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matters by John Darker, AM RIM
Transport and distribution consultants
No 7. .P-E Consulting Group Ltd
P-E CONSULTING GROUP, founded in 1934, is one of the "big four" in British consultancy, with a large stake in giving professional advice on transport and distribution matters. Though its services to industry and commerce cover the whole field of management problems it is particularly well placed to help on distribution problems by virtue of its capacity to design and supervise the construction of depots and traffic interchanges. Modern distribution systetins interact with production, warehousing, marketing—even tong-term forecasting techniques. Heavy capital expenditure is likely to be involved and the technical division of P-E claims special, expertise in the depth analysis of the commercial and other factors of distribution planning.
The assessment of the financial implications stemming from alternative schemes using .different methods of operation is likely to commend itself to transport people. There may be "one best way" of tackling a problem but there are always plenty of alternative methods. Reconciling the physical and human resources to ach'eve an agreed objective is the stuff of management consultancy.
A 25-minute management education film, "Objective: Distribution", produced for P-E recently, gives impressive evidence of the scale of problems handled by this firm. The well-known computer-directed centralized warehouse of Boots Pure Drug Co Ltd at Beeston. Nottingham, was built to the general design and specifications of 1;'E., and the firm was also responsible for the methods and mechanical handling systems involved. P-E was involved with the initial planning of the new £9m BRA/BOAC freight terminals at London Airport and subsequently was responsible as consultant for the detailed design, contract preparation and letting and administration associated with the mechanical handling systems valued at £4m. All this was co-ordinated with the building work, and advice was given on computer control systems and operating procedures.
Transport men cannot be reminded too often that 28 per cent of the working population of Great Britain is engaged in the transport, handling and storage of goods. Raymond Baxter, in the film commentary, stresses that distribution is not the province of a single department but is a combined operation involving a large number of different disciplines and activities. For maximum efficiency the contribution of each of these separate disciplines must always be subordinated to top-level analysis and planning.
Dist tibution Applying this philosophy to practical examples P-E points to the highly sophisticated beer bottling and distribution store of the Courage group in central London, Here, the distribution solution was determined by two basic factors—a relatively small product range, and the ability to control all activities from production to final consumer.
The Courage project began with a marketing survey of the 1500 outlets for the company's beer and their requirements in terms of frequency and variety of deliveries. A decision had to be made about where the beer should be packaged, whether in a single centralized store or a number of decentralized depots. The highly automated building decided on permits palletized storage of beer crates up to 35 crates high and their easy breaking down into lorry loads to Meet delivery requirements.
The original planning was so thorough that the various alternative methods of operation were evaluated in the form of a model. In the event it proved possible to extend the number of product lines from 23 to 53, to handle 25 per cent more beer production and to bring manning levels lower than the original estimates. The use of mechanical unloading and loading equipment and of decks designed to fit the vehicles exactly, with the rapid turn-round time which this gives, has enabled an additional load to be carried by each lorry and crew every day.
Route planning was a vital part of the Courage success story because the company's production control system is completely integrated with the control of despatch and delivery. The distribution pattern is planned in precise detail even to the way goods are placed on vehicles.
Boots" distribution problem was very different. Major considerations in planning the storage and distribution of bought-in toiletries were, first, the needs of a large wholesale organization carrying enormous inventories, and second, minimal control over the size, shape or nature of the packaged goods to be handled. The sophisticated mechanised handling system installed at the Beeston warehouse, which is associated with computerized order-taking, contributes to the cost-cutting exercise of minimum branch stock levels. More large undertakings are turning their attention to this aspect. Success invariably puts a premium on efficient road transport operations.
Cost elements A factor brought out by the Boots illustration is the number of variable cost elements making up total distribution expenses, ranging from packaging, through stockholding and trunking to warehousing and delivery. It is vital to understand at the planning stage that variation in one cost element can affect one or all of the others; hence the necessity of quantifying individual cost elements in any proposed solution.
Whether or not Britain enters the Common Market there is no doubt that in some respects the Continentals move faster in planning new transport projects. The new Paris airport only nine miles from the centre should be operational before the Foulnest designs are completed, let alone the requisite planning permissions which are likely tr hard-fought by local interests affected. Th project to move Covent Garden market Nine Elms is taking an unconscionable to implement.
In Paris, P-E was brought in to design a large new transhipment warehouse at Rungis, on the outskirts of the city, for the Gaieties Lafayette Group supplying the Monoprix and Uniprix chain of food stores. The pre-planning stage of this project involved the use of simulation techniques to define the best delivery arrangements to satisfy the unique constraints imposed by food retailing in the Paris area.
For many centuries, walled in covered stalls existed at Les Halles, in Paris, before the 1860 complex of buildings to act as a central receiving and wholesale distribution point for fresh food was put in hand. The design was revolutionary for its time, the long glass-covered pavilions being laid out geometrically for ease of movement. Below the street level front of each building ran an underground passageway for distributing the merchandise imported each night by vans and carts—an idea that is being revived in some current shopping precinct developments in Britain.
By the 1960s the Les Halles complex had become a total anachronism, the atmosphere stifling and poisoned by multiplying traffic. The stalls had overflowed into the neighbouring streets. Nightly, heavy delivery lorries unloaded their contents on to the pavements.
New market In the early 1960s the French Government closed down Les Halles and set up a new fruit and vegetable market at Rungis, near Orly airport, as part of a huge warehousing complex with full road and rail access facilities aimed at encouraging traders to move outside the city. Rungis reflects advanced thinking on the grand scale for it is intended to expand the traditional concept of a wholesale market into a modern food distribution centre capable of operating on both a national and international scale. Rungis, some months ago, was feeding 20 per cent of the French population. It was designed in its first full year of operation to handle 1+ million metric tons of goods, representing the daily arrival of 520 railway wagons and 1700 lorries, and despatch of 1200 delivery vans.
SAMADA, the transport company of the Societi. Central d'Achats (SCA), part of the Gal eries Lafayette Group, commissioned P-E to design the mechanised handling systems for a new depot built on a 15-acre plot at Rungis. The existing transhipment depot, located near Bercy in the Gare de Lyons, handled about 500 tons of merchandise daily, receiving goods by road and rail from all over France and delivering them to shops in the Paris area within 24 hours. Some 80 tons of fruit and vegetables were received nightly, from the country.
A transport and delivery study was launched by P-E's technical and management sciences divisions. Operational research and other techniques were used to determine the vehicle design and delivery systems needed to satisfy the various constraints imposed by the transport of goods from Rungis to the Paris shops. The .4ree-part study dealt with the physcial aspects of parcel handling, vehicle types and sizes, and the most suitable delivery system,
P-E found that SAMADA was using rented 4+-ton artics loaded with parcels in wheeled containers holding on average 175kg (3851b) of merchandise. Most of the shops received their deliveries at the kerbside, thus most vehicles were equipped with electrically operated tail-lifts.
Because SAMADA had a large investment in small wheeled containers, some 15,000 being employed, P-E's study was based on this method of operation. However, the small artics did not give very high vehicle utilization and a new larger type was specified for use in deliveries to larger shops.
At the shops it was found that few premises had sufficient space available for parking trailer or swop-body containers; for the majority of the shops, tractors would have to wait while rapid unloading and reloading took place.
Many of the larger shops received more than one daily delivery by the existing 44-ton vehicle which contained only 18 to 20 wheeled containers. The study took into account that the new Rungis depot would allow larger vehicles to be loaded, but that the use of these for delivery might be limited by physical access problems. It was found possible to use the maximum size of vehicle permitted (15m long) to contain 42 or 44 wheeled containers, or in the case of special double-decked vehicles, 65 containers. While the height of the latter vehicle would restrict its use to suburban work, this disadvantage was largely offset by the many large supermarkets and hypermarkets being built on the Paris outskirts. Only 12 shops were found to have access problems so acute as to need small vehicles.
Research studies Particular interest lies in the operational research studies evaluating possible vehicle routeing and scheduling schemes. Account had to be taken of the various time constraints. For example, most of the fruit and vegetables come by rail from the South of France. The first arrive at 10 pm, but later arrivals, up to 2 am, do not allow goods to be sorted into shop orders ready for dispatch until about 4 am. French food shops attach great importance to good presentation of produce which means that even small shops must receive deliveries of produce at latest by 8 am. This situation at the existing Bercy depot causes a spectacular "Le Mans" type start for about 100 small lorries at 5 am each morning.
A further time factor affecting the use of the large vehicles proposed for economic transport arose from parking and circulation regulations, severe in the centre of Paris after 8 am, while heavy traffic builds up on the Boulevarde Peripherique—a motorway entirely encircling Paris—at about the same time.
All these various factors, together with the characteristics of the new Rungis depot, were used as input to an operational research model, set up to evaluate a number of possible distribution systems. These included a single drop system of one shop delivery per journey, giving the advantage of maximum security and simplicity; and different multi-drop systems—delivery to various shops in turn—which optimize vehicle sizes and have substantial cost advantages.
It was found that multi-drop systems were often complicated by the fact that the actual volumes of goods to be delivered to each shop were not known accurately until the last minute. Hence the optimum size of vehicle might change from day to day, since the 24-hour delivery had to be maintained regardless of the unplanned arrival of goods.
For each type of method •the main questions to be decided were the number and size of vehicles required and the total cost. Initially, the daily scheduling at Rungis is to be done manually, but the use of computer scheduling in future is possible. In order to produce efficient routes quickly on a regular basis, the shops were selected on the basis of their geographical position and of a statistical analysis of the daily quantity variation, in order to give a stable demand within each group of shops. This allowed the strategic decisions for each day's scheduling, such as allocation of vehicles to groups, to be made the day before and detailed loading decisions to be left until the morning of delivery.
Vehicle sizes It was found that either single-drop delivery with a carefully chosen range of vehicle sizes, or multiple-drop delivery with the largest vehicle sizes permitted, would show substantial savings over the present methods using 6-ton vehicles. In the multiple-drop system savings up to 40 per cent were forecast, using a fleet of only 47 vehicles, while giving the same level of service as that currently experienced with 100 smaller vehicles. In addition, the reduced number of vehicles would allow important savings to be made in providing for vehicle loading positions in the new warehouse.
P-E has developed a special simulation technique called HOCUS (Hand or Computer Universal Simulator) which is analogous to the use by aircraft or ship designers of small models or replicas of life-size products with wind tunnels or tanks of water. Simulation provides information replacing the use of intuition in decision making. It enables managers to explore the consequences of possible actions quickly and at minimum cost, often leading to very large savings.
In one typical example, HOCUS was used during the design of a warehouse site. Storage requirements were such that the space allowed for traffic around the site entrance and unloading area appeared small. The management felt that this area would become seriously congested and thus impair the smooth operation of the warehouse.
To build first and later have to rebuild to ease congestion would have been a disaster. Management decided to simulate normal operations using HOCUS. The warehouse designer produced a model, using the actual schedules of vehicles which would service the warehouse. The model was produced in half a day and was checked and run in in a further half-day. When "played" by those concerned it demonstrated that with the proposed design no congestion would occur at any time during the day and that, for the vehicle schedule proposed, only two main loading bays would be needed, with a third as standby.
Simulation The use of the HOCUS simulation technique thus enabled the design problem to be posed and the answer received in one day. It saved further costly work on site layout re-design and construction; in particular, it enabled the need for a fourth and a fifth bay to be questioned at an early stage. Finally, it enabled all concerned to see what would happen, when and how under operational conditions.
Discussing a number of current transport problems with P-E executives I asked for their views on the highly topical matter of parcels rationalization in Britain. For a fee of £.50,000 and six months' work one P-E manager reckoned the labour force of the state parcels agencies could be reduced by 80 per cent. This was a confident forecast made by a man with some knowledge of the volume of traffic passing and the number of depots currently involved in parcels work. I asked: "If you proved this, on paper, how would you solve the industrial relations nightmare resulting?" But we had not time to pursue that interesting question!