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Physical Distribution

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In this presentation, we will discuss about the concept and definition of physical distribution, defining logistics, relation with other marketing mix variables. We will also talk about the objectives of physical distribution process, components of physical distribution, warehousing, inventory management and control.
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Physical Distribution

  1. 1. Chapter 2• Physical Distribution Chapter 2 Physical Distribution
  2. 2. Chapter Plan• Concept & Definition• Logistics• Relation with other Marketing Mix Variables• Importance of Physical Distribution• Components of Physical Distribution Chapter 2 Physical Distribution
  3. 3. Definition• Physical distribution ‘involves planning, implementing and controlling the physical flows of materials and final goods from place of production to the place of end use to satisfy buyers ‘ needs.’’ – Philip Kotler Chapter 2 Physical Distribution
  4. 4. Logistics• Logistics management includes both physical distribution and physical supply Chapter 2 Physical Distribution
  5. 5. Relation with Marketing MixA. Product-physical Distribution • FMCG- Mass Distribution • Perishable product- shortest distri.B. Price-Physical Distribution • Reciprocal RelationshipC. Promotion-Physical Distribution – Grab the market potential Chapter 2 Physical Distribution
  6. 6. Objectives of Physical Distribution Process1. Total Cost Concept2. Customer Service Concept a. Time b. Dependability c. Communication d. Convenience e. Accuracy Chapter 2 Physical Distribution
  7. 7. Objectives of Physical Distribution Process3. Distribution Cost- service trade offs • Achieve right balance between them • Flexibility is important in balancing the cost and service Chapter 2 Physical Distribution
  8. 8. Component of Physical Distribution1. Order Processing2. Transportation3. Warehousing4. Material Handling5. Inventory Management and Control Chapter 2 Physical Distribution
  9. 9. Order Processinga. Verifying customers’ credibilityb. Checking for any outstanding paymentc. Monitoring stock leveld. Preparing invoicee. Arranging transporterf. Sending the consignment and information Chapter 2 Physical Distribution
  10. 10. Selection of the transportation mode1. Suitability or nature of product2. Affordability3. Availability4. Customers’ specifications5. Competitor’s transportation mode Chapter 2 Physical Distribution
  11. 11. Warehousing• Type of warehouse 1. Private warehouse 2. Public warehouse 3. Distribution warehouse 4. Bonded warehouse 5. Mother depot– Number and Size of Warehouses Chapter 2 Physical Distribution
  12. 12. Warehousing• Location – Availability of basic facilities such as electricity, water, labour, transport etc. – Space – Roads – Government rules and regulations Chapter 2 Physical Distribution
  13. 13. Warehousing• Layout 1. Proper lighting, ventilation, and fire precaution 2. Protection from temperature, moisture, etc 3. Security arrangement 4. Space arrangement Chapter 2 Physical Distribution
  14. 14. Warehousing• Storage Methods – Optimum use of space – Ease in storing and picking – Accurate identification of material – Possible to follow FIFO – Provision for fast moving items Chapter 2 Physical Distribution
  15. 15. Material Handling• Involves placing and positioning of material to facilitate movement and storage• Common equipments are conveyors, bucket Elevators, hoists, lifts, cranes, forklifts, trolleys, dumpers, trailors, trucks Chapter 2 Physical Distribution
  16. 16. Inventory Management & Control• Major tool to cost reduction objective• Just –in –time – Reliability of suppliers – Close communication between suppliers and customers – Attention to quality – Adequate storage facilities and transportation options Chapter 2 Physical Distribution
  17. 17. Economic Order Quantity (EOQ)• At EOQ Ordering Cost=Carrying Cost• EOQ =Square route ( 2AP/CU) – Where, A= annual demand in units B= Ordering Cost per Order C= Carrying Cost U= Unit Price Chapter 2 Physical Distribution
  18. 18. Summary• Physical Distribution is highly co-related with other variables of marketing mix• Order processing, transportation, warehousing, material handing and inventory management and control are important components of physical distribution Chapter 2 Physical Distribution
  19. 19. Summary• Material handling involves decision on placing and positioning of material to facilitate their movement and storage.• Inventory control is a major tool for cost reduction, JIT and EOQ are useful techniques Chapter 2 Physical Distribution
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