new approach to Euro ha
Page 42
If you've noticed an error in this article please click here to report it so we can fix it.
THE APPROACH of an operational research (OR) man to the challenge of goods distribution in Europe differs vastly from that of the traditional transport manager.
The transport man thinks in terms of vehicles, transhipment points, drivers's hours, refreshment and sleeping arrangements en route, warehouse/depot network, and communications in the widest sense. The OR man may see the problem from a different angle.
Because many British companies are planning to increase exports to Europe and the Middle East, the methods of organisation and the "infrastructure" — warehouse locations, vehicle servicing points, computer control systems, etc — are being worked out.
A massive increase in exporting, or for that matter in the distribution area, poses complex problems for distribution managers. Success is not guaranteed if the transport and warehousing links are adequate.
The costs of distribution may be inflated if the total operation is not closely controlled from the centre.
This theme was hammered home at a conference of the British Institute of Management's Physical Distribution centre and the Operational Research Society.
Any road transport manager aspiring to progress to distribution management must be prepared to learn a new ball game.
Whereas the transport manager may operate a largely autonomous department, with a limited though vital task, the distribution manager is more closely integrated into the total management team. He works closely with marketing, financial, and production managers.
If the joint advice to the marketing /distribution specialists is wrong, than the whole enterprise may be endangered.
All road hauliers know something of the importance of cash flow and budgetary control. An inaccurate sales forecast, backed up with distribution arrangements for a predicted level of activity, can do immense harm, wasting raw materials and disrupting production schedules.
Translated into the sphere of transport and distribution, there could easily be the wrong products, in the wrong quantities, at the wrong places.
Once used, transport is a wasted resource. To correct maldistribution of products costs time and money. The transport department has to pick up the pieces if errors in forecasting have caused problems.
Prof R. G. Brown the principal lecturer at the BIM /OR conference at Stratford-upon-Avon, is an independent consultant with clients in the United States, Australia, and the Common Market. His experience of distribution in the US is relevant to Europe.
Time and distance add complexity to distribution. In Britain, forecasting errors can be put right relatively quickly and cheaply. Multiply the distances, add communications problems and frontier hold-ups and the distribution task becomes more formidable.
Prof Brown says there must be a central control of stocks of raw materials and finished products. The actual location of stocks may be less important.
Prof Brown spoke at length on the merits of the "push" rather than the "pull" system of replenishment of stocks. If number of selling focal points get their sums wroni then the central factory run the risk of over or under production.
During an upturn in confidence it is easy for field marketing manager to make rosy forecasts. If surplus goods are made ant distributed in line with forecast demands — the "pull" system — sensible control from the centre is impossible.
Prof Brown was concerned to describe the most economical system of replenishing the finished goods inventory "because has the most value added, and is the most specialised in terms of form and place carried." There must be sufficient stock, not too fal from market, to fill orders promptly.
Inventory is "pulled" int a warehouse if it is orderec solely on the basis of stoc14 status and requirements at that location, regardless of competing claims.
With a "push" system, stocks are sent to the sellir points in fair shares — perhaps less than ordered but within the capacity of the organisation.
The technique of central control is possible today because of improved communications and the u: of computers. But the sam principle can be applied using manual methods.
Distribution is really an extension of the factory's production control system, Production control enables the correct number of components to be produce at the right time and in the right sequence.
Some mistakes are inevitable, but correcting these at minimum cost without detracting from acceptable service standar is crucial to successful distribution in Europe.
• John Dark