Physical Distribution

PHYSICAL PHYSICAL DISTR DI STRIBUTION IBUTION SYSTEM S YSTEM

PRESENTED BY  GROUP- SUMMER OF 69 Arijit Das Atanu Ghosh Eshita Sadhukhan Prakram Majumdar Sayak Ghosh Tithi Sahoo

 AGENDA : § PHYSICAL DISTRIBUTION DEFINITION DISTRIBUTION § OBJECTIVE OF PHYSICAL DISTRIBUTION § DISTRIBUTION CHANNEL CHARACTERISTIC § PHYSICAL DISTRIBUTION COMPONENTS § ELEMENTS OF PHYSICAL DISTRIBUTION § § § § § § § § §

SYSTEM PHYSICAL DISTRIBUTION EXPENDITURES IMPORTANCE OF PHYSICAL DISTRIBUTION SYSTEM DECISION AREA WAREHOUSING FUNCTIONS TRANSPORTATION COST ELEMENTS: DIFFERENT MODE OF TRANSPORT OF INDIA TRANSPORTATION CHARACTERISTICS TRENDS TRENDS IN PHYSICAL PHYSI CAL DISTRIBUTION CONCLUSION

PHYSICAL DISTRIBUTION Defination Activities concerned with with efficient movement of products and raw material from producers to consumers. It is the set of activity concerned with the physical flow of materials, components and finish goods producer to channel and consumer . Physical distribution refers to the actual physical flow of  products. It means the movement of materials from the producers to the consumers.

S U P P L I E R 

MANUFACTURE

Physical Supply

Manufactur er Planning and

DISTRIBUTION SYSTEM

Physical Distribution

Dominant Flow of Products and Service Dominant Flow of Demand and Design Informat Informat ion

C U S T O M E R 

OBJECTIVES : p hysical ü To give an understanding of the institutional and physical aspects of channels of distribution in global market. ü To describe the different channels of distribution and show their advantages and disadvantages. disadvantages.

DISTRIBUTION CHANNEL CHARECTARISTICS ü To reconcile the needs of producers and consumers number of  ü To improve efficiency by reducing the number

transactions and creating bulk  time gap ü To improve accessibility by lowering location and time between Producers and Consumers.

PHYSICAL DISTRIBUTION COMPONENTS Three components: cu stomer ü Input: Order from the customer ü Processor: Transportation ü Output: Delivery to the customer

ELEMENTS OF PHYSICAL DISTRIBUTION SYSTEM A companys physical distribution distribution system sy stem contains the following elements: ü Customer Service ü Transportation ü Inventory Control

materials handling ü Protective packaging and materials ü Order Processing ü Warehousing

PHYSICAL DISTRIBUTION EXPENDITURES

IMPORTANCE OF PHYSICAL DISTRIBUTION SYSTEM Physical distribution forms a pivotal part of the marketing task. place-utility and time-utility to a product by ü It confers place-utility making it available to the user at the right place and at the

right time thereby it maximizes the chance to sell the product and strengthen strengthen the company company s competitive competitive position. position. good s to the places of consumption; ü Helps in carrying the goods then storage & finally in distribution c lientele ele ü Helps build client ü Acts as a balance between production & consumption in case of those products p roducts which are impacted impacted by the seasonability factor.

PHYSICAL DISTRIBUTION AREA  Inventory Management Match quantity produced with quantity demanded Holding costs Ordering costs Stock out costs ü When to recorder ? ü How much to recorder ? much to keep as safety stock ? ü How much Forecasting Area: ü Demand ü Order filling time.

PHYSICAL DISTRIBUTION

PHYSICAL DISTRIBUTION Inventory Management(cont.)

PHYSICAL DISTRIBUTION Inventory Management(cont.)

 WAREHOUSING ü Receipt :

Unloading , Inspection, Accounting ü Storing : Carefully labeling , Identification & a/cing a/cing ü Handling ü Display ü Order Handling Information Processing : Depository of information across the organization

TRANSPORTATION COST ELEMENTS ü ü ü ü

Line Haul Cost Pick up and Delivery Costs Terminal Handling Costs Billing and Collection

MODES OF TRANSPORT ü Road Transport ü ü ü ü

Rail Transport Water Transport Air Transport Sea Transport ü Pipelines

v Passenger Liner

This is normally used for carrying passengers, mail mail and some express cargo. It It has a regular time table table and only calls at major ports .

v Cargo Liner

This mainly mainly used for carrying a variety of  cargo and sometimes a few passengers.

v TRAMP

This is is essentially a cargo cargo ship. ship. It carry a full load load of any type to a certain specified destination where it unloads whole bulk.

Carrier This is a ship which is specially specially built to carry a v Bulk Carrier particular type of cargo for for e.g- a bulk carries for iron ore. v Tanker

This is special bulk carrier which carries liquids and gases such as oil or Liquefied natural gases.

v OBO SHIP : This is an oil-bulk ore carrier which uses

different holds to transport at one time a mixed bulk-cargo. v Roll-on, Roll-off or Ro- Ro ship

This is highly specialized ship which allow allow loaded vehicle like truck , trailer , cars , etc . to be driven abroad through at the stern and sides .

v Container ship

This is built carry large standard sized

containers. v Liners

Liners Liners follow mixed routes and timetables .It Carry mixed cargo and belong to shipping conferences.

v Coastal shipping

Sometimes goods are transported around the coast rather than inland . These goods goo ds carried by coastal ships.

v Ferries

These are small boats that carries passengers over very short distances.

v Delivery vans

Mostly wholesalers and large scale retailers make use of delivery vans for short distances for small consignments.

CHARACTERISTICS OF MOTOR TRANSPORT  WATER TRANSPORT    Water Transport is cheaper than

various modes of transport of land transport . ADVANTAGES: water is cheaper means of inland transport 1. Transportation of water for heavy and bulky goods like logs, grain , and metals.

can be carried in large quantities quantities than by 2. Building material can road or train. Unloading will be easy. 3. Loading and Unloading DISADVANTAGES: rail transport. 1. Its speed is lower than road, air and rail 2. It is not reliable. 3. It provide service to limited areas.

PIPELINES

ADVANTAGES: 1. Liquids and gaseous goods are transported over long distances from the place of production to the to the refineries, and from their to consumers in their homes via pipelines. 2. Maintenance cost are low. cond itions. 3. It is not affected by weather conditions. th e environment 4. There is less amount of pollution of the compared to vehicles. DISADVANTAGES: initial capital cost is involved in in installing the whole 1. High initial system. limited in use, once built these pipes can only only be 2. It is rather limited used for particular type of product p roduct for which it was originally installed .

ROAD TRANSPORT ADVANTAGES: 1. Flexibility 2. Timetables

3. Economy. 4. Motorways 5. Vehicles 6. Suitability 7. Containerization

DISADVANTAGES: 1. Bulk  2. Congestion and delays 3. Social costs .

RAIL TRANSPORT ADVANTAGES: 1. Cheap 2. Speed 3. Bulk Commodities 4. Containerization DISADVANTAGES: 1. Transshipment 2. Delays 3. Short Journeys. 4. Timetables. 5. Changing Outputs. 6. High Capital Costs.

SEA TRANSPORT ADVANTAGES: 1. Cheap

2. Bulk  3. Flexibility 4. Facilities. 5. Short notice. 6. Containerization

DISADVANTAGES: 1. Slow speed 2. Documentation 3. Other Costs.

  AIR TRANSPORT ADVANTAGES: 1. Aircraft are now built larger to carry more goods. 2. Aircrafts are now available at short notice. 3. Mail, newspapers, medicine and perishable goods can be transported quickly by Air. 4. Risks involved by transporting by air are less the insurance charges are low. 5. Documents used in air transport are less complicated when compared to sea transport. 6. Aeroplanes can take the shortest route. DISADVANTAGES: 1. Airfreight transport is very expensive because of high capital investment and maintenance costs. 2. Aircrafts have limited cargo capacity, bulky, goods cannot be sent. 3. Bad weather may restrict flights.

TRENDS IN PHYSICAL DISTRIBUTION ü ü ü ü

Increase in in road and and decline in rail transp transport. ort. Growth in light goods vehicle. vehicle. Growth in heavy goods vehicle . Growth in Air and Sea transport. ü Growth in just in time production . role of Distribution centers. ü Changing role ü Restrictions on driver hours.

CONCLUSION In the physical distribution system, distribution channel is an important part so proper decisions has to be made on the distribution system . However, it is in the channel ch annel of distribution that the marketer encounters risk & dangers. It involves transaction cost both apparent & hidden . Risk includes destruction, negligence, non-payment, loss of transit etc. Therefore careful choice & evaluation of the channel partner is a necessity. n ecessity. Along with price and promotion decisions, a decision has to be made on the distribution system. There are two components to this the physical (order processing storage/warehousing and transport) and the institutional aspects. The The letter involves the the choice of agents , distributors , wholesalers, wholesalers, retailers, direct sales or sales forces. Again, each has h as its its own advantages and disadvantages .

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