Many changes on way in distribution methods
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1E CENTRE for Physical DistilAtion Management was ought to many people's attenin about five weeks ago when launched a big new distribuin cost survey.
Ex-transport minister and risg Social Democrat William )dgers was on hand to "say a w words" and attract some of e national press. As a result Iverage was good, and news of e survey actually filtered rough to some of the dailies. For many readers this was the st they would have heard of e CPDM although in fact it was
up in June 1970 as an offloot of the British Institute of anagement. Its rather grandlunding aims were to develop e theory and practice of physi1 distribution management, rcourage a wider and deeper rpreciation of pdm and generly promote the profession. In the early days the Centre as mainly funded by the Govnment, but in 1974 this ceased id the CPDM looked to industry r sponsorship. Companies are invited to become cor)rate members and in return luld nominate representatives attend CPDM seminars and 3ining courses at preferential tes, join in local meetings with her member companies and
have access to the Centre's reference information.
About 600 companies have done this and become corporate members, therefore supporting the CPDM by their varying contributions. There's not a lot of money involved, which does at least ensure that the CPDM isn't top heavy — there's just manager Ray Horsley plus three other full-time staff.
But the formula works, says Ray Horsley. "We wanted to become an influence in the physical distribution management world and I believe we have. We really do know what's happening in the industry."
Ray Horsley's own background gives him a good insight into the business. He started his career with ICI as a distribution management trainee, rising to assistant to the distribution manager. From there he moved to become transport controller with Rank and then distribution director. This was followed by a spell with Fisher-Price as European operations director in Brussels before returning to this country to become CPDM manager in early 1979.
When most of us refer to distribution we think of the rather more limited definition covering just the final delivery to customers. The CPDM more correctly takes the wider definition of distribution, encompassing from the minute the goods come off the production line until they go into the customer's premises. This includes packaging, order processing, exporting, materials handling, inventory management, warehousing and transport.
Furthermore, the Centre takes a multi-modal view — although the vast majority of physical distribution is by road, the haulage industry hasn't got a complete monopoly and so rail, air and sea are also covered by the CPDM to a lesser extent.
Said Ray Horsley: "The CPDM isn't a super union for distribution managers. But we want to enhance the profession. In a survey in the early Seventies it was found that physical distribution accounted for 16 per cent o manufacturing companies' sale: revenue, which is a fairly largr chunk of the total costs. So thr distribution manager has a yen responsible and important job "In some companies this I: understood. But I suspect the are in the minority and in tor many companies the status o the distribution manager is no properly recognised. Which why we want to improve thei professionalism."
This is being done largely 13) the seminars and conference: held by the Centre for Physica Distribution Management or such topics as tachographs, wa rehousing, productivity and sr on.
To back this up and help thr pdm manager become a bette all-round manager — placinc. him alongside the accountants marketing men and productior managers — the Centre looking to extend its programmE into general managemen training. The resources of its bic brother, the British Institute o Management, will no doub come in useful here.
Ray Horsley believes that thE 1980s will be an era of chang( for physical distribution. He personally expects that the major development will come in the order processing field with the use of mini and micro computers speeding and easing the documentation. Already the most advanced manufacturers are at the stage where phoned-in orders are immediately converted directly into picking notes, loading sheets and invoices, with the information also updating stock records and customers' accounts.
The CPDM membership includes both manufacturing companies and professional haulage and distribution companies, so the Centre is well-placed to examine the links between them. Ray thinks that more and more manufacturing companies in the 1980s will opt out of distribution and hand it over to the specialists, who will offer warehousing as well as trunking and final distribution.
Under the dictates of the BIM the Centre for Physical Distribution Management is open only to company membership although it had been felt that there was also a need for a body for individuals to join. This has led to the establishment on January 1 this year of the Institute of Physical Distribution Management. It's legally independent of the Centre but affiliated and members of the CPDM board are acting as the council of the Institute for its first year. Ray Horsley is ,-Thief executive and secretary; here are no full-time staff.
Ray Horsley was literally 'overwhelmed" at the response `o the launching of the Institute. He expected about 1,000 memDers by the end of this year but n fact he is already at this figure low and says 2,000 is possible )y December. So far they iaven't "marketed" the Institute t all, but have even attracted iorne overseas members.
The IPDM is open to managers n manufacturing companies as yell as those working for profesonal distribution operators and lere are no formal entrance xams for the Institute — appliation forms merely ask for a eview of the applicant's relent experience, any qualificaons, current position and res
ponsibilities, etc. The council democratically vets the applications.
There are three grades of membership; Associate, Member and Fellow, Registration fee is £5 and the annual fee is £20 for Associates and Members and E30 for Fellows. Benefits are similar to those of the Centre but apply to individuals, not companies. Ray also mentioned that the Institute would like to win exemption from the physical distribution paper in the Chartered Institute of Transport exams. He did not feel the IPDM is treading on the CIT's toes — there's room for both.
The members and fellows of the IPDM are entitled to use the appropriate designatory letters after their names and there is also practical help for them over careers advice, notifying them of suitable pdm vacancies, etc. At present the Institute exists purely on this professional level, but Ray indicated that if there was the demand it might also run a social programme in the future.
He commented: "I'm delighted with the way in which the Institute has got off the ground and I hope the members are too. They have the distinction of being associated with the first pro fessional institute in Europe for distribution managers."
The distribution costs survey mentioned earlier and announced last month is the biggest project to be undertaken by the CPDM. The last major survey was carried out more than 10 years ago, so it's certainly not a wasted effort. Existing British figures indicate that physical distribution costs including all transport, warehousing and associated administration is costing between nine per cent and sixteen per cent of total sales value.
The most recent British survey (albeit on a smaller scale) was carried out by an American consultancy company and came up With a figure of 17 per cent of sales value and indicated that big potential savings were achievable.
Understandably, the CPDM took the view that before you can start talking about the possible savings it's helpful to know the size of the problem. Hence the new survey.
Consultants PW International is to conduct the survey for the CPDM and the 5,000 member companies of the BIM are being invited to participate. Any other company which wishes to can also join in. They will be sent quite a hefty, 20-page questionnaire to complete and it's estimated that it will take a well-informed manager with information readily available a day to do this.
The information required includes a classification of the type of business, sales volume, distribution pattern, service level, etc.
All the information — and about 500 to 750 replies are ex pected will be processed h the PW International compute Companies that have partic pated in the survey will receiv in return a free 20-page compt ter analysis of their distributio costs and performance and the will also be given a compariso with the average for other corr panies in their industry. Conf dentiality is assured; no corr pany name will be mentione and no trade secrets will b revealed.
The overall findings of the su vey will be published in a fu report at the end of the year an presented at a national confe ence. It is hoped that sales of th report will finance the survey Having gained an accurate ph ture of physical distributio costs in the UK, it gives the ir centive and the knowledge t get these costs down -rnayb by changing the whole patter of distribution.
Whatever happens, the Centr for Physical Distribution Mar agement can justifiably claim t have been instrumental, by qu etly but steadily promoting th cause of professional physici distribution management.