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1. Physical distribution is the set
of activities concerned with
efficient movement of finished
goods from the end of the
production operation to the
consumer.

2. PHYSICAL DISTRIBUTION is
part of a larger process called
“distribution," which includes
wholesale and retail marketing,
as well the physical movement
of products.

5. Evaluating the Channels
Distribution System.
Economic.
Control.
Criteria.

6. Elements of Efficient Physical Distribution
1.Inventory planning and control- proper handling
of stocks
2.Transportation- shipping of products on time
and right place
3.Warehousing- keeping of goods until they are
delivered
4.Order Processing- receiving, recording, filling
and assembling orders for shipment
5.Materials handling- moving goods over short
distances into and out of warehouse and
manufacturing houses

7. ROAD/SURFACE/TRUCKING—FLEXIBLE AND
GROWING .
The shipping method most favoured by small
business (and many large enterprises as well) is
trucking. Carrying primarily manufactured
products (as opposed to bulk materials), trucks
offer fast, frequent, and economic delivery to more
destinations in the country than any other mode.
Trucks are particularly useful for short-distance
shipments, and they offer relatively fast,
consistent service for both large and small
shipments.

8. RAIL—LONG DISTANCESHIPPING
Rail continue to present an efficient
mode for the movement of bulky
commodities over long distances.
These commodities include coal,
chemicals, grain, non-metallic
minerals, and lumber and wood
products.

9. AIR FREIGHT—FAST BUT EXPENSIVE
Because of the relatively high cost of air
transport, small businesses typically use air only
for the movement of valuable or highly-perishable
products. However, goods that qualify for this
treatment do represent a significant share of the
small business market. Owners can sometimes
offset the high cost of air transportation with
reduced inventory-holding costs and the
increased business that may accompany faster
customer service.

10. WATER CARRIERS—SLOW BUT INEXPENSIVE
There are two basic types of water carriers: inland or
barge lines, and oceangoing deep-water ships. Barge
lines are efficient transporters of bulky, low-unit-value
commodities such as grain, gravel, lumber, sand, and
steel. Barge lines typically do not serve small
businesses. Oceangoing ships, on the other hand,
operate in transporting goods among port cities, and in
international commerce. Sea shipments are an
important part of foreign trade, and thus are of vital
importance to small businesses seeking an international
market share.

11. PIPELINES—SPECIALIZED TRANSPORTERS
Pipelines are utilized to efficiently transport
natural gas and oil products from mining sites to
refineries and other destinations. In addition, so-
called slurry pipelines transport products such
as coal, which is ground to a powder, mixed with
water, and moved as a suspension through the
pipes.

12. INTERMODAL SERVICES
Small business owners often take advantage of
multi-mode deals offered by shipping
companies. Under these arrangements,
business owners can utilize a given
transportation mode in the section of the trip in
which it is most cost efficient, and use other
modes for other segments of the transport.
Overall costs are often significantly lower under
this arrangement than with single-mode
transport.

13. WAREHOUSING
Small business owners who require
warehousing facilities must decide whether to
maintain their own strategically located
depot(s), or resort to holding their goods in
public warehouses. And those entrepreneurs
who go with non-public warehousing must
further decide between storage or distribution
facilities.

14. Warehousing include plant warehouses, regional
warehouses, and local warehouses.
The service function that warehouses perform
can be classified into
General Warehouse: where goods are stored for
long periods & where the prime purpose is to
protect goods until they are needed.
Distribution Warehouse: It has dynamic purpose
& mixing. Goods are received in large volume
uniform lots, stored briefly & then broken down
into small individual orders.

15. Proper ventilation.
Proper lighting.
First Aid Box.
Fire Fighting equipment.
Sufficient moving space.
Communication gadgets.
Security

16. Packaging in any industry is to carry the goods safely through
a distribution system to the customer.
The package must do following:
Identify the Product
Contain & Protect the product
Contribute to physical distribution efficiency, protect against
shock, compression, vibration, moisture, heat, solar radiation,
oxidation, animals, bacteria etc.
At least 3 levels of packaging: Primary packaging to hold
product, next for small packages shipping container is
needed, thirdly several primary or sec packages are
assembled into unit load

17. Order processing is designed to take the customer orders
and execute the specifics the customer has purchased. The
business is concerned with this function because it directly
relates to how the customer is serviced and attaining the
customer service goals. If the order processing system is
efficient, then the business can avoid other costs in other
functions, such as transportation or inventory control. For
example, if the handbag business has an error in the
processing of a customer order, the business has to turn to
premium transportation modes, such as next day air or
overnight, to meet the customer service standard set out,
which will increase the transportation cost.

18. Order Processing.
a. Verifying Customers’ Credibility.
b. Checking for any outstanding payment.
c. Monitoring stock level.
d. Preparing invoice.
e. Arranging transporter.
f. Sending the consignment and information.

19. ORDER PROCESSING
The small business owner is concerned with
order processing—another physical distribution
function—because it directly affects the ability to
meet the customer service standards defined by
the owner. If the order processing system is
efficient, the owner can avoid the costs of
premium transportation or high inventory levels.

20. Order processing varies by industry,
but often consists of four major
activities: a credit check; recording of
the sale, such as crediting a sales
representative's commission account;
making the appropriate accounting
entries; and locating the item,
shipping, and adjusting inventory
records.

21. Technological innovations, such as increased
use of the Universal Product Code, are
contributing to greater efficiency in order
processing. Bar code systems give small
businesses the ability to route customer orders
efficiently and reduce the need for manual
handling. The coded information includes all the
data necessary to generate customer invoices,
thus eliminating the need for repeated
keypunching.

22. Electronic Data Interchange.
EDI allows computers at two different locations
to exchange business documents in machine-
readable format, employing strictly-defined
industry standards.
Purchase orders, invoices, remittance slips, and
the like are exchanged electronically, thereby
eliminating duplication of data entry, dramatic
reductions in data entry errors, and increased
speed in procurement cycles.

23. Benefits of EDI
1) Cost saving.
2) Speed.
3) Accuracy.
4) Security.
5) System Integration.
6) Just In Time Support.

24. COST SAVING or REDUCTION
Employees time in handling paper work.
Less paper work, paperless office. Print only
if required.
Fund transfer. (NEFT/RTGS)
National Electronic Fund Transfer (NEFT) and Real Time Gross
Settlement(RTGS) allow individuals, companies and firms to transfer funds from
one bank to another.

25. SPEED
Fast and Accurate forwarding the
documents through computer.
Fund transfer. (NEFT/RTGS)
National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement(RTGS) allow
individuals, companies and firms to transfer funds from one bank to another.

26. ACCURACY
1) Minimum punching of
information.
2) No loss of documents.
3) Direct & easy communication
verification.

27. SECURITY
Less false information being
circulated.

28. SYSTEM INTEGRATION
Increasing use of EDI software
with the internal system triggers
application & further automation
of data.

29. JUST IN TIME SUPPORT
1) Increased communication
helps in control of inventory.
2) Accurate analysis of data.
3) Timely action against
un-foreseen situation.

30. EDI Working
1) Proposal sent electronically by
supplier to potential customer.
2) Customer approves the price,
quality, size, payment terms and other
attributes electronically.
3) Supplier sends the invoice,
packaging details and shipping details.

31. EDI working Con’td
4) Payment electronically
transfers/agreed on COD.
5) Supplier ships the order.
6) Customer receives the order, scan the
bar code to actual items received.
7) Payment.

32. Advantages/Benefits of EDI
1) Cost saving.
2) Speed.
3) Accuracy.
4) Security.
5) System Integration.
6) Just In Time Support.

33. Dis-advantages
1) Product not in line with
catalogue.
2) Cultural difference.
3) Govt. restrictions/EFT
difficulties.
4) Political challenges.