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A survey of computer applications and practices in transportation and distribution.

Over the past decade the development of computer technology and its application to modern-day business problems has revolutionized the whole process of business control and management decision making. After initially being introduced in the financial and accounting sectors, the use of computers has been expanded to the extent that their impact is felt in nearly every department of the modern business organization.

The utilization of the computer in the transport and distribution area has arrived somewhat late relative to other departments in the business firm. Indications are that the computer has been used for some period of time as a computational device for routine tasks in distribution and transport. However, the full power of the computer in solving distribution problems and planning distribution systems has not been fully exploited even at the present time. As the physical distribution function received increased attention by top management there will undoubtedly occur a corresponding increase in the more strategic application of the computer to solving creatively transport and distribution problems.

Numerous case studies and surveys of companies employing computerized distribution programs have been reported in most of the major trade journals. Traffic Management, for example, outlined the efforts in this area of 20 major companies in its June, 1971 issue. In the same issue, Traffic Management reported the results of a company survey where the objectives were similar to those of the survey reported in this article. Other journals regularly include articles on new developments and applications of computer technology to the field of physical distribution management. In view of the growing interest and importance of computer applications to physical distribution operations, the idea of a survey to document the scope and nature of computer applications was developed.

Research objectives

The general purpose of the study was to shed some light on the present scope and use of computers within the transport and distribution sectors of American industry. Specifically, the survey sought to answer the following questions:

* To what extent have the respondents developed internal capability for computer usage (systems development, programming, time-sharing, etc.) within the physical distribution function?

* To what extent does the physical distribution function control the computer activity related to its operations?

* What are the most critical problems encountered in applying the computer to physical distribution management?

* What methods of input and output are available to process information?

* What are the current and planned applications of the computer in physical distribution operations?

Methodology

The answers to the questions listed above were sought through the use of a four-page questionnaire that was mailed to selected members of the US National Council of Physical Distribution Management (NCPDM) in early August, 1972. In the questionnaire the respondents were asked to provide information relative to the above questions. The responses were then machine tabulated and classified in summary form, by type of industry and by annual sales volume of the responding firm.

The survey sample was selected by screening the NCPDM membership roster and attempting to select the highest ranking distribution executive in each of the companies represented. This was done to eliminate the chance of receiving duplicate responses from the same companies. Out of a total of 401 questionnaires that were mailed, 107 responses were received. The distribution of the responses by industry and annual sales volume is shown in Table I. It can be seen from this table that the majority of the responses (66 per cent) came from companies classified in either the food, petroleum and chemical, or other industry categories. When classified by annual sales volume, the responses are more evenly distributed, and generally representative of NCPDM membership.

In view of the small number of responses and the wide variation in the types of company reporting, no attempt was made to draw definite conclusions as to trends in computer usage within any given industry. Rather, in this article the thrust has been to provide an up-to-date report on the overall "state of the art" of computer application within the physical distribution sector of US industry. Therefore, only aggregate responses to each of the questions will be described in the body of the article.

[TABULAR DATA FOR TABLE I OMITTED]

Summary of findings

Internal capability

It has been previously mentioned that one of the primary objectives of this study was to determine the extent to which the distribution managers in the companies surveyed, exercised direct control over the transport and distribution-related computer activity within their firm. With this in mind the respondents were asked to specify whether or not they had, within the transport and distribution function, internal capabilities for systems development, programming, computer input and output and time-sharing. Their responses shown in Table II indicate that nearly two-thirds of the companies surveyed have a capability for systems development within the transport and distribution function. Thirty-five per cent of the respondents indicated that they also have a programming capability and over half said they have input and output capabilities directly controlled by the transport and distribution function. Nearly 42 per cent indicated that presently they are using time-sharing systems applications for some of their operations. This high use of time-sharing might well reflect the inability of the distribution function to get priority time or programming assistance on the corporate data processing system.

Corporate control of computer activity

In most companies (69.2 per cent) it was found that the control of the company-wide computer activity fell under the data processing, management information services, or corporate systems/services functions. Sixteen per cent of the respondents indicated that this activity was supervised by the corporate controller, treasurer or other financial officer in their companies (Table III). It is interesting to note the significant percentage (37.5 per cent) of companies which reported that all corporate computer activity was controlled by "management information systems/services". This shift from "data processing" to "management information" terminology probably reflects a growing recognition on the part of management that data management is a management resource rather than a computational type of service activity.

Distribution of responsibility for computer activity

In Table IV, responsibility for computer activity related to distribution and transport is outlined. Over one-third (36.6 per cent) of the respondents reported that the chief distribution executive controlled computer activity as it related to the distribution function. Perhaps more significant is the fact that a large number of respondents reported that primary internal responsibility rested in some staff-level distribution position. This would seem to indicate that as applications in the distribution function become more broadly based there is a tendency towards functional specialization in computer applications within the distribution function.
Table II. Do you have internal capability for selected data
processing activity within the transport and distribution function?


Internal capability for      Yes          No          Total
                          (per cent)   (per cent)   (per cent)


Systems development          66.1         33.9        100.0
Programming                  34.9         65.1        100.0
Computer input/output        57.4         42.6        100.0
Time sharing                 41.7         58.3        100.0
Table III. Function controlling all corporate computer activity


Title                                        Per cent


Management information systems/services        37.5
Data processing                                18.7
Controller/treasurer/finance                   15.9
Corporate systems/services                     13.1
Management services                             3.7
Corporate-administration                        3.7
Planning                                        2.8
Distribution                                    0.9
Other                                           2.8
No response                                     0.9


Total                                         100.0
Table IV. Function controlling transport and distribution related
computer activity


Title                                  Per cent


Manager-distribution                     20.7
Director-distribution                    13.1
Systems                                  12.1
Distribution planning/development        11.2
Manager-data processing                   8.4
Manager-distribution services             7.5
Information systems/services              6.5
Vice president-distribution               2.8
Other                                    14.0
No response                               3.7


Total                                   100.0


Problem areas in computer applications to distribution and transport

The respondents were asked to list in descending order the three most critical problem areas that they encountered in their use of the computer in managing the transport and distribution function (Table V). Their unstructured responses to this question were classified into the 11 categories shown in Table V. The most [TABULAR DATA FOR TABLE V OMITTED] frequently mentioned problems dealt with the application of the computer to specific areas (for example, inventory control) with the distribution function. Following in order of importance, nearly 18 per cent of the respondents mentioned that their most critical problem was the fact that the systems development and computer needs of the transport and distribution function receive a low priority in the corporate structure relative to the needs of other departments. A significant number of respondents also indicated that many of the people within the transport and distribution function do not have adequate understanding of and/or training in systems development and computer usage as they relate to the physical distribution function. This fact may also tend to explain the frequent complaints (over 11 per cent) that the computer was inflexible and/or it tended to produce inadequate or untimely output. It should also be noted that the problems of output, flexibility and database were listed prominently as the second and third most critical problems in computer applications.

Computer input/output mode

In the early stages of computer development the methods of submitting and receiving data were limited primarily to punched cards and paper printouts. In more recent periods, other methods and devices such as magnetic tape, disk, cathode ray tubes (CRT), optical readers and remote terminals have been developed to meet the expanding needs of computer users. In an attempt to measure the extent to which the more advanced methods have been adopted and applied within the physical distribution function, the respondents were asked to specify which of the various input/output methods they had available to them for processing transport and distribution-related information. Their responses, shown in Table VI, indicate that 85 per cent use punched cards for submitting and/or receiving information. Nearly 65 per cent use the disk method, while 80 per cent have the capability for using magnetic tape. The more recently developed methods which, in many cases, permit the user to obtain instantaneous response to information requests from the computer, seem to be coming into fairly common usage as indicated by the fact that over 42 per cent of the companies surveyed are using remote data terminals with both input and output capabilities. Also significant is the fact that nearly 19 per cent of the respondents indicated that they are presently using cathode ray tubes with both input and output capabilities.

Computer applications to specific transport problems

The application of the computer to transport-related activity seems to be growing as can be seen from Table VII. Nearly half the companies surveyed are presently using a computer to prepare bills of lading and another 21 per cent indicated that they were either developing or planning programs of this type. About one-third of the respondents presently use the computer to route shipments and process carrier payments and a significant number of the others are developing or planning to implement these uses.
Table VI. Use of time sharing by specific transportation and
distribution area


Activity                                Per cent


Facilities studies                        17.8
Systems modelling                         16.8
Inventory control                          8.4
Shipment forecasting                       7.5
Carrier evaluation                         2.8
Railcar fleet control                      1.9
Vehicle railway                            1.9
Other applications                        10.0
Table VII. Computer applications to transport-related activity (per
cent)


                                Presently    Development   Planning
Activity                          use           stage        stage


Bill of lading preparation       49.5            12.1         9.3
Carrier payments                 35.5             8.4        24.3
Carrier routeing                 33.6            11.2        17.8
Railcar fleet control            21.5             2.8         4.7
Tracing                          16.9             2.8         6.5
Freight rates                    16.8            15.9        23.4
Carrier evaluation               15.9             6.5         0.0
Vehicle routeing                 11.2             4.7        15.0


Especially significant, in view of the difficulty of the task, is the number of respondents who indicated that they are presently using, developing or planning to use the computer to develop freight rates. Sixteen per cent said they are presently using programs, another 16 per cent have such programs in the development stage and 23 per cent of the respondents have freight rate programs in the planning stage.

Order processing and inventory control were two uses of the computer that have received widespread application within the distribution sector of US business. Survey results indicated that over 75 per cent of the firms responding use the computer for these purposes (see Table VIII). The increasing tendency of distribution managers to utilize the analytical capabilities of the computer as an aid in decision making is illustrated by the fact that between one-third and one-half of the respondents indicated that they used the computer for shipment forecasting, facilities studies and systems modelling. It should be noted that shipment forecasting, facilities studies, consolidation and systems modelling all show strong activity in the development and planning stage of computer applications.

Use of time sharing in transport and distribution

The development of time-sharing systems has provided distribution managers with new and more efficient methods of processing, updating, editing and retrieving information pertinent to the accomplishment of the distribution task. Table IX shows some of the ways in which the respondents are using this capability. Nearly 18 per cent of the respondents apply time-sharing systems to facilities studies, while almost 17 per cent develop and utilize systems models through this technique. It is interesting to note the broad base of strategic and operational time-sharing applications which testify the flexibility of time-sharing in distribution-related computer-oriented activity.
Table VIII. Computer applications to other distribution-related
activity (per cent)


                                 Presently   Development   Planning
Activity                            use         stage        stage


Inventory control                  84.1          3.7          4.7
Order processing                   79.4          6.5          6.5
Facilities studies                 45.8          8.4          8.4
Shipment forecasting               41.1         10.3         14.0
System modelling                   35.5          7.5          7.5
Consolidation                      15.2         11.2         14.0
Allocation/control                  6.5          1.9          0.9
Distribution costing/budgeting      6.5          0.9          0.0
Simulation                          4.6          0.0          1.9
Planning/forecasting                1.9          0.9          0.9


Conclusions

As noted earlier, the survey was designed as a state-of-the-art report. As such, it is difficult to comment on changes or trends in the application of computers to the transport and distribution functions over time. However, some evidence from earlier studies makes it possible to speculate on developing trends in the area. The points listed below are to be considered tentative rather than definitive results of the survey. It will remain for future repetitions of this study to identify definite trends in computer application to transport and distribution.

* At the corporate level there is a growing tendency to position control of the computer-related activity under a management information systems or services function.

* Within the distribution organization responsibility for directing and/or coordinating the computer is increasingly being delegated to a staff-level specialist rather than being assumed by the ranking distribution executive.

* The majority of firms rely on outside corporate support for programming assistance in systems development. However, the majority of firms have internal systems development and input/output capability.

* Over 40 per cent of the respondents use time-sharing within the distribution function. Facilities studies and systems modelling are the primary uses of time-sharing by distribution management.

* There have been recent significant increases in the use of disk, cathode ray tube and remote data terminal input/output media application in the distribution function.

* There is a high level of activity in the area of computerizing the freight rate, shipment routeing, bill of lading preparation and carrier payment. Almost two-thirds of the respondents reported utilizing such systems or that such systems were in the planning and development stage.

* Inventory control and order processing are the primary uses for the computer in distribution. Over 90 per cent of the respondents reported either utilizing these types of application or working on the planning and development of such systems.

* There appears to be a significant increase in the strategic use of the computer as a planning, forecasting and control tool for distribution management.

* The major problems retarding more rapid growth of computer applications appear to be in the area of low corporate priority for computer support of the distribution function and the inability or unwillingness of distribution personnel to apply the computer creatively and aggressively to distribution-oriented problems.

* A second tier of problems impeding progress seems to cluster around the problems of inflexibility of input and output, updating requirements and inadequate database. This general class of problems relates to adequacy and accuracy of input and output.
Table IX. Computer oriented input/output methods available in
transport and distribution function (per cent)


                                                 Both input
Method                     Input      Output     and output


Punched cards              26.2         0.0         58.9
Magnetic tape              11.2         8.4         58.9
Disk                        8.4         3.7         51.4
Paper tape                  9.3        11.2         23.4
Cathode ray tube            6.5         6.5         18.7
Optical reader             11.9         2.8          3.7
Remote data terminal        8.4         3.7         42.1
Other                       2.8        10.3          2.8


Implications

In recent years there has been an increasing interest in harnessing the power of the computer to solve more creatively a wide range of business problems. Although, to date, applications in the transport and distribution area have been primarily in the operational, data-handling area there appears to be persuasive evidence that the computer is being used by an increasing number of firms as a strategic tool of distribution management and control.

If the computer is to realize its full potential in distribution applications several problems currently confronting distribution management in many firms must be remedied. First, distribution management must develop an internal capability within the distribution function directed at understanding the computer and appreciating its potential in solving distribution problems. This is not to say that management must develop a competitive staff to the corporate information systems group, but rather argues for improved understanding and communication between the distribution function and the corporate data processing function.

A second and related requirement is that distribution managers should carefully and comprehensively plan their computer-oriented requirements. All too often computer applications, including the reporting system, are built piecemeal, with expensive reprogramming required to modify existing programs for unplanned changes. Frequent changes result in inefficient use of computer systems, programming and systems personnel, and often raise the frustration level on both sides. If this situation is to be resolved, careful planning and a more thorough understanding of what computer systems can and cannot do is required on the part of distribution management.

In summary, it appears that the computer is becoming a fact of life for modern distribution management. In order to get the most out of new data processing technology and develop an effective, efficient and responsive distribution system, the distribution manager of the 1970s will require increasing levels of understanding of the power and flexibility of the "magic black box" in solving his distribution problems.
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Author:LaLonde, Bernard J.; Auker, Karl
Publication:International Journal of Physical Distribution & Logistics Management
Date:May 1, 1995
Words:3139
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