Physical Distribution: Meaning, Objectives, Components, Importance, Factors

Physical distribution is the transfer of commodities, products, and raw materials between storage facilities, manufacturing facilities, and distribution hubs as well as the delivery of completed items to customers.

Physical Distribution Meaning

Objectives of Physical Distribution

Components of Physical Distribution

Transportation:

• This component involves deciding which mode of transportation is most suitable for shipping goods. Choices include trucks for land transport, ships for water transport, and planes for air transport.
• It also encompasses the planning of transportation routes, considering factors such as distance, cost, and time to ensure efficient movement of goods.
• Involves coordinating the loading, unloading, and tracking of goods during transit, as well as managing transportation providers and negotiating rates.

Warehousing:

• Warehousing involves the storage of products in a systematic manner, ensuring they are organized and easily accessible for distribution.
• This component also deals with the handling of goods within the warehouse, which includes activities such as picking, packing, and moving products.
• Warehousing aims to make the best use of available storage space, maximizing capacity while minimizing wasted space.

Inventory Management:

• It involves predicting customer demand for products and adjusting inventory levels accordingly to prevent shortages or overstock situations.
• Inventory management defines reorder points, which indicate when it's time to replenish stock to maintain a sufficient supply of products.
• This component also focuses on reducing excess inventory holding costs, which can include storage, insurance, and financing expenses.

Order Processing:

• Order processing begins with the entry of customer orders into the system, either manually or electronically.
• It encompasses the various steps required to fulfill orders, including picking items from inventory, packing them securely, and preparing them for shipment.
• Order processing also involves tracking shipments to ensure they reach customers on time, providing customers with shipment status updates as needed.

Packaging and Materials Handling:

• This component includes designing packaging materials to protect products from damage during transit while minimizing packaging waste.
• Addressing materials handling involves finding ways to efficiently move products through the distribution process, reducing the risk of breakage or spoilage.
• It also considers cost-efficient packaging and handling practices to minimize expenses associated with materials and labor.

Importance of Physical Distribution

Factors Hindering Physical Distribution

Physical Distribution FAQs