillingness to think at least one step ahead, one vendor (history is silent on who he was — surely, with brief researches you can identify the pioneer’s name, but we can’t be bothered — at least because for our narrative it doesn’t matter) invented his own epic win:
The micro brain of this plain scheme’s inventor saw PROFIT! as something like that follows:
A reader prepared by previous feature story will easily suppose further scenario. And he will be right.
As long as the world market of household appliances and electronics in a similar way to the aviamarket consists of the same magnitude companies (every way) it came about the same way: other vendors immediately launched the same "programs".
Nevertheless, apart from easily forecasted effect of free hand feeding vendors" grassroots by metabolic wastes, emerged consequences of the second stage which were results flowing from the fact that folly was directed towards a limited number of professional players in the market rather than general public of the end consumers of air travel:
And such situation with production describes each major vendor. It’s easy to guess that eventually no vendor has increased sales due to such "program". Instead expenses, wastes, headache and stealing has increased by all the scheme participants.
Eventually the typical retailer of the household appliances and electronics market sells the most part of the circulation-generating assortment at a loss, the view of life is based on the primary Russian ground rules "hoping for the best" and "I suppose". And vendors" designated employee as one man are masters of a large fortune with seven zeros in terms of dollars.
What has dia$par to do with it? Which despite powerful capabilities meanwhile cannot yet work upon the essence, replacing world business captains" brains.
That’s right: it cannot. But it provides tools for fundamental ease from hard existence. As the saying runs "money can’t buy happiness but it’s a lot more comfortable to cry in a Mercedes".
For mirbt.com company needs, a throughput accounting of vendors" bonus programs (in their full Gypsy splendor) has been realized. Including, but not limited to the following:
Tuning for vendor’s bonus conditions
Special vendor’s price-lists for bonus accounting
Goods Receipt, price with a bonus
At the same time the interface of credited bonuses coordination with a vendor works and it allows to have control over all the money making process. The procedure of coordinating activates automatically upon expiry of the bonus program action: a coordinating document with entry status is created automatically. In the final stage after vendor’s approval an accounts receivable is stated for the final total.
Vendors" bonus report
So, the chaos (the fatal result of insane marketing consultants" depressive delirium) obtained such features as digestibility, clarity and controllability.
Finally as tradition demands there are a few numbers.
Capacity of obtainable bonuses has increased 20% (depending on vendors) — through case’s presence in terms of clear accounting as well as multiple growth of analytic energy for suitable target making.
Vendors" accounts receivable for unpaid bonuses has been cut by half — actually, before it was an extremely time-consuming task even to count it up. It has become much easier for a CatMan (a product manager) to manage product purchase/sales whose total profit grows generally from vendors" bonuses.
Bonuses have immediately begun to be reflected in the prime cost (which means also in the online computable one) and salesmen have received clear motivation for realization of these goods, and assortment-price policy corresponded to market reality much better.
As a result sales of product items participating in bonus programs have increased up to 15%.
Here we can see: so far is the grace of organization and order enclosed in dia$par that it allows to head-to-head struggle and overcome the obstacles that the weariless insane marketing asps" devilish wily engenders every hour.
There are results of the introduction of similar functionality in Ulmart:
Let’s dig into the details.
The quantity of current bonus sales promotions is around five hundred.
For increasing of visibility, dia$par on the weekly basis sends out master accounts for current interest of completing the targets with forecast of completing.
Here is an example of the automated distribution (from the real world with deleted forms) — a list of targets that an employee is responsible for...
36,3%— № <action number>: <vendor’s/deliverer’s name> — quarterly Digis, quarter
35,3%— № <action number>: <vendor’s/deliverer’s name> — quarterly Q4, quarter
36,3%— № <action number>: <vendor’s/deliverer’s name> — quarterly Digis, quarter
37,2%— № <action number>: XXXXXXXXX — 2% completion of quarterly plan, 2% marketing (+1% when you run a annual plan). Plan 3Q — 17M, 4Q — 30M, year — 75M, quarter
50,3%— № <action number>: XXXXXX — quarterly, quarter
53,2%— № <action number>: XXX — In a quarter 1M. 1.0% 2M. 1.5% 3M. 2.0% 4M. 2.5% 5M. 3.0%, quarter
61,1%— № <action number>: XXXXXXX — quarterly Q4, quarter
66,6%— № <action number>: XXXXXXXXX — quarterly Q4 Goon, quarter
67,1%— № <action number>: XXXXXXXXXXXXXXX XXX — quarterly, quarter
Here are details for the target:
№XXXXXXXXX — XXXXX XXX — quarterly
Period: a quarter
Entry cost VAT included: no
Accountable manager: XXXXXXX XXXX XXXXXXXXXX
Delivers: XXXXX XXX
Current completion of maximum target: 75,5% (3 773 355 from 5 000 000)
Daily promotions" items sales
dia$par forms and sends personal lists:
Cross-reconciliation happens naturally — it’s impossible to forget about any action.
On the same base was realized a logistics bonus accounting: when a deliverer pays for the distribution center’s services I mean he doesn’t carry goods himself but he delivers them only to Ulmart’s transfer hub.
In this case bonuses are accounted (what if we simplify a little?) proceeding from the cubic volume of delivered by the deliverer goods and from the amount of shops where goods will be transferred. All that is reported to dia$par already in the moment of the acceptance.
It’s not enough to correctly count bonuses for a deliverer/vendor, you need also get these bonuses from them.
There are two options: either mutual payment (then the dia$par automatically correct deficit of immediate requests for deliverer’s payment) or financial payment.
The planned cash proceeds are automatically reflected in the payment schedule of the pay office.
You can’t come by advertisers. Firstly in their schemes of unloading to trading platforms were only the front margin and now — the absolute margin. For those product categories in that the back margin predominates (or generally the only one who generates final profits) dramatic changes have taken place in the area of the advertising efficiency.
And of course we have here our favorite book-keepers. For deliverers" bonus programs the super package of closing documents is formed one hundred per cent automatically.