1. Think. Think. Think ..
High quality products, even if
the price is low, and an
excellent promotional activity
has been made, will have a
small chance of getting sold
unless they are made
available at the place where
they are wanted ..
4. The marketing function which
facilitates the movement of
goods from the manufacturer to
the location of the ultimate users
manufacturer goods
Ultimate
users
5. On a broader scope..
Supplies
Parts
Raw Materials
THE
FIRM
Warehouses
Wholesalers
Retailers
CONSUMERS
7. Objectives / Opportunities
Improve customer service
Reduce distribution costs
Create time and place utilities
Stabilize prices
Influence channel decisions
Control shipping costs
8. Improve Customer Service
When customers are satisfied with the
services provided by the firm through
an effective physical distribution
system, they are motivated to
patronize the firm.
9. Reduce Distribution Costs
When the physical distribution system
is effective, cost reduction is possible.
e.g. Economic Order Quantity
10. Create Time And Place
Utilities
Problems:
A. year-round consumption vs. seasonal
production
B. year-round production vs. seasonal
consumption
Solutions:
Storage (part of warehousing)
– creates time utility
Transportation (part of physical
distribution) – creates place utility
11. Stabilize Prices
Problem:
There are times when the market is
flooded with an oversupply of a certain
product = drastic decrease in the
product
Solution:
Warehousing and Transportation
12. Influence Channel Decisions
Deciding which channel to tap in the
distribution of a firm’s product or
services because not all types of
channel will serve the requirements of
the firm’s physical distribution
13. Control Shipping Costs
When physical distribution activities
are not functioning properly, the
smooth flow of products from the
company to the customers will not be
possible.
14. Elements of an Efficient
Physical Distribution
Inventory Planning And Control
Transportation
Warehousing
Order Processing
Materials Handling
15. Inventory Planning And
Control
Maintaining an inventory of stocks is a
requirement of physical distribution
too much inventory, is a drain to the
financial resources of the firm ; too
small of an inventory may mean lost
sales
Economic Order Quantity mode
used to determine what quantity to order
as to minimize total inventory costs
18. Railroads
Less costly as a means of
transportation
Can carry more in terms of volume
Used in some parts of the Philippines
but not as extensive as those in other
countries like the United States and
Australia
19. Trucks
The most reliable means of
transporting goods between two points
inland
Least affected by weather
Provide delivery service to any points
traversed by roads
Less desirable means of transporting
bulk goods
20. Water Vessels
Useful in archipelagos like Philippines
Accounts for a large percentage of
total domestic cargo and passenger
movement between the islands
offer services like cargo and container
roll-on/roll-off
- trampers
- barges and tugs
21. Pipelines
Specialized means of transporting
liquid products like oil from their
sources to markets
Less expensive yet not readily
available for service by anyone
22. Airplanes
Fastest means of delivering goods
Mainly used for perishable goods like
food, newspapers, and flowers
Costly
Least dependable due to being easily
affected by adverse weather
conditions
24. Comparison of Transportation Modes
Mode Quantity
Limits
Cost Speed of
Delivery
Coverage /
Availability
Railroads Bulk Low Average Limited
Area
Trucks Big
Volumes
Average Average Wide Area
Water
Vessels
Bulk Average Slow Limited
Pipelines Unlimited High Initial Fast Very
Limited
Airplanes Limited
Volumes
High Fast Limited
Post Office Small
Parcels
Minimal Slow Complete
Coverage
Parcel
Service
Firms
Small
Parcels
Low Fast Limited
Freight Big Average Average Limited
26. Types of Warehousing
Private Warehousing
- warehouses are owned or leased by the
company
- the following conditions justify the use of
private warehouses:
◦ When the firm is able to adapt a rapidly
changing market or product conditions;
◦ When the firm has special storage and
handling requirements; and
◦ When the firm has a relatively constant high
volume of goods moving into large metropolitan
areas
27. Public Warehousing
- warehouses are operated by
professional warehousers which
provide storage and related
physical distribution facilities on a
rental basis to other firms
28. Number and Location of
Warehousing Facilities
More warehouses would bring the
product nearer the market, but
warehousing costs will increase.
Management science has come up
with various formulas to determine the
most economic number and location
of warehousing.
29. Decisions would involve trade-offs
between many variables like:
1. warehousing costs
2. transportation costs
3. change in inventory carrying costs
4. obsolescence costs
5. value of alternative facility use
6. production or supply alternatives
7. value of cost concessions
8. communicating and data processing
costs
9. channels of distribution
10. customer service costs
30. Order Processing
refers to receiving, recording, filling
and assembling orders for shipment
steps undertaken from the time the
customer makes an order up to the
time the ordered goods are delivered
is called the “order cycle”
31. Major Components of the
Order Cycle
order placement
internal order processing
order preparation
order shipment
32. Order Placement
refers to the time that elapses
from the time the customer
develops the order until the
order is received by the seller
33. Internal Order Processing
refers to the time required to process
the customer’s order until it is ready
for shipment
it involves the ff. :
customer credit checks
transfer of information to sales records
transfer of orders to the inventory unit
preparation of shipping documents
34. Order Preparation
refers to all activities relating to the
picking and packaging of individual
customer orders
e.g.
manual system
highly automated systems
35. Order Shipment
refers to the time the order is
placed upon a transport facility
until the goods ordered are
unloaded and received by the
customer
36. Materials Handling
refers to the activities involved in
moving goods over short distances
into, within, and out of warehouses
and manufacturing plants
cost reduction and the effective flow
of goods
37. Objectives of Material Handling
Subsystem
to increase the usable capacity of the
warehouse facility
to reduce the number of times goods
are handled
to minimize the possibility of danger to
people who are working around the
warehouse
to reduce, if not eliminate, the
monotonous and heavy manual labor
aspects of short-distance movements in
the warehouse; and
to respond quickly and efficiently to
customer’s orders
