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.

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

An integrated philosophy to manage the multidirectional flow of materials and information through an entire channel, from the first raw material supplier to the ultimate user of the finished product. Supply Chain Management

Study Area Map Supply chain management (a series of connected logistics flows) Logistics management Materials managementPhysical distribution Incoming transportationTraffic management ReceivingShipping PurchasingCustomer service Incoming warehousingFinished 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 or 40-foot steel containers

Large cranes loaded the containers on a ship. ) (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 the ship, the containers can be loaded onto a flatbed rail car 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).

Intermodal container motor carrier (Image courtesy of Maersk Sealand)

Rail freight carrierBarge/river freight carrier (Image courtesy of CSX Corp.)

PipelineAir freight carrier Container stack train Jumbo jet air freight

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)

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 Major Advantages by Transportation 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