Cost survey falls short of success
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iN UPDATE rather than the final results of the Centre for Physical istribution Management's distribution costs survey was given at CPDM's conference in Birmingham last week (see page 13).
Although the full results from 50 expected replies had been riginally planned, in fact only a irther three replies had arrived ince the interim results were nnounced in February (CM Feb.
20).
This took the total of cornleted questionnaires to a ieagre 57 and Brian McKibbin f consultant PW International /hid! is carrying out the survey, ommented: "I cannot pretend le survey has been an unqualied success." He admitted that le 20-page questionnaire was 30 comprehensive and proiosed a simplified two-page verion. This recent update changed the last interim figures slightly. It indicates that UK physical distribution costs as a percentage of sales revenue are averaging 12.77 per cent, although Mr McKibbin pointed out that the companies that have replied are probably well-versed in distribution, so this figure is almost certainly lower than the national average.
The 12.77 per cent is made up of transport (3.77 per cent), storage (3.54 per cent), administration (2.88 per cent) and inventory (2.58 per cent). Packaging costs were omitted because they are too variable.
Comparing these figures with some obtained in a 1981 USA survey, the distribution costs in the UK are substantially higher — a reversal of the situation 10 years ago. In the USA now, distribution costs represent 8.5 per cent of total sales revenue.
Storage costs in the UK are 50 per cent higher than across the Atlantic, administration is 42 per cent more, inventory is 23 per cent more and transport five per cent more.
When comparing stock levels with customer service levels, Mr McKibbin said that the UK survey shows no apparent correlation between high stocks and good customer service.
Other points that have emerged include a high incidence of vehicle delays at customers' premises, and heavy pallet losses.