Physical Distribution
Management and
Strategy
Physical Distribution
• The process of
– planning, implementing, and controlling
– the efficient, effective flow and storage
– of goods, services, and related information
– from point of origin to point of consumption
– for the purpose of conforming to customer's
requirements.
• Physical distribution cost can represent 20%
or more of the selling price of a product.
Logistics Management
• The efficient management of the flow of
materials inbound-through and outbound of
an organization.
• Two primary product flows:
– Physical supply (materials management):
Flows that provide raw materials, components,
and supplies to the production process.
– Physical distribution management: Flows that
deliver the completed product to customers and
channel intermediaries.
Materials
management
Supplier
Physical distribution
management
Customer
Manufacturer
Inbound
Logistics
Outbound
Logistics
Logistics Management
Study Area Map
Supply chain management
(a series of connected logistics flows)
Logistics management
Materials management
Physical distribution
Incoming transportation
Receiving
Purchasing
Incoming warehousing
Inventory control
Traffic management
Shipping
Customer service
Finished goods
Functions of Traffic
Management
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•
•
•
Mode and carrier selection
Routing
Claims processing
Operation of private transportation
Many of the imported goods you purchase were shipped
in 20-foot (TEU) or 40-foot (FEU) steel containers
Large cranes load the containers onto ships.
(Image courtesy of the Port of Charleston)
Larger container ships can hold
4,000 to 6,000 containers.
(Image courtesy of Maersk Sealand)
After unloading from ships, containers can be loaded
onto a flatbed rail car, or truck flatbed, for additional
intermodal shipping.
(Image courtesy of CSX Corp.)
Alternatively, a container can be attached to a set of
wheels for motor transport
(as an 18-wheeler trailer).
Major Advantages by Transportation Mode
• Motor
– Speed of
delivery
– Diversity of
equipment
– Flexibility
– Frequency of
movement
– Transfer of
goods to other
carriers
– Convenient to
both shipper
and receiver
• Rail
– Mass movement of
goods
– Low unit cost of
movement
– Dependability
– Long-haul moving
– Wide coverage to
major markets and
suppliers
– Many auxillary
services (i.e.,
switching)
– Transfer of goods to
other carriers
– Specialized
equipment
• Water
– Very low unit
cost of
movement
– Movement of
low-unit-value
commodities
– Long-haul
movement
– Mass
movement of
bulk
commodities
(continued)
Major Advantages by Transportation Mode
• Pipeline
– Lowest unit cost
of movement
– Mass movement
of liquid or gas
products
– Long-haul
moving
– Large capacity
– Most
dependable
mode
• Air
– Frequent
service to major
markets
– Large capability
– Overnight
service
– Most rapid
speed of any
carrier
• Intermodal
– Cost savings
– Lower loss and
damage claims
due to
containerization
– Service
extended to
more shippers
and receivers
– Reduced
handling and
storage costs
Controllable Elements in a Logistics
System
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•
•
•
•
•
•
•
•
•
Customer service
Logistics communications
Warehousing
Packaging
Production planning
Order processing
Transportation
Inventory control
Materials Handling
Plant and warehouse location