Physical distribution includes all those activities that concerns the handling and the movement of goods from the place of production to the place of consumption i.e. It includes basically:

a) Planning the infrastructure to meet demandb) Then implementing and controlling the physical

flow of materials and final goods from point of origin to point of use.

c) In order to meet customer requirements at profit.

It is also known as Marketing logistics or public distribution system or traffic management.

“Physical distribution involves planning, implementing and controlling the physical flows of material and final goods from the point of origin to point of use or consumption to meet customer needs at profit.”

-PHILIP KOTLER

“Physical distribution involves the management of physical flow of products and establishment and operation of flow systems.”

- WILLIAM J.STANTON

• Supply chain – complete sequence of suppliers that contribute to creating a good or service and delivering it to business users and final consumers.

• Logistics – the activities involved in controlling the flow of goods, services, and information among members of the supply chain.

• Physical Distribution – the activities aimed at efficiently moving finished goods from the production line to the consumer or business buyer.

The prime objective of every firm as a market logistics objective is “getting the right goods to the right place at the right time for the least cost.”i.e. Its objectives are:

a) Maximizing profitsb) Giving better customer servicec) Reducing costd) Customer satisfactione) Enhancing sales

OBJECTIVES OF PHYSICAL DISTRIBUTION

To achieve the above stated objectives a company must take following steps:

a) Analyzing customer needsb) Analyzing the competitors - analyzing the importance of service

outputs - analyzing competitors service

standardsc) Deciding its own standard The marketing

logistics system should be such that reduce the cost. i.e

M=T+FW+VW+S

The following are the components of Physical distribution:

a) Order Processingb) Inventory Management - Warehousing - Inventory controlc) Transportationd) Material handling

COMPONENTS OF PHYSICAL DISTRIBUTION

43% Transportation26%Warehousing

InventoryCarrying 21%

5% Administration

5% Order Processing

1.ORDER PROCESSING

Order processing includes the activities of receiving, recording, filling and assembling orders for shipment. Each customers expect that his order should be filled in time Without an inordinate delay and the goods must match perfectly to his order specifications. It involves following steps:

a) Communication of order to marketing departmentb) Order processing starts which involve - Credit check - Investment check - Order for dispatch - Replenishment of stock - Intimation to customers - Despatch of goods - Collection of payments

Basically order processing have dual impact on consumer service level:

c) Order timed) Consistency and uniformity of delivery time

Inventory management means the management of products on the move. It is the basic task of planning and controlling finished goods after they have brought from production centers and before their delivery to users. Basically two aspects are included under this:

- Warehousing - Inventory control

2.INVENTORY MANAGEMENT

WAREHOUSING

Warehousing is an act of storing and assorting the finished goods so as to create maximum time utility at minimum cost .So basically warehousing involves two functions:

a) Movement of finished goodsb) Storage of finished goods The types of warehouse is as

follows:warehouse

Distribution warehouse

Storage warehouse

Automated warehouse

Regarding the location of the firm, it has two options:

a) Centralized location

b) Decentralized location

Warehouse Location

WarehouseCustomer

Customer

Customer

WarehouseField Warehouse

Customer

Customer

Customer

Inventory implies the stock of goods held over a period of time for meeting the customer needs both business and final. It act as a link between the orders of the customers and production cycle of the firm. There are various techniques which are generally used to control inventory in the firm. These are:

a) Determination of stock levelb) Economic order quantityc) ABC analysis d) JIT system

INVENTORY CONTROL

3.MATERIAL HANDELING

Material handling is such component of physical distribution which is generally taken at every stage of logistics namely during production,storage,transport and packaging process. From marketing point of view it stands for the product movement after it gets out from manufacturing plant but before it is loaded on the transport mode to the destination of consumer. The following methods are used for material handling:

Material handling methods

Manual Material handling

Mechanical

Material handling

Automatic Material handling

TRANSPORTATION

Transportation is the last component of physical distribution. It is basically concerned with the movement of products from warehouses to customer destinations. It involves loading and unloading of products and transshipment between the places of dispatch and places of arrival.

Carriers

Private carriers

Contract carriers

Common carriers

Railroads 37.9%

26.1% Trucks

19.9% Pipelines

15.8% Waterways

0.3% Airways

0 10 20 30 40

1

2

3

4

5

Mode Speed Depend-ability in Meeting Schedule

s

Frequency of

Shipments

Available-

ity in Different Location

s

Flexibility in

Handling

Cost

Rail Average Average Low Low High Average

Water Very slow

Average Very low Limited Very high

Very low

Truck Fast High High Very extensiv

e

Average High

Pipeline

Slow High High Very limited

Very low

Low

Air Very fast High Average Average Low Very high