INTERNATIONAL PHYSICAL DISTRIBUTION

TANIA KATHERINE CORREA MORA

SERVICIO NACIONAL DE APRENDIZAJE – SENA

INTERNATIONAL BUSINESS – COURSE N°. 2104863

AUGUST 2021
 Tabla de contenido

Introduction......................................................................................................................................3

What is the International Physical Distribution?.............................................................................3

Reducing logistics and transport costs.............................................................................................4

Advantages..................................................................................................................................4

Disadvantages of high costs.............................................................................................................5

Conclusion.......................................................................................................................................5

References........................................................................................................................................6
 Introduction

International physical distribution is the logistics process that develops around placing a product
on the international market, complying with the terms negotiated between the seller and the
buyer.

This is a means that is used to search for satisfaction to carry out a negotiation, giving a step-by-
step instruction on how my export and import can really be effective, taking into account the
parameters of the world economy.

In this essay, we will investigate the advantages of reducing logistics costs and transportation.
Also, we will check the disadvantages of high costs and how this affects in the International
Physical Distribution.

What is the International Physical Distribution?

Physical distribution is the process of making your products available for use by a consumer or a
business. It takes place within numerous wholesaling and retailing distribution channels, and
includes such important decision areas as:

 Customer service
 Inventory control
 Materials handling
 Order processing
 Transportation
 Warehousing

Physical distribution is important because it comprises the final steps a business takes before
they put their product in the hands of their customer. That’s why so many businesses invest in a
third party logistics provider to ensure their physical distribution is handled with care.
 Reducing logistics and transport costs

Logistics can represent a significant expense, it's important to analyze the different types of
logistics costs routinely. Logistics cost management can potentially save your business thousands
of dollars, but it requires plenty of research and ingenuity.

Advantages

 The Effective Use of Warehouse Space: Warehouse space can be at a premium for many
large businesses, and a strategic and optimized transportation management plan is the
only way to ensure that the warehouse space is used effectively. Keeping the flow of
products in and out of a warehouse moving smoothly, saves time and money. The better
the flow is controlled, the less warehouse space that will be needed. Getting products in
and back out the door on to customers is the most effective use of time and space. The
less warehouse space that is needed, the lower the overhead costs are for the business.

 Communication Across All Aspects of Transportation is the Key to Success: With a solid
communication strategy in place, it is easier for businesses to find problems in the
delivery system. If too many packages are breaking on delivery, this information is
known quickly. The packaging department can work to rectify the problem before it
becomes an excessive problem for the company. Timing is everything in a large business
that gathers products and then delivers them on to customers, and good communication
through an integrated system is the only way to be successful in the competitive business
market today.

 Customer Satisfaction is the Key to Success for any Business: Customers want their
orders, and they want them fast. They want the products they have paid money for to
arrive fast, and without damage. One damaged package can result in a lost customer for
life. To be successful in business and win out over the competition, a logistical plan for
 optimized transportation management to keep your customers happy is critical to your
overall profit and business growth. It is easy for customers to provide you with bad press.
With a simple picture of damaged goods and a poorly packaged item shared in social
media, your reputation can get tarnished.

Disadvantages of high costs

 High logistics costs have a negative impact on the way of doing business in the country,
so work must be done to compensate for the lag in infrastructure and increase
connectivity.
 High transportation costs due to low “critical mass”.
 Low negotiating power with retail clients, eg: Reverse Logistics.
 Entry strategy based primarily on prices and not on service.
 Lack of management in Inventories, Losses, Returns and Obsolescence.
 Lack of an optimal purchasing strategy and improvements in inventory quality.
 Low associativity, which implies low operational synergies and low integration in the
chain.
 Lack of visibility in “hidden” costs, due to inventory differences and “false freight”.

Conclusion

It is important to stay on top of the entire product flow of your business from procurement to
delivery. With a solid integration plan in place, you will gain loyal customers, streamline your
delivery processes, and save money because of a decrease in product damage. When you want to
improve your profit margin, it’s a great idea to consider your needs by filling out this 3PL
checklist and start searching out the best third party logistics company for solution ideas that
match your company’s needs.
 References

 https://elempresario.mx/actualidad/altos-costos-logistica-afecta-economia
 https://www.shdlogistics.com/covid-19/reasons-why-logistics-costs-are-rise
 https://smallbusiness.chron.com/strategic-logistics-plan-examples-18183.html