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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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. 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
5. Relation with Marketing Mix
A. Product-physical Distribution
• FMCG- Mass Distribution
• Perishable product- shortest distri.
B. Price-Physical Distribution
• Reciprocal Relationship
C. Promotion-Physical Distribution
– Grab the market potential
Chapter 2 Physical Distribution
6. Objectives of Physical
Distribution Process
1. Total Cost Concept
2. Customer Service Concept
a. Time
b. Dependability
c. Communication
d. Convenience
e. Accuracy
Chapter 2 Physical Distribution
7. Objectives of Physical
Distribution Process
3. Distribution Cost- service trade offs
• Achieve right balance between them
• Flexibility is important in balancing the cost
and service
Chapter 2 Physical Distribution
8. Component of Physical
Distribution
1. Order Processing
2. Transportation
3. Warehousing
4. Material Handling
5. Inventory Management and Control
Chapter 2 Physical Distribution
9. 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
Chapter 2 Physical Distribution
10. Selection of the transportation
mode
1. Suitability or nature of product
2. Affordability
3. Availability
4. Customers’ specifications
5. Competitor’s transportation mode
Chapter 2 Physical Distribution
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. Warehousing
• Location
– Availability of basic facilities such as
electricity, water, labour, transport etc.
– Space
– Roads
– Government rules and regulations
Chapter 2 Physical Distribution
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. 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. 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. 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. 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. 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. 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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