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management
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Page 59
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matters by John Darker AM BI
Computer aids in transport administration
PUBLICITY highlighting the contribution of computer sciences to the solution of distribution problems, especially related to the economical routeing of delivery vehicles, should not obscure the very real contribution computers can make to routine matters in road transport administration.
Either because of the availability of superior equipment or the readiness of American businessmen to exploit computer aids in their continental-size market, many of the most interesting examples of computer aids in transport stem from America. The example of the National Transit Corporation, of Dearborn, Michigan, seems well worth quoting for the Corporation claims such benefits as more detailed current revenue accounting and analysis; better identification and control of fleet maintenance cost, and the ability to increase revenue without increasing staff.
The company is a common carrier, mainly serving the motor industry in the states of Michigan, Ohio and Indiana. It has terminal depots in Detroit, Pontiac, Saginaw, Indianapolis, Dayton, Cincinnati, Columbus and Toledo, with garages in Detroit and the Dayton-Cincinnati area. The fleet totals 150 tractive units and 300 trailers — comparable with many wellknown British operators. The current annual revenue of the company is $ 7 million.
National Transit serves 1600 regular and inter-line customers and receives between 850 and 1000 freight or pro forma bills daily from its terminals. The pro bills are recorded on magnetic tape on an NCR 736 magnetic-tape encoder — three times faster than a punched-card encoder. The NCR 736 provides input to the computer at the rate of 2000 records a minute — more than six times faster than punched-card input. The recording of a pro bill data takes from four to six hours a day.
Future needs
The computer used is the NCR Century 200 system which includes a central processor with a storage capacity of over 32,000 characters and a dual-spindle magnetic disc unit with a capacity of over 8m characters. This equipment has ample capacity for present and future needs and can be added to as necessary. The computer was able to "go live" immediately it was installed thanks to the employment for nine months, before installation, of two ex
perienced computer people who wrote programmes after a two-week course at the NCR school.
Following a validation and error-listing run which checks the accuracy of pro bill input data, the system produces a freight bill register broken down by terminal. This register shows complete daily revenue in terms of revenue splits, accounts receivable from splits, accounts payable, if any,together with inter-line and all miscellaneous revenue. The register also lists any missing pro bills and classifies shipments (consignments) under five weight categories.
A total revenue analysis for the day, week and period-to-date is then printed out, following which charge data is separately accumulated for the weekly production of statements for regular and inter-line customers. Master disc files are then updated with the day's transactions.
All these runs take only 25 minutes on the NCR Century system. Cash receipts are also recorded daily on the encoder; this input• takes from three to four hours. Prepared from remittance advices, the receipts are read into and validated on the computer to ensure that the remittances balance in terms of total debits and total credits.
Collection reports These collection reports forwarded by the terminal depots are then balanced, following which payments are posted and records of payments, bank deposits and all journal entries generated by cash receipts are produced. The cash-receipts computer runs take about 35 minutes and complete each day's processing.
At the end of each four-week period, an accounts receivable aged trial balance is produced which shows 30-day, 60-day, 90-day and over-90-day balances, as well as total balances, for each account and the current state of accounts due for inter-line customers.
The report also summarizes the total balance, by aged categories, of each account and also the percentage of grand amountsoutstanding totals by aged category for each terminal, broken down by regular and interline customers. Data provided by the aged trial balance facilitate tight credit control.
A comparative aged trial balance is also produced for all inter-line customers. This compares moneys receivable from inter-line with money due to inter-line operators, thus making it possible to determine break-even points between interline dues and owings.
Revenue analysis The revenue for each period is then analysed, both for the period and the year to date. The analysis covers outbound and inbound point-to-point shipments between National Transit terminals and the shippers' outbound, and consignees' inbound, loads by terminal. Each of these categories is broken down in the report by weight category; average weight and revenue per shipment, average LTL (small load) shipment; average TL (full) load shipment and average overall shipment.
These outbound and inbound point-topoint shipment analyses are used by National Transit to improve its operations. They reveal customer traffic patterns and make advanced planning more practicable. The system also produces a miscellaneous revenue register which lists all other incoming payments by jodrnal account number.
National Transit also produces a period and year-to-date report which analyses the maintenance cost per mile of each of its vehicles and trailers, in terms of nearly 5C different types of repairs. The report includes fixed costs, such as depreciation and licensing fees, and also shows an average cost per mile for the entire fleet and pinpoints vehicles which show a high cost-per-mile in relation to this average. A similar analysis is also done for 12 different types of vehicles.
Tyre costs Tyre costs are not overlooked; a separate report on tyre repairs by individual vehicle and vehicle type is produced with another report detailing the cost of inside and outside repairs, with fuel expenses, for each terminal.
The NCR Century 200 system is also used to process six different payrolls for 650 National Transit and affiliated warehouse employees, and is also providing a data processing service to three outside firms, covering revenue distribution, stock control, sales analysis and commission reports. Negotiations are in hand to undertake data processing work for 14 other companies.
Future plans for National Transit's computer system include the use of a second NCR magnetic-tape encoder with communications capability (now used for direct communication with outside users of National Transit's data processing service) to communicate directly with each terminal, thus making possible a centralized collection and invoicing operation. The company also plans to put stock control, invoicing and accounts receivable for the affiliated warehouses on to the computer.
This example of the use of a computer by a modest-size transport company suggests that before long British road hauliers will be folloiviag suit. National Transit had used electronic daia processing before its new computer system was acquired; they sent punched paper tape produced on accounting machines to an outside computer bureau for processing. But this method failed to meet growing accounting and management information needs. In deciding to equip themselves with a system with more than sufficient capacity for their own needs they had in mind the sale of data processing facilities to firms outside the transport business, thus subsidizing their computer costs.
Fewer depots One result of the introduction of computer accounting has been the reduction of the number of National Transit's depots from 10 to eight. The analysis of preventive maintenance data led to the introduction of a second garage to minimize the cost of outside repairs.
It is certainly impressive to read a print-out of a vehicle profitability report prepared by this NCR equipment with miles per gallon worked out to four places of decimals — a ludicrously costly exercise by manual methods — with earnings per mile, maintenance costs per mile and profit /loss per mile to the same standards of accuracy. Perhaps sizeable British operators should send their accountants to America for a month to see for themselves what is possible and what it all costs.