Rationalization of U.S.
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Distribution Under Way
Overlapping Delivery Systems
By are Wasteful, so War-time George H. Scragg Revisions in Great Britain and
. America May Come to Stay
E are living in a period of rapid changes and forced
developments—an era of great achievement when operating, practices either establish their soundness very definitely or fall by the wayside in favour of more effective methods. Times arestrenuous indeed, but out of the newly created efficiencies of war will come many factors of lasting benefit to peace. Developments have already indicated some of the things we may expect.
Let us take a quick backward look no.w at business during normal times to see just where we stood befcre the outbreak of hostilities. Manufacturing efficiencies, we know, had hit such a high peak in the United States that engineers found it increasingly difficult to improve on the methods in vogue. Machines had become almost human in their automatic precision. As a result production costs had hit an all-time
low level. - Despite this idealistic situation, the final cost of goods to the consumer was
out of line. Distribution efficiencies failed to keep pace. When we observe that 58 cents of the consumer's dollar went for distribution, we can retognize. this point. While engineers were applying close measures to manufacturing operations, the field of distribution received no comparable attention. Here, then, was a fertile field.
Lorries Lower Cost to Consumer Although big stridei have been made, the surface, has been barely scratched. Consider the food field, for instance. The motor lorry has proved • a means. for bringing many food commodities direct from the farm to the city, reducing costs to the consumer materially and, in many cases, permitting the use of commodities that without the lorry could • not be economically handled.
D'espite this, however, it is estimated that to-day American consumers pay approximately two billion dollars a year for fruits and vegetables, but the farmers and growers get only about 700,000,000 dollars. This field has its complications, of course, hut there is unwartantecl waste in handling and transportation, and 'distribution must be charged for a large portion of the bill. Too often the greater bulk of food commodities are handled by trade intermediaries, whose costs and profits inflate the final price many times. The war will have a far-reaching effect on distribution in the peace-time economy to follow, and the 58 per
cent, consumer-cost laid to distribution in the past will be cut decidedly. Consider a few. facts. The aeroplane received its big impetus, from the first World War and made vast strides as a transportation medium in the years that followed. But the accomplishments of the past will be far surpassed by the developments of the present war. War economy permits experimentation on a scale which would never -be considered in peace-time.
To-day, all first-class mail in the United States could be carried by aeroplane for less money than by previous methods. Beyond that, the bombers we are building to-day will be used after the war is over, not for mail alone, but for cargo.
Not only in the air, where we naturally turn for the more dramatic developments, but on the land as well, we will see great strides as a result of the war. Road-transport developments of comparable magnitude, born of the war, will be converted to peace-time use when hostilities cease.
In Cleveland, the Half-Trac vehicle has been developed and is being built in increasing numbers for the United • States and Allied forces. Already farmers, oil-well producers, and timbermen are asking if it be possible to get such equipment for their use. The answer is: "No, not to-day, but when peace‘comes the manufacturer' will be interested in filling orders."
It took the war to produce this type of vehicle which can travel over rough ground, through mud and water, as well as on the highway. So it is with, product after product which has been designed for war and will be adapted to peace-time pursuits. These things will cut distribution costs, which during the past two decades got so far out of bounds.
I think we will have to agree that we have introduced too many unnecessary services to our customers, actually impelled by competition, but labouring under the illusion that the customer has forced it upon us. These services are not only unnecessary to-day, when we must conserve energy, but they are , unnecessary at any time. For years we have been studying to reduce waste motion in manufacture, with the result that fine, co-ordinated 'movements have been developed, but we have yet to bring this thorough study of waste motion into our merchandising and into our distribution.
If we had, then when I made a purchase of a picture frame, 3 ins. by 4 ins, and weighing less than 8 oz., the girl in the departmental store would not have said to me, "Charge and send, sir? " The cost of delivering that frame was probably more than its sales price, certainly more than the profit. The girl did not offer to send it because I had demanded such service, -but merely because someone, somewhere, had neglected to teach her the expense, the wasted energy and the distribution cost she encouraged.
Now, with to-day's war conditions, authorities are telling these departmental stores that they cannot have tyres. Undoubtedly they will soon be saying that 'they cannot have trucks. Under such conditions, the stores will find method i ofholding customer goodwill without saying to the purchaser of a 25-cents item, " Yes, madam, we'll deliver this afternoon.'
High Distribution Costs Must be Cut This waste is not limited to retai merchandising and it is not entirely the fault of the retail customer.
Let me tell you that the distribution costs in many American businesses (take the laundry business as an example) average from 20 to 30 per cent. and the profits are from 2 to 5 per cent: Certainly we know that we are not going to be able to cut the cost of the product very much—of its material, the labour involved, administration costs, or the taxes. So, if business is to continue, we must realize our savings from the average 25 per cent, which goes into distribution.
Undoubtedly, the war will bring is some fine examples of communal delivery and, perhaps, we will retain some of these after the war is over.
In a period like the present, when salesmen are taken out of service because of low domestic stocks, due to the' -priority situation, advertising is called upon to maintain the contact between producer and consumer, to inform the customer of 'What is going on, to keep the company name alive, and to engender goodwill. Allthesethings were previously doneby the
salesman. Advertising must fill the bi each .