‘The Distribution Revolution’

Press, 4 October 1982, Page 39

‘The Distribution Revolution’

By

DAVID THORNTON.

marketing development manager. Micanta Engineering Traditionally. manufacturers have tended to divorce themselves from involvement in the physical distribution of their products on the domestic market. This function will be left to one of the hundreds of road transport operators or to the Railways. In this way. distribution has usually been built in to the product pricing on a cost-plus basis.

More recently, manufacturers have become aware of the substantial percentage of total cost which is directly attributable to distribution.

This awareness has engendered a search for new technology in the transport and distribution arena, in order to bring about nothing less than a "Distribution Revolution."

"Keep those wheels moving — they're costing me money." How many of us realise the actual cost of an idle vehicle - or an under utilised vehicle. An average 7-tonne truck bears a total cost of $1.53 per kilometre if that vehicle travels only 10.000 km in a year. The same vehicle, if it travelled 40.000 km in a year, would bear a cost/km of only 75 cents — a cost reduction in excess of 50 per cent. These figures are from Ministry of Transport statistics, "Truck Operating Costs" 1981.

This startling cost reduction is achieved by simply keeping the vehicle moving to such an extent that the running costs equate to the standing charges.

To many transport operators. there is an easy way out — charge the customer on an hourly rate and all the costs are covered. Never mind the delays - the customer will always pay. But to other operators paid by weight or volume of goods carried, the story can be very different. Delays can cost money, and where do most of the delays occur?

Lost time in loading and unloading is the major cause in most distribution situations.

Many companies have sought to alleviate these delays by such innovations as palletised loading and the extensive use of fork-lifts.

Others use a load by nightdistribute by day pattern. The use of articulated vehicles is yet another attempt to beat delays in the distribution pattern. All have their place — and all are expensive.

The first stage of a new technology is already being manufactured here in New Zealand — and it’s cheap. It is the simple concept of demountable, interchangeable truck bodies and decks.

In the U.K. and Europe, demountables are an increasing segment of the total

transport scene and a variety of systems have been developed. The most popular system in New Zealand, known as a Swopbody. is totally mechanical — no hydraulics, no electrics, and virtually maintenance free.

Simply operated by one man. fully-loaded or empty, and the decks can be readily repositioned by fork-lifts if necessary.

The mounting and demounting operation takes about four minutes — which should be compared with many loading/unloading situations which can take two or three hours.

Of course, the introduction of the Swopbody system usually involves changes in work patterns — but the enormous savings in both capital and operating costs make those changes not only inevitable but even desirable.

Most operators of' the Swopbody System have established’ cost savings of more than 30 per cent with a pay-back of less than two years on capital involved. Manufacturers, realising at last the true cost of distribution. are now finding that Teal savings can be achieved by use of the demountable system.

Rather than buy vehicles themselves, they are buying just the bodies and arrange their transport with an operator who is geared to the Swopbody System.

If European experience is to be followed, tempered by New Zealand’s special environment, up to 30 per cent of the total transport fleet oi the country will be demountable before the end of the decade.

The "Distribution Revolution” will have succeeded in its aim — a real revolution in the cost of physical distribution.

STANDING CHARGES RUNNING COST

10,000 kms per year 11,677 3,698

40,000 kms per year 15,140 14,793