CHANNEL MANAGEMENT

PHYSICAL DISTRIBUTION

By: Steve Harrison

INTRODUCTION

This is described as the movement of final products from the company’s distribution and
fulfillment network to the customer. According to Kotler, physical distribution entails
various eCommerce supply chain activities like inventory control, shipping, warehousing,
retail fulfillment, order processing among others.

Physical distribution occurs within many wholesaling and retailing distribution channels
and it comprises significant decision areas like customer service, warehousing among
others. Physical distribution forms part of the larger ecosystem referred to as distribution
that entails wholesale, retail marketing, and physical movement of products.
IMPORTANCE OF PHYSICAL DISTRIBUTION

 Creating Time and Place Utility: Physical distribution activities help in creating time and
place utility. This is done through transportation and warehousing
 Helps in Reducing Distribution Costs. Physical distribution costs account for a major part of
the price of the product. If these costs are handled systematically, a decrease in the costs of the
product can be there
 Helps in Stabilisation of Price: Physical distribution helps in maintaining stable prices. Even
customers expect price stability over some time
 Improved Consumer Services: Consumer service in physical distribution means making
products in the right quantity available at the right time and right place i.e. place where a
customer needs.
 Economies of Large-Scale Production: An efficient distribution system leads to the large-
scale production of goods within an organization. It also helps in delivering production
benefits to a large number of customers
CONT..

 Facilitates Product Planning: As the distribution system decided the level and nature
of storage and transportation of organizational products, it is crucial to undertake
distribution decisions at the time of product planning.
 Improves the Sales Volume: With the help of different innovative inventory
techniques, the distribution system improves the sales volume of the organization
 Source of Employment: For any organization, the distribution function is as important
as production, Several employment opportunities are offered by the distribution system.
OBJECTIVES OF PHYSICAL DISTRIBUTION

I. To make available the right goods in the right quantity at the right time and right place at
least cost.
II. To achieve minimum inventory level and speedier transportation.
III. To establish the price of products by effective management of physical distribution activities.
IV. To gain a competitive advantage over rivals by performing customer service more
effectively.
V. Reducing Cycle Time: Another important goal of physical distribution involves reducing
cycle time, the time needed to complete a process.
VI. consumer satisfaction making sure that the customer is satisfied.
COMPONENTS OF PHYSICAL DISTRIBUTION

 Order Processing: Order processing is the starting point of any distribution activity.
Storage and Warehousing:Storage means making proper arrangements for retaining the
goods in proper condition till they are demanded by customers

Inventory Control:Inventory control refers to efficient control of goods stored in warehouses.

Maintaining an adequate level of inventory is very essential for the smooth flow of business

Material Handling:Material handling includes all those activities which are associated with
moving products when it leaves the manufacturing plant but before it is loaded on the transport

Transportation: Transportation as a component of physical distribution is concerned with the

movement of goods from the warehouse to the customer’s destination
CONCLUSION

The physical distribution function is tasked with completing marketing transactions the
moment the function of an exchange is completed. The availability of products to the
customers relies on how effective the physical distribution is as any bottleneck would
translate into losses, increased inventory charges, or customers seeking alternatives. Hence
physical distribution remains to be an important component in channel management.

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