Physical Distribution Functions Of Marketing
The physical distribution functions include transportation
and storage of goods. Until the goods have been sold out they should be kept
safe and after selling they should be transported from one place to another.
For this, arrangement transport becomes necessary. Transportation and storage
are included in the physical distribution functions of marketing.
1. Transportation
Transport is the means to carry
goods from one place to another. It creates place utility of goods.
Transportation in marketing becomes necessary because the goods are not used in
the place of production. The goods produced at one place should be carried
thousands of miles away for selling. Transport is very important means to
expand market and seek seek opportunities of new markets. In fact, trade and
market have been developing at a faster pace with the development in the means
of transportation, their speed and increase in security. Because of the
transport facility, mass production of goods and wider distribution has become
easy. Transportation has played a significant role to increase time utility of
goods, to minimize price fluctuation and to provide better services to
customers at lower cost.
2. Storage
In marketing process, it becomes
necessary to make proper storage of goods and warehouse management. There
remains long interval between the time of production of goods and their use.
Some goods are produced only in certain season and are use for whole year.
After the goods have been produced, they should kept safe in store until
consumers make demand. Storage or warehouse management helps to keep the supply
of goods stable as well as regular in market. This creates time utility of
goods.
Objectives for Physical Distribution
Physical distribution decisions
include choosing a transportation mode to distribute goods.
Physical distribution refers to
the processes through which a business moves a product through distribution
channels and gets it to its customers. Physical distribution is the sum of a
firm's warehouse location decisions, inventory control processes, order
handling and transportation decisions. The goal for a firm is to manage all
these aspects so as to minimize its total physical distribution costs.
Warehouse Location
A firm needs warehouses as
storage facilities for finished goods. One objective of physical distribution
is to decide how many warehouse locations the firm needs, and where to locate
them. If the warehouses are too far away from the consumer, it might mean a slower
time to deliver the product to the customer. On the other hand, if it is close
to the customer location, the cost of the warehouse might increase the total
cost of distribution.
Order Handling
In processing a customer's order,
the firm might have to move it through a number of channels. It could go from
the manufacturer to the wholesaler to the retailer, and finally reach the
consumer. Some firms have found ways to cut down on the multiple middlemen
involved in this classic distribution system. Online ordering allows a customer
to order directly from the manufacturer, cutting down some of these
distribution costs.
Inventory Policies
There is a trade-off for a firm
between having too much inventory on hand, with its incurred additional costs,
and not having enough inventory on hand to satisfy shifting customer demand.
Another objective for physical distribution is to put in suitable inventory
policies so as to bring down the total cost of the physical distribution
function.
Transportation
The firm also has to make
decisions relating to what mode of transportation to use for its physical
distribution. For instance, it could truck the products, ship them, send them
by train, or fly them. One factor that influences the decision is the cost of
transportation. There is also the speed factor. Sending a product by air is
faster for international delivery, but it is also likely to be more expensive.
Other decisions related to transportation include how often to transport goods,
or the frequency of transportation, and the transportation route.
Objectives of Warehousing & Distribution
Warehousing is the placement of
products, merchandising and goods in storage units as a major part of
distribution management. Goods may move between multiple warehousing and
distribution systems from the time they are initially manufactured to the time
they ultimately are delivered to end users. The managerial logistics that
ensure an efficient and timely flow between these distributions points define
the objectives of warehousing and distribution.
Transportation
Transportation is among the
highest costs faced by many firms in the supply chain process, say Ronald J.
Ebert and Ricky W. Griffin, authors of "Business Essentials."
Transportation costs will be effected by the transportation method, product
nature, travel distance and the need for speed. An objective in distribution
operations is to manage these costs through effective integration of intermodal
transportation methods and information technology for in-transit tracking.
Storage
Warehouse operations involve
receiving and storing goods. Storage is typically defined as the safekeeping of
goods in a depository. Warehouse storage is a temporary state for goods moving
along the distribution trajectory to the customer. While in storage, the
objective is to provide a secure and controlled environment that is consistent
with the material nature of the goods.
Material Handling
Material handling is the movement
of individual, packaged and bulk goods using labor and machines. This may involve
an assortment of activities between the receiving and put-away processes.
According to the Material Handling Industry of America, there are ten core
principles of material handling: planning, standardization, work, ergonomic,
unit load, space utilization, system, automation, environment and life cycle
cost. The objective is to ensure handling is both timely and that handled goods
arrive to destination points physically intact.
Fulfillment
Fulfillment is the process of
receiving, processing and shipping orders from warehouse inventory. Monitoring
operations and performance is key to improving the productivity and accuracy of
order fulfillment. Computerizing of warehouse operations greatly increases the
ability to identify causes of information and material flow problems and allows
managers to pinpoint areas for improvement, such as order-picking strategies.
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