FIT Service Specialty: Improving Distribution Procedures

Successful process plant operation depends on effective product distribution to provide a mechanism for the client to meet his delivery commitments while ensuring sufficient raw materials for production at the lowest transportation costs. In a well-run organization, the distribution process is the key to customer satisfaction and supply needs - product at the right time, location, and volume. Ineffective distribution prevents many refineries from achieving their potential and, in today's economic climate, can mean the difference between survival and failure.

FIT provides a service whereby seasoned FIT distribution professionals assist the client to evaluate existing distribution operations for efficiency, effectiveness, and support of operations. The FIT distribution procedures improvement program also strives to guide the client in maximizing the benefits of modern transportation systems. Logistic operations may benefit by using modern tracking systems, automated bill-of-lading verification processes and other technologies, as appropriate. The program has a first and second step: an audit, where one of the key objectives is to identify areas for improvement in existing procedures, as well as to identify applications where the use of new technology and better distribution techniques will provide more reliable shipping and more profitable logistics performance; and the second step, a mentored program for improvement. Some clients perform just the first step as an impartial means to validate areas for change, if internal resources are available to help facilitate required changes.

The distribution audit reviews the current logistics process and evaluates how well it meets current and expected future business needs. It covers the following specific topics:

• Expectations from the distribution process.
• Sources, timing and reliability of distribution information.
• Data acquisition process.
• Distribution software used.
• Customer feedback metrics.
• Use of the shipment tracking services.
• Fleet management.

An Applications Audit project can look at current systems and infrastructure and evaluate how the client environment compares to peer industry systems, how well they meets current and expected future business needs, and how well they support the organization. The audit could cover the following specific topics:

Expectations from the Distribution Process

FIT consultants interview key management personnel to define expectations from the distribution process and determine how reliably those expectations are met. The outcome of these interviews provides guidelines for the remaining work.

Sources, Timing and Reliability of Distribution Information

The FIT consultants hold interviews with key logistic, shipping, car tracing, customer service, sales and marketing support personnel to understand the nature, timing and accuracy of distribution data used, as well as any recognized deficiencies in the data that, if corrected, could improve the effectiveness of shipments. Specifically the bill-of-lading handling is of utmost importance to ensuring effective shipping results.

Distribution Software Used The consultants review the distribution software and systems currently in use to ensure that they are capable of supporting plant and corporate needs. Existing software is studied to determine how well it can meet the needs identified earlier, including appropriateness for the task, robustness, and ability to generate useful timely results. The consultants will recommend software changes, additions or enhancements as appropriate to improve the process.

Customer Feedback Metrics

The FIT consultants examine the customer feedback data results to ensure that all who need these results are receiving them in time to take appropriate action. Sometimes this part of the audit leads to changes in the distribution information flow controls.

The consultants examine the process by which feedback results are collected and shared. Results consist of three phases:

1. Narrative. The narrative provides a summary of the customer feedback metrics and highlights any important findings. In particular, it emphasizes changes from the previous reports.
2. Sharing. The distribution area sends detailed data supporting the customer feedback metrics to all stakeholders for continued analysis such as trending or statistical charting.
3. Improvement. The stakeholders use the feedback analysis to recommend adjustments to better the distribution process used by several parts of the organization, including shipping, sales, customer service and logistics.

The mechanics of disseminating this information are examined to identify potential improvements to enhance the value of the distribution process.

Use of the Shipment Tracking Services

The FIT consultants investigate the processes by which the shipment are tracked. This part of the audit is concerned with ensuring that the systems and procedures are in place to enable the various users to determine the location and status of a shipment to take appropriate action. Follow up procedures are reviewed and recommendations made for improvements.

Fleet Management

The FIT consultant determines the process of fleet sizing to ensure adequate service coverage. Additional effort may be applied to formulate contingency plans for alternate resources or methods of delivering the product. The FIT consultant may suggest alternatives to handle seasonal requirements.

From information gathered in the activities outlined above, the consultants:

1. Benchmark existing procedures, systems and models against industry peer practices. This benchmark provides a quantified measure of potential improvements in over twenty areas to insure that client customers are provided with the information that meets their needs.
2. Estimate the economic value of the proposed changes, based on information supplied by the client personnel and that obtained from existing plans. The value comes from better utilization of client resources to maximize the profit generated by the plants.
3. Recommend further requirements for the future to maintain the standard of excellence achieved.

Audit results enable either the FIT distribution professionals or client professionals to prepare a plan of continuous improvement, with economic benefits clearly defined at each step along the way.

For additional information please contact: