1. 1 MARKETING CHANNELS Physical Distribution Strategy Berman Chapter 6 Version 3.0

2. 2 Physical Distribution Activities A. Transportation B. Facilities C. Inventory D. Materials handling E. Communication

3. 3 Transportation - inbound/outbound/ international carrier/ mode/ carrier Facilities - warehouse mngt/ planning distribution center/ planning/ plant site Inventory - purchasing/raw materials/ work-in-process/ finished goods/ parts- service support/return goods handling Materials handling - salvage-scrap disposal/ materials handling/ packaging Communication - order processing/ demand forecasting /production scheduling

4. 4 Symptoms of a poor PD System Transportation - unprofitable, peripheral hauls few backhauls Facility Structure - uneven warehouse utilization Inventory Mgnt - stockouts, emergency orders, inventory turns Materials handling - goods received defective Communication, Information - lost orders, status, inconsistent customer service

5. 5 A. Transportation Decision Making railroads motor carriers waterways pipelines air freight third party providers coordinating transportation modes

6. 6 B. Facilities Warehouse Decision Making public vs private private warehouses distribution centers, direct store delivery cross docking, store front system public warehouses bonded, custom, field hub and spoke systems

7. 7 C. Inventory Mgnt Principles types of inventory process stock lot size (cycle stock) safety stock seasonal, smoothing stocks Computing Inventory Turnover unit inventory turnover retail $ inventory turnover cost $ inventory turnover

8. 8 Inventory Decision Making Just-in-time and Quick Response Systems Characteristics of JIT supplies, quantities, quality, shipping Efficient Customer Response Reorder Point Determination order cycle time, floor ready mdse usage rate, review period, accurate response Economic Order Quantity Determination inventory holding costs, order proc costs

9. 9 ABC Inventory Analysis A. average inventory on hand = 1/2 order qty B. annual inventory holding costs C. annual order processing costs D. B + C = Total annual inventory costs Service Levels % % Cus Co Sls Co Prods ServLvl product group A= 80 20 98 product group B= 15 30 95 product group C= 5 50 80

10. 10 D. Materials Handling Salvage and Scrap Disposal Materials Handling Packaging

11. 11 E. Communication and Information Order Processing Demand Forecasting Production Scheduling