Limited PDM view Cheers
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THE BEST PAID distribution HE FIRST joint annual conference of the Centre for Physical Distriution Management and the Institute of Physical Distribution Mangement in Birmingham last week attracted 195 delegates. AVID WILCOX reports.
The theme of the conference fas, optimistically, "Emerging .om the recession — the role of le distribution manager". A uccession of speakers put over le same message: that the UK iew of physical distribution is 30 limited. What is needed, said 'rof Donald Bowersox of Michian State University is someone oversee the complete movenent of materials from raw naterials entering the factory, hrough the production process, stock and distributed to cusomers.
This is called materials logisics management and is based rn the grounds that the final listribution is only part of the )icture and so should not be dewed in isolation from the novement of the rest of the naterials through the system.
The best received speaker was lune Svensson of AB Volvo Transport in Gothenburg who, although Swedish, spoke in the plainest English and avoided consultants' jargon used by some of the speakers who preceded him.
Mr Svensson illustrated how Volvo had adopted the principle of materials logistics management to good effect. The potential savings are enormous — he said that Scandinavian companies typically have 55 per cent of their tied-up capital in the materials flow including the raw materials, goods in manufacture and those in distribution.
Since applying materials logistic methods, Volvo had managed to reduce tied-up capital by almost a half, and for Volvo each one per cent reduction in inventory meant £25m released. As an example, Mr Svensson said that it took six months before Volvo turned a steel ingot into a crankshaft.
But the machinery and all the handling took only one day; the remainder of the six months was waiting at various points in the line. Good materials logistics management can reduce this period and so free tied-up capital.