Physical Distribution And Operations

 Introduction

                                  Physical Distribution is the process, in which raw materials and finished goods are moved from one place to another place, that means raw materials moved from raw material yard or manufacturers. And finished goods are moved from factory to consumer or end users. Physical Distribution is the set of activities concerned with movement of finished goods from the end of the production operation to the consumer. Physical Distribution takes place within numerous wholesaling and retailing distribution channels and includes such important decision areas are customer service, inventory control, material handling, protective packaging, order processing, transportation, warehouse site selection, and warehousing. 

                    Physical Distribution creates time and place utility, which maximizes the value of products by delivering them to the customer at the right time and right place. Physical Distributions management consists of the design and administration of systems to control the flow of products. There are two dimensions to physical distribution process, the flow of information from individual customer to the producer and the flow of materials from the producer to the consumer. Physical Distribution function is responsible for completing the marketing transaction once the function of exchange is completed, i.e. buyer and seller come to terms and enter into a contract of sale. Physical Distribution requires a distribution infrastructure that that includes transportation, warehousing, material handling, inventory control, processing, customer service, which facilitates the movement of goods. 

Definition

                      Some important definitions of physical distributions are given below -

                Philip Kotler has defined physical distribution as, " Physical Distribution involves planning, implementing and controlling the physical flow of materials and final goods from the point of origin of use to meet consumer needs at a profit." 

            According to William J. Stanton, " Physical Distribution involves the management of physical flow of products and establishment and operation of flow systems." 

         Physical Distribution is thus, management of the physical flow of products and management and operation of the flow systems. It is a process of managing the movement of the goods. 

Objectives 

                       Physical Distribution has two main objectives i.e. consumer satisfaction and profit maximization. Apart from these, there are other objectives also. A satisfied consumer is the biggest asset that a company has. A firm can provide satisfaction to consumers by making available right quantity of right goods at right place and right time, at lowest cost. 

  Apart from above physical distribution has other objectives as follows :

1) To achieve minimum inventory level and speedier transportation. 

2) To establish price of products by effective management of physical distribution activities.

3) To gain competitive advantage over rivals by performing customer service more effectively. 

4) The right kind of physical distribution can increase consumer convenience. They can buy the products as per their needs at any time from the convenient place, even at reasonable price. Similarly middlemen involved in physical distribution, who sell products of various companies, can offer consumers a chance to select the most suitable products. Smooth and continuous flow of goods can added to total consumer satisfaction. 

5) Physical Distribution is directly beneficial to producers. Continuous production contributes a lot to distributors, consumers and society at large. An efficient distribution network facilitates continuous production because of sophisticated storing facility, rapid means of transportation and communication, access to global market, advance ordering, buying incentives to sell in off-seasons, rapid ordering and executing, etc. 

6) Physical Distribution is also targeted to speed up turnover of stocks. From investment of cash in raw materials to realization of cash through the sale of finished can be speed up. Stocks can be speedily converted into cash. So, the duration of working capital can be reduced, and need of working can be minimized. 

Functions

  The major function of physical distribution systems are as follows : 

1) Prompt reply and customer services. 

2) Order processing.

3) Inventory control.

4) Transportation and logistics activity. 

5) Packaging and materials.

Importance

           Physical Distribution activities have an important role to play in success of business.

The some important point of physical distributions are given below : 

1) Helps In Reducing Distribution Cost

                              Physical Distribution cost account for a major part of the price of the product. If these costs are handled systematically, decrease in  cost of product can be there. Proper and systematic planning of transportation schedules and routes, warehousing location and operation, material handling, order processing, etc. can easily bring in cost economies. 

2) Improved Consumer Services

                              Consumer service in physical distribution means making products in right quantity available at right time and right place i.e. place where customer needs. 

3) Helps In Stabilization Of Price

                             Physical Distribution helps in maintaining stable prices. Even customers expect price stability over a period of time. Proper use of transportation and warehousing facilities can help in matching demand with supply and thus ensure stabilization of price.

4) Reducing Cycle Time

                             Important goal of physical distribution involves reducing cycle time; the time it takes to complete a process, so as to reduce costs and increase customer services. 

5) 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. Thus, it facilitates product planning. 

6) Improve The Sales Volume

                             With the help of different innovative inventory techniques, the distribution system improves the sales volume of the organization. It helps both the manufacturers and consumers. Manufacturers distribute a large number of inventories at low distribution costs, whereas, the consumer start stocking less due to the assumed supply of goods. 

7) Sources Of Employment

                             For any organization, the distribution function is as important as production, several employment opportunities are offered by the distribution system. Different roles like salesmen, marketing managers, advertisers, traders, etc. are offered by distribution systems of different organizations.

Conclusion

                 Physical Distribution refers to the movement of finished from a company's distribution and fulfillment network to the end user. In ecommerce, physical distribution involves several commerce supply chain activities including warehousing, inventory control, order processing, retail fulfilment, and shipping. Physical Distribution creates 'time' and 'place' utility, which maximizes the value of products " by delivering them to the right customer at the right time and right place."

             Physical Distribution Management involves controlling the movement of materials and goods from their source to their destination. It is a highly complex, and one of the most important aspects of any business.