Physical Distribution System: Objective and Decisions Area

Physical distribution is concerned with the physical movement of the goods from the producer to the consumer.

It includes all those activities which help in the efficient movement of goods from producer to consumers, such as trans­portation, warehousing, material handling, inventory control, order processing, market forecasting, packaging, plant and warehouse location and customer ser­vice.

Philip Kotler has defined physical distribution as, “Physical distribution involves planning, implementing and controlling the physical flow of materials and final goods from the point of origin of use to meet consumer needs at a profit.”

“Physical distribution involves the man­agement of physical flow of products and establishment and operation of flow systems.”

Management of the physical flow of products and management and operation of the flow system.

A firm can provide sat­isfaction to consumers by making the available right quantity of right goods at the right place and time, at the lowest costs.

Prompt and dependable distribution enhances consumer satisfaction.

By offering better service at a lower price the product, the firm can attract additional consumers and make more prof­its.

This can be done by improving the efficiency and effectiveness of physical distribution activities, firm can bring in the economy which will have an effect on profit margin i.e. by lowering the physical distribution costs, profit position can be improved.

Its importance can be judged from the following points: (A) Creating Time and Place Utility: Physical distribution activities help in creating time and place utility.

This is done through transportation and warehousing.

The transportation system creates place utility as it makes available the goods at the right place where they are required.

Warehousing creates time utility by storing the goods and releasing them when they are required.

If these costs are handled systematically, a decrease in the costs of production can be there.

Proper and systematic planning of transportation schedules and routes, warehousing location and operation, material handling, order processing, etc.

Proper use of transportation and warehousing facilities can help in matching demand with supply and ensure stabilisation of price.