Physical distribution management
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Physical distribution involves all activities required to transport goods from manufacturers to customers, including transportation, warehousing, packaging, and order fulfillment. The objectives are to deliver customer orders on time and at minimum cost while providing an appropriate level of customer service. Key activities include transportation of goods between facilities, order processing, warehousing and storage of inventory, packaging to contain and protect products, and materials handling within facilities. Channels of distribution refer to the intermediaries involved such as wholesalers or transportation companies. The goals are achieving the right balance between distribution costs and customer service levels.
Physical distribution management
- 2. Physical Distribution Cover of this topic. 1. Physical Distribution . 2. Activities in Physical Distribution. 3. Channel Distribution 4. Objects of Physical Distribution 5. Order Processing. 6. Transportation. 7. Warehousing 8. Packaging 9. Material Handling
- 3. Physical Distribution Physical distribution is responsible for delivering to the customer what is wanted on time & at minimum cost The Objective of distribution management is to design & operate a distribution system that attains the required level of customer services & does so at least cost TYPES Physical Supply ◦ goods moving from supplier to manufacturer ◦ “inbound” Physical Distribution ◦ goods moving from manufacturer to customers ◦ “outbound”
- 5. Activities in Physical Distribution Transportation: It involves various methods of moving goods outside the firms building Distribution Inventory: It includes all finished goods inventory at any point in the distribution system Materials Handling: It is the movement of stored goods inside the distribution center Packaging: Goods moving in a distribution system must be contained protected & identified Order Processing: It includes all activities needed to fill customers orders
- 6. Channels of Distribution A Channel Distribution is one or more companies or individuals who participate in the flow of goods or services from the producer to final customer TYPES Company may deliver directly to customers Use other companies or individuals to deliver goods Intermediaries ◦ wholesalers – agents ◦ transportation companies – warehouses
- 7. Object of Physical Distribution 1. Total Cost Concept 2. Customer Service Concept a. Time b. Dependability c. Communication d. Convenience e. Accuracy 3. Distribution Cost-Service trade offs a. Achieve right balance between them b. Flexibility is important in balancing the cost and service
- 8. Order Processing a. Verifying Customers’ Credibility b. Checking for any outstanding payment c. Monitoring stock level d. Preparing invoice e. Arranging transporter f. Sending the consignment and information
- 9. Transportation i. Transportation brings together raw materials for production of marketable commodities & distributes the products of industry to the marketplace FACTORS i. Suitability or nature of product ii. Affordability iii. Availability iv. Customers’ specifications v. Competitor’s transportation model
- 10. Warehousing Warehouses include plant warehouses, regional warehouses, and local warehouses. The service function that warehouses perform can be classified into two kinds: General Warehouse: where goods are stored for long periods & where the prime purpose is to protect goods until they are needed Distribution Warehouse: It has dynamic purpose & mixing. Goods are received in large volume uniform lots, stored briefly & then broken down into small individual orders Role of Warehouse: Transportation Consolidation, Product mixing, Service
- 11. Packaging The basic role of packaging in any industry is to carry the goods safely through a distribution system to the customer. The Package must do following: Identify the Product Contain & Protect the product Contribute to physical distribution efficiency Role: Protect the product against shock, compression, vibration, moisture, heat, solar radiation, oxidation, animals, bacterias etc Atleast 3 levels of packaging: Primary Packaging to hold product, next for small packages shipping container is needed, thirdly several primary or sec packages are assembled into unit load
- 12. Materials Handling Materials handling is short distance movement that takes place in or around a building such as plant or distribution center Objectives: To increase cube utilization by using the height of building & by reducing space To improve operating efficiency by reducing handling To improve the service levels by increasing the speed of response to customer needs TYPES: Conveyors, Industrial Trucks, Cranes & Hoists