National Council of Physical

Distribution Management

PART(1)
TIGER SUPPLY COMPANY LIMITED.
 (NCPDM)
National Council Of Physical Distribution Management

Concept Of Physical Distribution

INTRODUCTION

*Distribution show us how this entire process can be managed so as to increase

the efficiency of the organization.
*Distribution covers a range of operations and activities depending on this
consumer, but also movement of a
Product within and outside the organization.

*The operation which creates time, place and form utility through the movement
of goods and persons from one place to another.
This can be apply summarized as:
Distribution Management = Physical Distribution + Distribution Channel

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 Definition Of NCPDM

. Management of movement, inventory control, protection and storage of raw and processes of finished goods
to and from the production line.
. The Responsibility to design and administer system to control raw material and finished goods flow.
. The council for Logistics, has given the following definition of physical distribution :
. Include freight transportation, warehousing, material handling, protective packaging, inventory control,
plant and warehouse site selection, order processing, market forecasting and customer service.
. In most business firms whether they are retail, Wholesale of manufacturing unit, distribution figures as a
major functional area.
. To accomplish this transfer, two kinds of movement occur: the movement of goods to people, and the
movement of people to goods.
. Moreover the product may pass through many hands and be stored for short or long periods before being
delivered to the customer.

Architect Of Distribution. Customer

Service

Sale E.D.I
Analysis

OPENPRO
Warehouse ERP
Management DISTRIBUTION Purchasing

Point Of Inventory
Sale Control

Order
Entry
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 . Physical distribution management thus
consummates with the satisfaction of consumer’s demand, barring time and place, storing of goods and their ultimate
transportation so as to fulfill the target customer’s needs along a channel of distribution.

Council of Logistics Management Components of Logistics

Logistics

Material Management Physical Distribution Management

Manufacturing and Supply Service

Customer Service

Suppliers Inbound
Raw Material Outbound
Work
Sub-assemblies Finished Inventory
In Production
Manufactured goods In the field
process
Parts Finished
Material Flow
Packaging goods
material

Transit Depot Intermediary

Customer
Other
Equipment
Manufacturers
End user
Government

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 Logistic Activities

! Procurement ! Warehousing and storage

! Plant and warehouse selection ! Packaging
! Demand forecasting ! Material handling
! Customer Service ! Distribution Communication
! Order processing ! Return of goods handling
! Traffic and Transportation ! Parts and service support
Inventory control ! Salvage and scrap disposal

Logistics Process ( Transport Chain) Cosignee

Shipper
Forwarder
Forwarder Trucker
Trucker
Warehouser
Warehouser
Customs
Customs
Stevedore Stevedore
Port, Carrier, Port

Logistics Management Based On Information

Based On Based On Based On

Improved Timely, A Net-Enable

Better
Operational Accessible, Information
Decisions
Effectiveness Trusted Sharing
Faster
Information Environment

Support Support Support

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 Key Logistics Activities
! Customer Service
! Demand Forecasting ! Part and Service support
! Inventory Management ! Plant and warehouse site selection
! Logistics Communication ! Procurement
! Material Handling ! Reverse Logistics
! Order Processing ! Traffic and Transportation
! Packaging ! Warehousing and Storage

A Sample Logistics Channel

Market
Raw materials Customer
Supply point
Manufacturing Market
Plant Customer

Raw materials
Supply point Market
Customer
FLOW
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 Elements of Business Logistics
What is the system which can assist in this issue?

Packaging Warehousing Inventory Planning

And And And Control
Shipping Storage

Demand
Procurement forecasting
And BUSINESS
Purchasing
LOGISTICS

Facilities Customer
service

Transportation Salvage and Order

Scrap Disposal processing

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 Supply Chin Management System(SCM)

Manufacturer
(OEM)

Distributor
/ Retailer
Reseller

Customer

Supplier Logistics

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A well planned NCPDM system helps an organization achieve.

- Lower Costs
- More Sales
- Prompt delivery
- Increased goodwill
- Improved Customer confidence
- Competitive Edge

Need for Physical Distribution

1. Management Conflicts
! Production department like to minimize production cost by having high
outputs at
a constant rate, sending as much as possible out to the depots.
! Sales department prefer to have high stocks at times of high number of
depots so
As to give best service to the customers.
! Finance and control likes to reduce all round cost and the investment
required In the form of stocks of all kinds.

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2. Rising Costs:
! Distribution is labor-intensive function and wages of transport and
warehouse staff has been rising rapidly.
! Distribution costs have also increase.
! Consumers now-a-days expect more frequent deliveries from the supplier,
which in turn increases the distribution costs.

3. Cost-reduction Opportunities
Cost can be reduced by using skilled management and modern
technology for inventory management, inventory processing and
transportation.
4. Physical Distribution as an Aid to Marketing
The organization should aim at winning consumer trust and
satisfaction. Physical distribution helps satisfaction through faster delivery of
goods in a least damaged from, greater stock availability, and service in new
geographical areas. Also It allows managers to evaluate distribution
channels and their casts efficiently, and there by enable discount sales and
satisfy consumers.
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5. Customer Service Explosion
Customer service has many fats like in time delivery, after sale services,
regular feed back, prompt complaint redressal and so forth.
Service excellence can only be archived through a properly integrated physical distribution
system. For example, Mc Donald’s and Pizza Hut are not famous for their advertising campaigns but
for their service level.

Factors Contribution to Customer Service

Pre-transaction Elements
(Element that determine Inventory availability
the service capability Target delivery data
before it is provided)

Transaction Element
Order status, Order tracing,
(Elements t hat judge the
Customer performance level of
Backorder status, Shipment
delays, product substitutes,
Service various component of
Routing changes
buyer-seller transaction)

Post-transaction Element
(Element measure
Actual Delivery data
consumer satisfaction
Return / Adjustments
based on results that
come)

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6. Time Constraints
One of the most important side effects of increase competition in the market is related to the time factor.
Increase competition has led to shorter product life cycle, and consequently revolutionary changes in the consumer attitudes and
loyalty concepts.
Every “new product” when introduce in the market. Has implication for the already existing products. This competition has
led the management to opt for shortest inventory conversion period, so that the profit can be invested in raw
materials for new products.

7. Functions of Physical Distribution

Functions of a department of physical distribution generally include management, warehousing, industrial
Packaging, material handling, transportation, order processing and location analysis

8. Transportation Management
While making transportation decisions, physical distribution managers must consider
1. Cost
2. Dependability
3. Possibility of loss and damage associated with the mode of transport

This physical Distribution Manager thus should have a knowledge of

1. Various modes of transport

2. Services and routing offered by each mode
3. Privileges granted by carriers on certain kinds of shipment
4. Rates charged by various carriers
5. Negotiation ways of various carriers
6. The bottlenecks in transportation through various channel

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Modes of Transport and Their Utilities
Modes of Transportation and their Utilities
Railroads Trucks Waterways Airways Pipelines

Grain Clothing Petroleum Flowers Oil

Chemicals Paper goods Chemicals Food Coal
Automobiles Books Irons Instrument Natural Gas
Steel Livestock Building material Emergency parts Water
Building Material Electrical, Electronic Grains Overnight mail Chemicals
Appliance
Building Material

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 Scope of transportation
! The two c’s i.e. Capacity and Capability of transportation system, determines the boundaries
of market system it serves.
! The availability of inexpensive, efficient and easily accessed transportation services activities
several critical drivers of economics activity.

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 Principle of transportation Function

1. Continuous
2. Optimize unit of cargo
3. Maximum vehicle unit
4. Adaptation of vehicle unit to volume and nature of traffic
5. Standardization
6. Compatibility of unit load equipment
7. Minimum of dead weight to total weight
8. Maximum utilization of capital, equipment and personnel.

Relationship of Transportation to other Business Function.

1. Traffic management and transportation

2. Warehouse receiving and shipping
3. Purchasing
4. Customer Service
5. Product pricing
6. Distribution Location
7. Inventory planning
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 Transportation Management
1. Transportation pricing
2. Rate negotiation
3. Routing and carrier selection
4. Regulatory matters
5. Operation of co-transportation
6. International transportation
7. Co-operate with carriers tin the development of technological change that can
enhance transportation productivity.
8. Analysis of transportation cost and services
9. Customer service and transportation selection.

Transportation Agencies

1. Freight forwarders

2. Parcels post

3. Shipper’s association

4. Brokers

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 Inventory Control Management

Inventory Control

Inventory control aims at minimizing inventory cost, subject to demand and service
constraint.
Inventory control guides a firm on factors such as
1. How much to order?
2. When to order?
3. How to control stock-outs at lowest cost?

Warehousing

This function of physical distribution should decide the following-

1. Private or a public warehouse.

2. How many warehouses should it establish?

3. Where should they be located?

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 Industrial Packaging

packaging cost is a part of the total cost for production, Container manufacturers,
carriers and trade associations are continuously working for improvements in packaging
techniques.
Physical distribution department, in order to fulfill this function, has to work in co-
operation with sales and marketing department and deliver the products in their best
quality and condition in the consumer hands.
Thus, a systems approach is required to enable one department to share its
specialized knowledge With the other departments, and in turn, fulfill the objective of
the organization.

Materials Handling
Efficient and careful material handling methods in factory and distribution
warehouse can contribute
Much to customer satisfaction. Proper material handling helps
1. Decrease the damage
2. Maintain the quality of storage
3. Facilities order processing
4. Move right foods at right time to make them available to right customers.

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 Order Processing

Effective order processing should begin with transmission of orders information,

Continue uninterruptedly through stock checking, accuracy checking, credit
checking, back ordering, transmission and billing, to move on to order-filling.
Along the way, it should also have an efficient order status reporting system.
With so many departments involved in processing orders, delay can occur at any
stage.

Location Analysis

With the continuing growth of individual units of economic activity there is greater
expansion of organization, and new plant locations must be carefully chosen.
Moreover, trend of decentralization of industries have further increased emphasis
Upon the site location that bet fulfills forms this function after analyzing aspects
like market care, transportation facilities, transportation rates, and public and
private warehouse facilities.

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 Management of Information Flow

One of the solution required to solve transportation,

Warehousing and packaging problem, is information. This helps in formulation

of strategy and so an important function of physical distribution.

Marketing Forces Affecting Physical Distribution

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