PHYSICAL DISTRIBUTION
Logistics & Supply Chain
Logistics
Component parts
& Raw material In-process inventory Finished goods
Supply Chain
Physical Distribution
• Creation of customer is task of mktg.
• Product availability leads to satisfaction
• To achieve this value adding generally have
a distribution activity known as distribution
system, traffic mgt., mktg. logistics, or
physical distribution
• So it is a mktg. activity that concerns the
handling & movement of goods
Physical Distribution
• It includes all those activities concerned
with the efficient movement of goods from
the place of production to the place of
consumption
• It involves the handling of raw material
fabricates parts, supplies & finished goods
from producers to consumers via
intermediaries
Physical Distribution
• William Stanton: Involves the mgt.of
physical flow of products & establishments
& operation of flow systems
• Philip Kotler: Involves planning,
implementing, & controlling the physical
flow of material & final goods from the
point of origin of use to meet customer need
at a profit
Objective of Physical Distribution
• Basically two broad objective
• 1. Attain customer satisfaction
• 2. Profit maximization
• 3. Getting the right product, at the right
place, at the right time, in right quantity, at
the right customer at the lower cost
• 4. Proper co-ordination of distribution
acivities
Objective of Physical Distribution
• 5. To use powerful tool of competitive
mktg.
• 6. To provide better service of lower prices
• 7. To increase profit margin
Objective of Physical Distribution
– Meetings standards of customer service for
• Timeliness of order fulfillment
• Accuracy of order fulfillment
– Reducing total distribution costs
• Inventory levels against warehousing costs
• Materials costs versus transportation costs
• Distribution costs against customer service standards
• Overall goal is to achieve the lowest total distribution cost
compatible with the firm’s customer service objectives.
– Reducing cycle (process completion) time
• Faster processes for increased customer service
Significance of Physical Distribution
• Creation if utilities: Place – Transportation
Time – Warehousing
● Improved consumer service
● Cut in distribution cost
● Market share
● Price stabilization
● Play vital role where production location &
markets are distanced
Cost of Physical Distribution
Functions
Participants in physical distribution
• Supplier
• Manufacturer
• Intermediaries
Wholesalers, Retailers
• Agents – Selling, Manufacturing, C & F etc.
Component functions of physical
distribution
• Planning the overall physical distribution
system
• In bound transport
• Receiving – Raw material, orders
• In plant warehousing
• Inventory management
• Order processing
Component functions of physical
distribution
• Packaging
• Dispatch of goods
• Out bound transport
• Field warehousing
• Customer service
Components of physical
distribution
• Order Processing
– The receipt and transmission of sales order information
• Order entry
• Order handling
• Order delivery
– Electronic data
interchange
• A computerized means
of integrating order
processing with production,
inventory, accounting, and transportation
Order processing
• Series of logical steps from receiving orders
to dispatch –
there should be a standard procedure for
receiving the orders, handling orders,
granting of credit, invoicing, dispatching,
collecting the bills and post dispatch
adjustments
Steps in order processing
• Communication of orders – Verbal or written
• Credit check
• Inventory check
• Order of dispatch
• Intimation to customer
• Dispatch of goods
• Collection of payments
Material Handling
Material Handling
• Sub system of PDS
• Stands for movement & handling of goods
• Represents product handling from plant to
warehouse & warehouse to place of loading
• An agent of cost reduction & improved
customer service
• Reflects on efficiency & speed of
warehousing operations
• Efficient & effective MHS contributes
efficiency & effectiveness of total PDS
MH operations performed in
following stages
• Unloading incoming material from transport
vehicles
• Moving unloaded material to assigned warehouses
• Lifting the mat. from warehouses during order
picking
• Moving the material for inspection & packing
• Loading packages/boxes to transport vehicles
MH Equipments & Systems
• Manual – Use of man power & animal
• Mechanised system – wheeled trolleys,
forklift trucks, side loaders, mobile cranes,
conveyors – wheel, roller, belt, chain
• Semiautomatic system – sorting device
robotics
Warehousing
Warehousing
Storage
(Location)
Balancing act
Warehousing
• An act of storing and assorting the finished
goods so as to create maximum time utility
at minimum cost
• Sub function – Storage, movement,
assorting, hold, consolidation, break bulk,
packing,
Advantage of Warehousing
• Serves as safeguard
• Make provision for unloading
• Serves economically at lower prices
• Helps in determining the channel of distribution
• Assist in maintaining continuous sales
• Balancing demand & supply
• Stabilizing prices
• Reduces need for instant transportation
