Transport Needs Top-level Management
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THE transport section of industry was oftenthe "Cinderella of the piece," said Mr. A. D. Wilson, Managing director of Associated Industrial Consultants, Ltd., when opening the one-day conference on transport management held in London, last week, by the British Institute of Management and Institute of Transport. Tap-level thinking, he added, was applied by many organizations to manufacturing, warehousing and sales, but interest ceased when it came to transport.
In contrast to the precision planning of a factOry conveyor line, transport was tied to the elements of land, sea and air. There Were also conflicting cross-currents of industrial and urban development, and it was susceptible to rapid changes in types of goods carried, and in the habits and requirements of users. It suffered far more than any producer from the peaks and troughs of seasonal business.
Comparative indices . of effectiveness were not readily found, said Mr. Wilson, and standards of performance, which were so necessary for forward planning, were not easily established. Compared with factory supervision, transport organization was more difficult to control, because of the scattered nature of its activities.
Nevertheless, there was no vital difference in principle between transport and any other management. What differences did exist did not establish the need for a separate corpus of theory or practice. The techniques of modernscientific management could . unquestionably be applied to transport. . . .-• Unfortunately, in , many -rases, the . comparative unimportance of transport costs, in relation to the wider economy of a particular business, resulted in transport not receiving the top-lever attention it deserved. This could reflect on the status and remuneration of the transport manager.
Such a business got what it paid for, but the position of transport manager required a man of high calibre. He was frequently the butt and alibi for other departmental heads, and he had to be strong enough to withstand attacks from many directions and avoid being panicked into hasty and possibly costly decisions. He should be selected with just as much critical discrimination as a works manager or accountant.
Scope for Scientific Management
DESCRIBING the application of some of the techniques of modern scientific management to transport, Mr. J. E. Fleming, supervising consultant, Associated .Industrial Consultants, Ltd., said that work study would automatically reveal the need to improve methods, and the directions in which it might be possible to do so. It would show the source of weaknesses, and enable alternative solutions to be accurately compared. It would also indicate where the problems demanded the use of operational research techniques. The nonrepetitive nature of many of the transport problems submitttd was _not, sufficient reason for saying that scientific techniques 'could not' be applied.
:Enumerating objectives in route and load planning, •Mr. Fleming said that these could include reduction in both the size of fleet -and cost, provision of a prompt and predictable service, for the customer, and an .equitable work load for the drivers.
His experience in the application of incentive • schemes was that, basically, transport was only 60-75 per cent. efficient, with a corresponding potential margin for improvement. Incentives, however, must be appropriate to the specific job and sufficiently flexible to cope with changing circumstances. Mates were seldom of real productive assistance and their contribution to efficiency was not as high as was commonly supposed.
Cost. Advantage Diminishing
ccr HAVE the feeling that the number 1 of cases is growing where the advantage in cost of running one's own fleet, as opposed to employin& a professional transporter, is decreasing," said Mr. I. A. McMullen, transport officer, Imperial Chemical Industries, Ltd., in dealing with the economics of a fleet.
. He added that it was often the technical service advantages which were most important with much of the traffic in the chemical industry and made private operation the right choice.
In comparing the economics of road and rail transport for bulk liquids, he pointed out that a railway wagon had a life of at least 25 years. However, current modernization of the railways had accelerated changes in design requirements, and those contemplating spending money on items with the life expectation of railway wagons should remember that obsolescence might come quicker than formerly.
Moreover, the first cost of wagons suitable for operation on modern fast power-braked freight services was higher than that of the previous standard wagon. These were pointers when examining the merits of hiring as opposed to owning.
Referring tothe claim that, in terms of ton-miles, 58 per cent. of road transport in 1958 was estimated to be performed by privately owned or contract-hired fleets, Mr. McMullen questioned whether this was a reflection on the service public road transport was giving, or whether it could be explained by the work not being suitable for public services.
Whatever the answer, industry was investing large sums of money to provide a private transport service. By so doing, it might be not only paying more for its transport than it need but might be depriving public haulage, because of the loss of traffic, of the opportunity to provide the efficient service of which it should be capable.
It was, therefore, imperative that the C-licensee should appreciate the importance of the economics of fleet operation.
Speed of delivery and certainty of timing were principal reasons given for preferring private fleets to hired road transport. This, however, Mr. McMullen emphasized, should not obscure the necessity of ascertaining whether such a standard of service was costing more than that provided by hired haulage, and, if so, by how much.
Rail Drawback A fundamental difference between private fleets of rail and road vehicles was that, except within one's own premises, the movement of railway wagons was not Under the control of the owner, nor were twey-y452.rapanied by a servant of the owner. At. til2eir destination they were "but dumb lUrnm--„qt metal incapable of urging their quiek—af„Aa_gr e_ and return home." Accordingly. the
estimaijôhof the number of vehicles required for a particular traffic flow was not the exact science it could be with road transport.
As an example of the reasons for the growth of private road transport, Mr. McMullen cited a case where one vehicle had been acquired for a particular requirement. Once the money had been invested, such a vehicle had to be put to the maximum use. Soon there was a case for a second vehicle, and so on. As the fleet grew, only tiresome traffic which did not fit the pattern of C-licence operation was put out to public services.
Whilst the acquisition of the first one or two vehicles had seemed economically attractive, the gradual growth of the fleet called for further outgoings. A point was soon reached when garage and maintenance facilities were necessary. Such expenditure varied with the size of the fleet.
Snowball Costs
For example, where £5,000 was spent on vehicles, a further 15 per cent. of this amount could be required for depot and equipment. Where the expenditure on vehicles was £90,000, the percentage could rise to 23 and at £500,000 this figure could grow to 63 per cent. Similarly, the employment of two more drivers might not create a problem. but when the payroll reached 250, amenities of every description would he required.
Road tankers were normally used over shorter distances than rail tanks. Taking 45 miles as an average loaded journey, a road tank would normally do some 300 round trips a year, delivering around 4.000 tons. Such a tanker could spend 25 per cent, of its time in movement, 7 per cent, at the forwarding works (of which 8 per cent. represented time under repair) and 5 per cent, at the destination. Such figures emphasized the potential additional transport capacity. The objectives of statistics and costs for road vehicles included the provision of a basis of comparison with hired transport, whether by road, rail or water.
In formulating such comparisons, it was desirable to separate vehicles into groups relative to chassis types. Under such grouping should be recorded the number of vehicles concerned, the number of additional trailers, if any, analysis of vehicle hours, loaded and empty miles run, number of trips, average miles per round trip and tonnage carried. Vehicle time should be split into hours running, terminal hours, hours under maintenance and idle hours. Idle time should be split into hours spent in statutory rest periods, and hours when not required at base.
By showing terminal times separately, and interpreting them in relation to the number of trips run, the need to investigate any general increase in stationary time in obtaining or delivering loads would be shown up. The division of miles run, loaded and empty, provided a general measure of the development of return loading.
Three Cost Headings McMullen recommended the division of cost's-Mkt-11V
standing charges, running costs and driving labour costs. Because his particular traffic required special vehicles, such as a variety of tankers, where the costs arising from barrels or other specialized bodies varied substantially, vehicle costs excluded the barrel or special body, the cost of which was rendered separately.
This was an attempt to isolate the pure transport cost from the total cost, which included special expenses arising from complicated containers forming part of the vehicle. It had been found, for example, that the cost per effective vehicle-hour of one type of special body could be 10 times that of another.
There was an understandable desire to work out one single derived figure which could be taken as a general measure of efficiency. He suggested the use of three separate derived statistics: (I) Standing charges per effective vehiclehour, (2) running costs per vehicle-mile, and (3) driving labour costs per effective vehicle-hour, where the effective vehiclehour was the total of running time and time spent in obtaining or disposing of a load. Underemployment of vehicles would show up in increases in -relevant derived costs.
Big Reductions in Packing Costs
REDUCTION in packing costs and labour resulting from the employment of one's own transport could be more than the cost of the actual movement. Direct comparison of transport charges could not be relevant when packing costs were so vital, declared Mr. L. A. Carey. group transport manager, Reckitt and Colman Holdings, Ltd. He was discussing freight rates.
He added that it was a dangerous assumption to think that all C-licence vehicles operated lightly loaded. Large companies and combines, particularly, were in an excellent position to backload raw materials. The cost of ancillary operation would continue to determine the level of rates.
In Mr. Carey's opinion, the increase in ancillary fleets was natural. The Gogematter tad declared that transport was not a social service "iiihrtneFetbir,-if a commercially unnecessary service was required, the cost should be met by the taxpayer at large. Traffic had to be attracted on a basis of both cost and service.
Railwaymen hoped that modernization would solve their problems, but Mr. Carey was not optimistic. In his opinion, the extent of railway services would have to be reduced substantially beyond that of closing the odd branch line, and heavy writing-down of capital would be necessary.
Road transport had been able either to hold or reduce rates in the past four or five years, but he would not be surprised if there was soon an increase.
Four Approaches to Transport Problems
IN applying analytical methods to transport problems, Mr. H. R. Watkins, head of operational research group, Shell-Mex and D.P., Ltd., said there were four general approaches. The first two were to establish the nature of the problem and to collect information. Then a model was formed of the reallife situation, which was usually mathematical. It was next necessary to study the model and check that it was an adequate description. By studying the effect of changes in the model, information could be obtained as to the influence of similar changes on the real situation.
As an example of a transport problem, Mr. Watkins showed how the output from a number of sources could be allocated to various reception points so as to give the pattern for minimum distribution costs. An insight into a problem could be obtained by simulation when pure mathematics provided no solution.