Chapter 9

Physical Distribution

What is Physical Distribution?

 Physical distribution is that marketing function which facilitates the movement of
goods from the manufacturer to the location of the ultimate users.
 The Physical Distribution Managers are the people assigned to ensure that
physical distribution activities are carried out.

The Objectives of Physical Distribution

 Every activity in the organization must be made to contribute to the overall
profitability of the firm. These include activities concerning physical
distribution. Since physical distribution is not directly concerned with the
generation of income through actual selling, it can contribute to profitability
by reducing costs. This may be achieved through the efficient management
of its functions.
 The reduction of costs, however, must be made without sacrificing the
quality of service to customers, at least those that will affect profitability or
the attainment of other worthwhile objectives.
 When physical distribution activities are well managed, it provides
opportunities for the firm to compete effectively
These opportunities are as follows
 Improve Customer Service
 Reduce Distribution Costs
 Create Time and Place Utilities
 Stabilize Prices
 Influence Channel Decisions
 Control Shipping Costs

Elements of an Efficient Physical Distribution

 Physical distribution is efficient if its assigned objective is achieved at the least
cost. It is possible if the following elements are properly managed:
1. Inventory Planning and Control
2. Transportation
 The shipping of products to customers is one of the most important activities in
physical distribution. As products must be delivered at specific dates and at the
quality required, care must be taken in deciding what form of transportation to
adapt.
  Railroads
 Trucks
 Water vessels
 Pipelines
 Airplanes
3. Warehousing
 Warehousing is an important component of physical distribution: Due to some
reasons, most products are not delivered to the customers right after they come
out of the production line. Nevertheless, they must be kept in good condition
until they are finally delivered to buyers. The places where they are kept are
called warehouses and the activity done is called warehousing.
Types of Warehousing
 Private Warehousing
 Public Warehousing
4. Order Processing
 Order processing refers to receiving, recording, filling, and assembling orders for
shipment. The steps undertaken from the time the customer makes an order up to
the time the ordered goods are delivered is called the "order cycle."
The Major Components of the Order Cycle. Four major components consist the order
cycle. These are as follows:
1. Order Placement
2. Internal Order Processing
3. Order Preparation
4. Order Shipment

PREPARED BY: MACA-UMBOS, AIZA

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