Proposals for more Effective Distribution Procedures

Abstract

The physical distribution management function of Vono Ltd. has been investigated, the main conclusions being that the function was ill-defined and data bases from which control could be exercised were not available. Procedures were installed to monitor vehicle operations and to compare the actual carriage charges with the budgeted ones. Definite regional tastes in upholstery and bedding were indicated, which contradicted with the Company's beliefs. The service provided by the Company was also shown to be worse than believed, and this was shown to not improve with order processing changes. Linear programming and multiple correlation and regression techniques were applied to the load building model problem with no success. A model was developed which was shown to be useful and the recalculation of all budgeted carriage allowances was accepted by the Company. Alternative forms of transport were shown to be capable of reducing the actual carriage charges by over 8%. This saving relied partly on more efficient warehousing. Investigations into the warehousing function led to proposals for improved stock recording and control and also assisted in re-siting the warehouse within the Tipton factory. Stock recording and control of finished products was shown to be very poor. A simulation program was developed to indicate to the management the interaction of production and inventory decisions for bedding. Attempts at producing a theoretical transport cost model were only partially successful because of the simplyfying assumptions. Towards the end of the research programme it became evident that the company appreciated the complex nature of physical distribution management.