PHYSICAL DISTRIBUTION STUDY NOTES
Contents
1. Meaning of Physical Distribution
2. Purpose of Physical Distribution
3. Components of Physical Distribution
4. Organization of transport
5. Control of transport industry
6. International agreements on transport sectors
Introduction
Distribution moves merchandise from the producer to the consumer market. The role of distribution
in the supply chain management modes has extended considerably from the conventional view of the
activity as being concerned solely with transport and warehousing. The critical task that underlies
successful distribution today is demand management.
Demand management is the process of anticipating and fulfilling orders against defined customer
service goals. Information is key to demand management:
Information from the market place (forecasts)
Information from customers (actual usage)
Information on production schedules (inventory status)
Information on marketing activities like promotion that may cause demand to fluctuate away
from the norm.
Distribution is therefore in the integrated supply chain has now become an information-based, value
added activity, providing a critical li between the market place and the factory. Physical distribution
refers to the marketing logistics which involves planning, implementing and controlling the physical
flow of goods, services ad related information from points of origin to points of consumption to meet
customer requirement at a profit.
Components of Physical Distribution
Physical logistics involves:
a. Outbound distribution: Moving products from the factory to resellers and ultimately to
customers.
b. Inbound distribution: Moving products and materials from suppliers to the factory.
c. Reverse Distribution: Moving broken, unwanted or excess products returned by consumers or
resellers.
The task of physical distribution is to co-ordinate activities of suppliers, purchasing agents, marketers,
and channel members ad customers. These activities include:
a. Forecasting
b. Information systems
c. Purchasing
d. Production planning
e. Order processing
Introduction to Physical Distribution notes Prepared by Mr. Antony Ambia 1
, f. Inventory
g. Warehousing
h. Transportation planning
Inbound distribution Outbound distribution
Suppliers Company Ressellers Customers
Reverse distribution
Role of Physical Distribution
To gain competitive advantage
Yield cost savings
Better manage the different product varieties distribution.
Improvements in information technology have created opportunities for major gains in
distribution efficiency.
Major Physical Distribution Functions
1. Warehousing:
Distribution centers are designed to move goods and store them. They are large ad highly
automated warehouses designed to receive goods from various plants and suppliers, take orders,
fill them efficiently, ad deliver goods to customers as quickly as possible.
2. Inventory Management:
This involves balancing the costs of carrying larger inventories against resulting sales and profits.
3. Transportation:
Roads, railway, ships, aircraft, pipelines.
4. Logistics Information Management:
In physical distribution, information flow such as customer order, billings, inventory levels and
even customer data are linked to channel performance.
Challenges of Physical Distribution
1. Delays in distribution
2. Unstable prices of fuel and preferences thus increased distribution.
3. Change of consumer tastes and preferences thus affecting demand of final product.
4. Failure to maintain transportation infrastructure.
5. Compliance to government regulations when distributing.
TRANSPORTATION
Transportation provides the infrastructure and unit of carriage for actual movement of goods and
other cargo in physical distribution.
Factors to consider when choosing Transportation Modes
Costs
Introduction to Physical Distribution notes Prepared by Mr. Antony Ambia 2
Contents
1. Meaning of Physical Distribution
2. Purpose of Physical Distribution
3. Components of Physical Distribution
4. Organization of transport
5. Control of transport industry
6. International agreements on transport sectors
Introduction
Distribution moves merchandise from the producer to the consumer market. The role of distribution
in the supply chain management modes has extended considerably from the conventional view of the
activity as being concerned solely with transport and warehousing. The critical task that underlies
successful distribution today is demand management.
Demand management is the process of anticipating and fulfilling orders against defined customer
service goals. Information is key to demand management:
Information from the market place (forecasts)
Information from customers (actual usage)
Information on production schedules (inventory status)
Information on marketing activities like promotion that may cause demand to fluctuate away
from the norm.
Distribution is therefore in the integrated supply chain has now become an information-based, value
added activity, providing a critical li between the market place and the factory. Physical distribution
refers to the marketing logistics which involves planning, implementing and controlling the physical
flow of goods, services ad related information from points of origin to points of consumption to meet
customer requirement at a profit.
Components of Physical Distribution
Physical logistics involves:
a. Outbound distribution: Moving products from the factory to resellers and ultimately to
customers.
b. Inbound distribution: Moving products and materials from suppliers to the factory.
c. Reverse Distribution: Moving broken, unwanted or excess products returned by consumers or
resellers.
The task of physical distribution is to co-ordinate activities of suppliers, purchasing agents, marketers,
and channel members ad customers. These activities include:
a. Forecasting
b. Information systems
c. Purchasing
d. Production planning
e. Order processing
Introduction to Physical Distribution notes Prepared by Mr. Antony Ambia 1
, f. Inventory
g. Warehousing
h. Transportation planning
Inbound distribution Outbound distribution
Suppliers Company Ressellers Customers
Reverse distribution
Role of Physical Distribution
To gain competitive advantage
Yield cost savings
Better manage the different product varieties distribution.
Improvements in information technology have created opportunities for major gains in
distribution efficiency.
Major Physical Distribution Functions
1. Warehousing:
Distribution centers are designed to move goods and store them. They are large ad highly
automated warehouses designed to receive goods from various plants and suppliers, take orders,
fill them efficiently, ad deliver goods to customers as quickly as possible.
2. Inventory Management:
This involves balancing the costs of carrying larger inventories against resulting sales and profits.
3. Transportation:
Roads, railway, ships, aircraft, pipelines.
4. Logistics Information Management:
In physical distribution, information flow such as customer order, billings, inventory levels and
even customer data are linked to channel performance.
Challenges of Physical Distribution
1. Delays in distribution
2. Unstable prices of fuel and preferences thus increased distribution.
3. Change of consumer tastes and preferences thus affecting demand of final product.
4. Failure to maintain transportation infrastructure.
5. Compliance to government regulations when distributing.
TRANSPORTATION
Transportation provides the infrastructure and unit of carriage for actual movement of goods and
other cargo in physical distribution.
Factors to consider when choosing Transportation Modes
Costs
Introduction to Physical Distribution notes Prepared by Mr. Antony Ambia 2
