1994 Volume 3 Issue 1 Pages 3-19
In due to the collapse of the so-called Bubble Economy, the Japanese industry world is being strongly forced into Restructurization by Downsizing. In order to achieve this objective, it cannot but realize that the Decrease in Sales and Increase in Profit is brought by downsizing to proper business scales. Therefore, it is important for most corporations to challenge Physical Distribution (: PD) called as “the Treasury of Cost Reduction.”
According to financial statements from manufacturing companies, Paid PD Costs are only 2-3% of annual sales. However, Total PD Costs reach up to 9% of annual sales. If Total PD Costs are cut down by 10% in the corporations which the ratio of net profit to annual sales is 2%, that will equal to an increase of 45% in net profit. These Multiplier Effects may only be achieved under the precondition that PD cost accounting is introduced and practiced in the corporations.
We published “the Accounting and Application Manual on PD Costs” from MITI in 1992, and have since propagated“the Campaign on Charging PD Merchandise.” And then the party which required irregular PD activies, is charged back with the increased PD costs calculated on the base of the Manual. To realize Social Fairness of PD Activites through such Price Mechanism is urgently needed in the PD world.
