 Physical distribution includes all those activities that

concerns the handling and the movement of goods from the

place of production to the place of consumption i.e. It
includes basically:
a) Planning the infrastructure to meet demand
b) Then implementing and controlling the physical flow of
materials and final goods from point of origin to point of use.
c) In order to meet customer requirements at profit.
It is also known as Marketing logistics
or public distribution system or traffic management.
“Physical distribution involves planning, implementing
and controlling the physical flows of material and
final goods from the point of origin to point of use or
consumption to meet customer needs at profit.”
-PHILIP KOTLER

“Physical distribution involves the management of

physical flow of products and establishment and
operation of flow systems.”
- WILLIAM J.STANTON
 Supply chain – complete sequence of suppliers
that contribute to creating a good or service and
delivering it to business users and final
consumers.
 Logistics – the activities involved in controlling
the flow of goods, services, and information
among members of the supply chain.
 Physical Distribution – the activities aimed at
efficiently moving finished goods from the
production line to the consumer or business
buyer.
 OBJECTIVES OF PHYSICAL
DISTRIBUTION

The prime objective of every firm as a market

logistics objective is “getting the right goods to
the right place at the right time for the least
cost.”i.e. Its objectives are:
a) Maximizing profits
b) Giving better customer service
c) Reducing cost
d) Customer satisfaction
e) Enhancing sales
 To achieve the above stated objectives a company
must take following steps:
a) Analyzing customer needs
b) Analyzing the competitors
- analyzing the importance of service outputs
- analyzing competitors service standards
c) Deciding its own standard
The marketing logistics
system should be such that reduce the cost. i.e
M=T+FW+VW+S
 COMPONENTS OF PHYSICAL
DISTRIBUTION
The following are the components of Physical distribution:
a) Order Processing
b) Inventory Management
- Warehousing
- Inventory control
c) Transportation
d) Material handling
 5% Order Processing
Inventory 5% Administration
Carrying 21%

26% 43% Transportation

Warehousing
1.ORDER PROCESSING
Order processing includes the activities of receiving, recording, filling and assembling
orders for shipment. Each customers expect that his order should be filled in time
Without an inordinate delay and the goods must match perfectly to his order
specifications. It involves following steps:
a) Communication of order to marketing department
b) Order processing starts which involve
- Credit check
- Investment check
- Order for dispatch
- Replenishment of stock
- Intimation to customers
- Despatch of goods
- Collection of payments

Basically order processing have dual impact on consumer

service level:
c) Order time
d) Consistency and uniformity of delivery time
 2.INVENTORY
MANAGEMENT
Inventory management means the management of products
on the move. It is the basic task of planning and controlling
finished goods after they have brought from production
centers and before their delivery to users. Basically two
aspects are included under this:
- Warehousing
- Inventory control
WAREHOUSING
 Warehousing is an act of storing and assorting the finished
goods so as to create maximum time utility at minimum
cost .So basically warehousing involves two functions:
a) Movement of finished goods
b) Storage of finished goods
The types of warehouse is as follows:

warehouse

warehouse

Distribution
Distribution warehouse
warehouse Storage
Storage warehouse
warehouse Automated
Automated warehouse
warehouse
 Warehouse Location
Regarding the location of the firm, it has two options:
a) Centralized location
Warehouse
Warehouse

Customer Customer Customer

b) Decentralized location
Warehouse

Field Warehouse
 INVENTORY CONTROL
Inventory implies the stock of goods held over a period of time
for meeting the customer needs both business and final. It act
as a link between the orders of the customers and production
cycle of the firm. There are various techniques which are
generally used to control inventory in the firm. These are:
a) Determination of stock level
b) Economic order quantity
c) ABC analysis
d) JIT system
3.MATERIAL HANDELING
Material handling is such component of physical distribution
which is generally taken at every stage of logistics namely
during production,storage,transport and packaging process.
From marketing point of view it stands for the product
movement after it gets out from manufacturing plant but
before it is loaded on the transport mode to the destination of
consumer. The following methods are used for material
handling:

Material handlin g metho ds

Material handling methods

Manual
Manual Material
Material Mechanical
Mechanical Material
Material Automatic
Automatic Material
Material
handling
handling handling
handling handling
handling
TRANSPORTATION
Transportation is the last component of physical
distribution. It is basically concerned with the
movement of products from warehouses to
customer destinations. It involves loading and
unloading of products and transshipment between
the places of dispatch and places of arrival.

Carriers
Carriers

Private carriers Contract carriers Common

Common carriers
carriers
 0.3% Airways
5

15.8% Waterways
4

19.9% Pipelines
3

26.1% Trucks
2

1 Railroads 37.9%

0 10 20 30 40
 Mode Speed Depend- Frequency Available- Flexibility Cost
ability in of ity in in
Meeting Shipments Different Handling
Schedules Locations

Rail Average Average Low Low High Average

Water Very slow Average Very low Limited Very high Very low
Truck Fast High High Very Average High
extensive
Pipeline Slow High High Very Very low Low
limited
Air Very fast High Average Average Low Very high