Die toedeling van die distribusiekoste in die tekstielbedryf : 'n gevallestudie

Abstract

Technological development is the direct cause of the establishment of capital intensive undertakings. The installation of labour-saving machinery in the textile industry during the past few years has compelled management to consider the choice of location. In the past the textile industry has been established as near as possible to the available sources of labour, and is still one of the most important sources of employment in South Africa. The problem exists that the industry has gradually developed from a labour orientated industry in the past to a capital intensive undertaking in the future. It is especially the manufacturing of cloth consisting of synthetic fibre, combined with textiles such as wool and cotton, that is responsible for this trend. Production of synthetic fibre is almost impossible without the availability of expensive capital machinery. The Government's decentralization programme provides benefits for labour-intensive industries as well as capital intensive industries. Management will as a result be substantially influenced in their choice of location by the above mentioned factors in the future.

Distribution of textiles will become more complex in pro- portion to foreign distributors' penetration of the domestic consumer market. Intensive market segmentation will have to be undertaken in order to identify consumers' needs and preferences. Allocation of distribution costs shall in the future more than likely be according to new bases. Investment in capital machinery as well as the establishment of capital intensive factories combined with manual labour, can largely influence the choice of allocation bases. Distribution consists mainly of order-getting costs as well as order-filling costs. The other connotation applicable to distribution today, namely continuity in the production process up to the point where the final product reaches the consumer, confirms the necessity of the implementation of advanced allocation techniques. This dissertation incorporates allocation techniques for each phase in the product life-cycle as it is applied in the textile industry. Bases of allocation as it appears in theory as well as techniques that are applicable in practice, are discussed. Classification of costs

for production - and ·service departments must take place. Transportation planning as well as the influence of transportation costs on the profit structure in the textile industry are summarized. Effective separation of distribution costs ensures that optimal allocation occurs which is reflected in the nett profit. Variable costs must be precisely defined because the difference between turnover and variable costs represents the contribution to the redemption of fixed costs. In the textile industry the cost of material forms a significant part of the final selling price of the product. Management must not only strive to increase the productivity of labour to distribute final goods, but must also endeavour to increase the efficiency of material requirements, planning and thereby improve the productivity of capital. The principal aim of distribution management is to keep stocks at an acceptably low level consistent with the risks involved. The setting of stock levels and levels of service for apparel companies, must therefore involve a trade-off, hence the need for up to date information, continuous monitoring and frequent review. Inventory control that resorts directly under order-filling costs is very

important for the efficient allocation of distribution costs. Order-getting costs are primarily concerned with costs involving the attraction of consumers to get them interested in the buying of a new product, like advertisement for instance. Order-filling costs, on the other hand, are applicable to costs after completion of the production process. All costs whether fixed, variable or both, concerning the introduction of a product, the attraction of consumers as well as the effective turnover of such product belongs to distribution costs. A proper allocation basis for each cost item is reflected in the financial position of things and this also ensures the implementation of effective internal control measures. The optimal utilization of the break-even-analysis for certain product lines is insured if distribution costs are effectively allocated. To sum up, it can be said that the allocation question of distribution costs of apparel companies is centralized around the following problems, namely:

1. Identification. of distribution cost factors; 2. effective separation of order-getting costs and order-filling costs is fixed, variable, semi-fixed and semi-variable; 3. choice of proper allocation bases; 4. optimal allocation of cost items to production and service departments as well as administrative departments; 5. after allocation of distribution costs, the optimal utilization of advanced techniques like the break-even analysis, as well as the contribution margin technique, that simplifies decision-making.