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.

Physical distribution management Materials management Physical distribution management Supplier Customer Manufacturer Inbound Logistics Outbound Logistics Logistics Management

Supply chain management (a series of connected logistics flows) Study Area Map Supply chain management (a series of connected logistics flows) Logistics management Materials management Physical distribution Incoming transportation Traffic management Receiving Shipping Purchasing Customer service Incoming warehousing Finished goods Inventory control

Functions of Traffic Management 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 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 Pipeline Lowest unit cost of movement Mass movement of liquid or gas products Long-haul moving Large capacity Most dependable mode

Controllable Elements in a Logistics System Customer service Logistics communications Warehousing Packaging Production planning Order processing Transportation Inventory control Materials Handling Plant and warehouse location