Understanding Physical Distribution: Objectives, Components!

Physical distribution, also known as logistics or distribution management, is a vital component of the marketing mix that focuses on the efficient movement of goods from production to consumption. It encompasses the processes, activities, and systems involved in storing, transporting, and delivering products to customers. This essay explores the significance of physical distribution in marketing, its key components, and its role in ensuring customer satisfaction and competitive advantage.

Physical distribution is one of the most asked topic in the commerce related exams such as the UGC-NET Commerce Examination.

In this article, the physical distribution is a very important topic to be known along with other related topics in detail.

What is Physical Distribution?

Physical distribution, in simple terms, refers to the movement of products from the point of production to the final consumer. It is a critical function in marketing that encompasses the flow of raw materials from suppliers to production units, as well as the transfer of finished goods from these units to the end user.

Several activities are involved in ensuring the smooth transfer of goods from the producer to the consumer. These activities include transportation, inventory management, warehousing, material handling, forecasting, customer service, and order processing. Moreover, the strategic location of plants and warehouses is also a key element of physical distribution.

Renowned marketing expert Philip Kotler explains physical distribution as the planning, implementation, and control of the physical flow of materials and final goods from their origin to the consumer, aiming to meet consumer needs profitably.

The Aims of Physical Distribution

Let's delve into the objectives of physical distribution:

• 1. To satisfy consumers' needs
• 2. To maximize profitability
• 3. To provide the right goods, in the right quantity, at the right time and place, and at the lowest possible cost
• 4. To expedite transportation of goods while maintaining a minimum inventory level
• 5. To determine the accurate price of products by effectively managing the physical distribution activities
• 6. To gain a competitive edge by offering superior customer service

Key Elements of Physical Distribution

Let's look at the components of physical distribution:

• Order Processing: This is the starting point of the distribution activity. It involves receiving and handling orders, granting credit for the ordered item, generating invoices, dispatching orders, and collecting payments. Businesses should strive to shorten the order cycle time, which is the duration between the customer placing an order and receiving the goods.
• Storage and Warehousing: Storage pertains to the preservation of goods until they are ordered by a customer. Certain goods that are not available all year round need to be stored. Warehouses serve as storage centers that help businesses meet customer demands. Additionally, warehouses can also act as assembly centers for goods.
• Inventory Control: This refers to the efficient management of goods stored in warehouses. Businesses need to maintain an adequate inventory level to ensure uninterrupted order fulfillment. Both overstocking and understocking can be problematic, as the former requires substantial investment, while the latter can result in stockouts, lost business, and dissatisfied customers.
• Material Handling: This involves the activities related to moving goods from the manufacturing site to the loading point for transport. Proper material handling can minimize wastage during transport, reduce unnecessary goods movement, facilitate quick order processing, and ensure efficient goods movement.
• Transportation: This is a crucial component of physical distribution, responsible for moving stored goods from the warehouse to the customers. The transportation process includes loading, unloading, and moving goods. The choice of transportation mode is critical as it can affect the retail price of the product. The modes of transportation adopted by businesses include road, rail, air, water, and pipeline, depending on the type of goods, their availability, reliability, and the safety offered by the mode.

Conclusion

Physical distribution plays a critical role in marketing by ensuring that products are delivered to customers efficiently and effectively. By managing transportation, warehousing, inventory, and other logistics processes, companies can enhance customer satisfaction, reduce costs, and gain a competitive advantage in the marketplace. Embracing technology and addressing challenges in physical distribution management are essential for companies to optimize their supply chains and succeed in today's dynamic business environment. Thus, strategic management of physical distribution remains integral to achieving marketing objectives and driving business success.

Physical distribution is a vital topic as per several competitive exams. It would help if you learned other similar topics with the Testbook App.