1. Distribution (cont’d)

2. Physical Distribution
Place: Customer
Service Levels
Inventory carrying
Costs
Transportation
Costs
Warehousing Costs
Lot quantity costs
Order Processing &
Information Costs

3. Physical Distribution
Outgoing product flow through defined network of transportation lines and distribution nodes
This along with “material management” cycle would form
the “logistics cycle”
Outflow becomes inflow for another supplier in the value chain and is likely to be repeated
Distribution costs could go from 10% to 40% of the total costs

4. Rising Importance
Rising Cost of distribution In Rupee terms As a %age of the total costs
Role in delivery satisfaction and value creation to the customer

5. Physical Distribution
Three components: Input, Processor and Output
Input: Order from the Customer
Processor: Transportation
Output: Delivery to the Customer

6. Customer Satisfaction Levels
Most Critical Factor
Function of: Waiting time for the customer (from order to receipt) Extent of fulfillment Condition of the delivery
Inputs for the C.S.L.: Men, materials and money

7. Inventories Inputs for the production or use
Intermediate stage between stage
Finished Goods waiting shipment
These help In
Ensuring continuity and avoiding Stock outs
Take care of Seasonality on Both sides
Taking care of variation of demand and supply

8. Inventory Costs Order Processing Cost Inventory Carrying Costs
Re ordering Costs

9. Warehousing (Functions)
Receipt: unloading, inspection, accounting
Storing: Careful labeling, identification & a/cing
Handling
Display
Order Handling
Information Processing: depository of information across the organisation

10. Order Processing A major contributor to the costs
Helps in ensuring customer satisfaction
Needs careful planning
Function of the size and number of orders
Necessary to systemise it across the organisation
Information system can help in the process

11. Transportation Supply of Products in Sufficient Quantity
Supply of Products in time
Ease of Availability
Economy of Operation
Safety and Security of goods in transit
Ensuring Customer Satisfaction

12. Modes of Transport
Airways
Railways
Waterways
Pipelines

13. Mode of Typical Products Examples
Airways High value and perishables emergency goods Perishable goods,
documentation flowers
Railways Bulky Long hauls chemicals, Iron, Steel etc Coal, sand, rice,
3. Roadways Short hauls and high value goods, fresh Clothing, textiles,
fruits, vegetables paper, fish etc.
4. Waterways Bulky, low value and nonperishable Chemicals, sand, and
agricultural products
Pipelines Fluids Petrol, Oil, Natural
gas, Water, Chemicals

14. Current Trends Containerisation Multi modal modes of Transport
Third Party Logistics Providers