Distribution Management

1. PHYSICAL DISTRIBUTION
Distribution Management
7th Semester – B.B.A
By
Navin Raj Saroj
M.B.A. (Marketing)

2. INDUSTRIAL ACTIVITY: Every developing country is imbued
with zeal for industrialization. It has attempted growth in
several fields of sophisticated technology. For the further
development of any country economic and industrial
development i.e. steel, cement, and others plants would be
constructed in various parts.
It is essential to recognize the stark fact that there is and
imperative need for the development of certain basic
infrastructure facilities in the country on a more liberal scale
to ensure a smooth and sustained industrial growth.
Although the need for physically moving, storing and
presenting goods is basic to trade, the importance of
distribution and the nature of services expected by the
purchaser have evolved with the business environment.
OVERVIEW OF PHYSICAL DISTRIBUTION
MANAGEMENT (PDM)

3. • As the Neaplese economy grew from a rural agricultural
economy to an industrialized urban economy, the changing
importance and growing complexity of distribution service
options were increasingly recognized in business.
• Early in the twentieth century businesses were classified into
three great divisions; (1) the activities of production, which
change the form of materials, (2) the activities of distribution,
which change the place and ownership of the commodities thus
produced, and (3) the facilitating activities which aid and
supplement the operations of production and distribution.
• As a society advances from primitive rural to industrialized
urban, the producer and consumer become more widely
separated and distribution takes on greater importance n the
exchange of goods.
OVERVIEW OF PHYSICAL DISTRIBUTION
MANAGEMENT (PDM)

4. MEANING OF PHYSICAL DISTRIBUTION
MANAGEMENT (PDM)
The function which consist among the most pervasive of all
human activities and involve movement of goods for the
purpose of achieving the desired objective for making right
type of goods available at the right time and at the right place
is called Physical distribution management.
Physical distribution management refers to:
“……the management of all activities which facilitate movement and co-
ordination of supply and demand in the creation of time and place utility in
goods”.
“(Physical distribution is) the art and science of determining requirements;
acquiring them; distributing them and finally, maintaning them in an
operationally ready conditions for their entire life.”

5. “(Physical distribution management) is the planning, organizing and
controlling of all move –store activities that facilitates product flow
from the point of raw material acquisition to the point of final
consumption and of the attendant information flow for the purpose
of providing a sufficient level of customer service (and associated
revenues) consistent with the cost incurred for over – coming the
resistance of time and space in providing the service.”
MEANING OF PHYSICAL DISTRIBUTION
MANAGEMENT (PDM)
VENDOR
PRODUCTION
CENTER
DEALER CUSTOMER
Raw Materials
Movement
Finished Product
Movement

6. It is suggested that physical distribution has two
components: materials management and
marketing logistics. Materials management is
concerned with physical supply operations such as
procurement and the storage and movement of
raw materials to and through processing into a
finished products. Marketing logistics deals with
transfer of finished goods to intermediaries, final
buyers and end- users.
PHYSICAL DISTRIBUTION MANAGEMENT
(PDM)

7. OBJECTIVES OF PDM
 To extend direct reach into untapped markets,
 Goods and services that are produced should distributed
 Fully utilize the available human and material resources
to the maximum extent without wastage.
 To increase the rapid growth and development of
Country and organization
 Making right type of goods available at the right time and
at the right place.
• To fulfill the customer expectation

8. EMERGENCE OF PDM
Marketing efforts such as an extension of product lines and
penetration of new marketing channels into new markets, are
imposing and increasing strain on distribution systems, making
them more complex to manage and more expensive to operate.
Contemporary firms has reorganized their distribution systems to
take advantage of their major improvements that is made in the
transport and storage infrastructure. There are so many brands of
consumer goods in the market from which the consumer has to
choose with little or no attention to difference among them in
terms of quality and other characteristics.
There is a need for the consumer goods companies to manage the
Physical distribution system and engage in proper manipulation of
other functional trade – offs in competitive consumer goods
market.

9. ROLE OF PDM IN MARKETING
• Meeting delivery due dates and operating an
efficient distribution network
• To ensure the availability of products for the
customer
• Forecast accurate demand of products and the
movement of raw materials from the supply
centers to the processing center.
• Avoid delayed of procedures
• Planning for construction schedules

10. KEY ELEMENTS OF PDM
Packaging
Inventory
Control
Warehousing
Material
handling
Transportation
Location
Analysis
Customer
Service
Order
Processing
Physical
Distributi
on

11. TRANSPORTATION
Transportation is an essential and one of the most
important components of physical distribution. It’s
importance is illustrated when a strike in the road
transport paralyses a country. Not only does the
movement of raw materials but also of finished
products come to a halt, and various industries and
public face hardships. Transportation expenditure is
by far the most significant component of Physical
distribution.

12. WAREHOUSING
Warehousing is another important function of Physical
distribution, particularly when a manufacturer
produces consumer goods. The optimal location of a
warehouse or warehouses, having regard to minimal
transportation costs, customer services, warehouses
are some of the issues to be decided by logistics
management.
Suitable locations and adequate number of warehouses
maintained by and organization can give the customer
better service and can also result in reduction in
transportation costs if the goods are moved by
truckloads into the warehouses.

13. INVENTORY CONTROL
A very high inventory level results in high carrying costs
and potential obsolescence. A very low inventory level
results in high restocking and production costs as well
as the risk of lost sales and customer goodwill. The
control of inventories is therefore extremely important
in the successful functioning of a firm. The total of
capital costs on inventory and transportation, storage,
and inventory obsolescence must be minimized in order
to control the total costs, and maintain a minimal
inventory level consistent with the needs of production
and sales

14. Inventory
Management
at Apparels
stores
Inventory
Management
at Sandal
stores

15. ORDER PROCESSING
With the increasing acceptance of the concept of customer
satisfaction, managements are now paying more attention to
order processing. Order processing is closely related to sales
and production, and the physical distribution department
has to be careful about the need for interdepartmental co-
ordination. And effective information flow should begin with
the transaction of the customer order. The functions which
have to effectively carried out to ensure continuous supply
of goods to the customer. It is the responsibility the physical
distribution department to analyze the order flow and
introduce improved procedures, wherever necessary, so that
the customers receive the goods promptly and as and when
they want them.

16. MATERIALS HANDLING
An important responsibility of physical distribution
department is material handling, excluding the
production line. The development of material –
handling techniques in recent years has been
phenomenal. The benefits of material handling are
not solely confined to the manufacturer but to the
consignee as well. In co-operation with the
marketing department, the movement of goods can
be arranged in, say, pallets, so that the consignee
can avoid damages during handling.

17. PALLATES

18. PACKAGING
Packaging is another function of physical distribution
and its cost is an important element of the total cost of
goods to the consumer. It is essential that the latest
techniques and materials of packaging be known and
used. Much research has been undertaken on the
subject of packaging by container manufacturers,
carriers, trade associations, and government agencies.
In cosmetic and toiletry companies, the largest portion
of manufacturing cost of the product is that of
packaging.
Some packaging specifications have been prescribed by
transporters. Moving goods in unassembled form or
bulk, freight rates may be reduced.

19. SHAMPOO
&
HAIR OIL
CAKES
&
BAKES

20. LOCATION ANALYSIS
With the continuing growth of the individual units of a
company, new plant locations must be carefully
chosen. Further, the trend toward decentralization
and the industrial development of the backward areas
places increased emphasis upon a site location that
best meets the needs of a company.
An analysis of the physical distribution aspects in the
plant location covers the market area, the existing
transportation facilities and rates, and warehousing.
The plant location decision must be arrived at after a
thorough analysis of all the factors.