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168 
NAWK hears how to make warehousing pay
Page 39
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BEECHAM MAN GIVES FOUR-POINT GUIDE
by S. Buckley, AssocInstT COMMERCIAL aspects of warehousekeeping were a main feature of the annual conference of the National Association of Warehouse Keepers in London this week.
The services required of a warehouse keeper were set out by Mr. N. S. Downes, of the Beecham food and distribution division. His company, he said, looked upon the services they expected from a warehouse keeper under the four headings of warehousing and stock control, delivery, administration and the cost of service.
Within the Beecham Group, Beecham Foods had 21 distribution centres, eight of which were owned by the company and 13 contracted out. Day-to-day problems were very much left to the centres. Beecham Foods had a system of coding to identify the 94 products within its organization.
Because its products were foods, it expected warehouse keepers to provide a covered area for trunk vehicles to unload. There should also be a lockable area in which to put damaged goods to avoid further deterioration and possible pilferage. Proper stock rotation was facilitated by its three-figure numbering systems so that the lowest number should always be delivered first until the year-end when the cycle was recommenced.
Delivery aim Delivery within three to five days from receipt of order was the aim of Beecham Foods but there was increasing pressure, especially from supermarkets, to reduce this period. Referring to the Tesco night delivery experiment, Mr. Downes said it was a pity that it had fallen by the wayside. There were many organizations which would like to make night deliveries but there would have to be a change of heart on the part of retailers to make any future ventures a success.
Beechams encouraged co-operation with warehouse keepers in such matters as training, visits and cost comparison. But it did not like receiving a duplicated letter from a warehouse keeper stating that, on the basis of an RHA recommendation regarding increased costs, he was putting up his rates by a blanket x per cent.
Mr. Downes disclosed that the basis on which Beechams decided whether or not to have its own depot or contract the work out was on a break-even figure of 5,000/6,000 tons per annum throughput. Under that figure they preferred to contract the work out because the professional warehouse keeper could provide greater flexibility since all his customers were not all busy at the same time.
"Costing and accounting for the warehouse keeper" was then comprehensively surveyed by Mr. L. F. Holmes, director and secretary. A. R. Marshall and Sons (Bulwell) Ltd. It was important at the outset to know and understand by what standards profits were measured. But he warned delegates that profits were not capable of exact measurement. As a result the figure of profits disclosed by accounts were merely a guide to profitability. The longer the period covered the greater the accuracy of the profit disclosed.
Budget wisdom In these days of rising prices it was necessary to invest not only in a depreciation fund but also in new plant and equipment. Having set oneself a capital budget, Mr. Holmes explained, "get on with spending it and have confidence in your judgment". The question of working capital was important since lack of liquid resources could be serious and could easily cause an otherwise healthy business to be wound up. As one small example of potential saving Mr. Holmes pointed out that 24 per cent discount on monthly cash payments was the equivalent of 30 per cent per annum.
Management must take its share of the blame for the present economic position and it is to be hoped that, apart from spurring good management on to better things, it might jolt the complacency out of the previously inefficient. So commented Mr. J. D. Lockhart, managing director of Storage and Haulage Ltd., when presenting his paper on "Rising costs and their effect on the public warehouse-keeping industry".
Supply and demand for labour and union claims had forced up wage rates. The Government had been the major offender in rising costs, with increased weekly insurance payments, Industrial Training contributions, loss of investment allowance without compensation, corporation tax and the selective employment tax.
There was considerable pressure on profit margins with profit and dividends becoming indelicate words in present thinking of both politicians and unions. They must, however, realize that capital was as important as labour and accordingly must be given its rewards.
Mr. Lockhart then discussed what could be done to reduce the effect of rising costs. First and foremost, every item of expenditure from forklift trucks to postage stamps must be looked at closely, and those recurrent items of expenditure which had crept in when times were good and the purse-strings were not so tight must be eliminated.
Methods of operation must be re-examined in the light of recent advances in conveying, mechanical handling and recording. Because labour was not going to be any cheaper in the future, any time savings which could be made under this heading must be advantageous both in the short and long term.
Forklift trucks were by no means the solution to all problems and in many cases, even in bulk traffic, slowed up the process.
Each traffic must be reviewed separately and equipment tailored to its needs. There was plenty of equipment and the technical Press did a good job in keeping the industry up to date with recent developments.
Manual floor-sweeping was time-wasting and basically inefficient. Stock recording and checking could be streamlined. Bottle necks in operation often arose from too few off-loading points or insufficient equipment: everyone had seen the queues of vehicles early in the morning or late in the afternoon, and the use of containers and semi-trailers could help to spread the load evenly throughout the day.
How seldom, Mr. Lockhart suggested, were the relative movements of each traffic assessed. Often it was found that as a result of changing circumstances quick-moving traffic was sited at the rear of a depot or slow items adjacent to access points.
A study of customers' traffic and rates could reveal a change in the pattern of traffic.
Changes over the years might have led to a lower throughput although additional clerical operations might also have been intro duced. In comparing customer rates Mr.
Lockhart claimed that net revenue per sq. ft. was a very useful formula. It measured by totalling the storage rental and net hand ling costs, i.e. handling revenue less estimated handling costs divided by the area in sq. ft.
This gave a rough and ready figure for com parison and took account of the volume of throughput in any given area. A fall in throughput required an increased rental or reduction in area occupied to maintain revenue at previous levels. There must also be a system of budgeting and costing which produced up-to-date statements on operation. Only by having such a system and controlling expenditure could savings be effected and the results of efforts to reduce such costs be seen.
Practical warehousing course NEW techniques in warehouse handling and
storage methods will be described in a practical course for managers and trainee managers in warehousing arranged by Research and Marketing Ltd. The course will be held from January 16-20 from 9.30 a.m. to 5 p.m. at the firm's training centre, .41 Duke Street, London, W.1.
A feature of the course will be a visit to the new W. H. Smith and Son Ltd. 240,000 sq. ft. warehouse recently completed at Swindon at a cost of £3m., and techniques and equipment described during the course will be demonstrated.
Application forms and further information can be obtained from Research and Marketing Ltd., 41 Duke Street, London W.I.'
Pennine Snow Warnings: Hazardous weather conditions on the A62 Oldham-Huddersfleld road will be indicated from November 14 by a new warning system, including flashing signs, early warnings and a barrier. A highways radio vehicle with gritter and snowplough will he stationed at the summit when heavy snow falls.