Physical Distribution

Physical Distribution Definition Activities concerned with efficient movement of products and raw
materials from producers to consumers. It is the set of activity concerned with the physical flow of
materials, components and finish goods producer to channel institution and consumer.

Distribution is one of the four aspects of marketing. A distributor is the middleman between the
manufacturer and retailer. After a product is manufactured it is typically shipped (and usually sold)
to a distributor. The distributor then sells the product to retailers or customers

To give an understanding of the institutional and Physical aspects of channels of distribution in

Global marketing

Objectives

To describe the different channels of distribution and show their advantages and disadvantages and,

 To reconcile the needs of producers and consumers Distribution Channels Characteristic

 To improve efficiency by reducing the number of transactions and creating bulk.
 To improve accessibility by lowering location and time gaps between producers and
consumers

Three Components of Physical Distribution

1. Input: Order from the Customer.

2. Processor: Transportation.
3. Output: Delivery to the Customer

Physical Distribution decision area

Inventory Management:

Match quantity produced with quantity demanded

o Holding costs
o Ordering costs
o Stock out cost
 When to reorder?
 How much to reorder?
 How much to keep as safety stock?

Key is accurate forecasting of

 Demand
 Order filling time
Warehousing (Functions)

1. Receipt: unloading, inspection, accounting.

2. Storing: Careful labelling, identification & a/cing
3. Information Processing: depository of information across the organisation
4. Handling
5. Display
6. Order Handling

Trends in physical distribution

 Increase in road and decline in rail transport.

 Growth in light goods vehicles.
 Growth in heavy goods vehicles.
 Growth in air and sea transport.
 Growth in JIT production.
 Changing role of distribution centres.
 Restrictions on driver hours