Function of Physical Distribution Management and Distribution Channels

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Revision of DTM for chapter 1 & 2
Function of physical distribution management and distribution channels 1) Definition of physical distribution management – Used in manufacturing and commerce to describe the broad range of activities concerned w/ the efficient movement of finished products from end of production line to consumer. * Emphasizes the flow of materials from the point of manufacture industrial user * Implies the control of the flow End consumers

Products supply > Warehousing > Distributution planning > Products delivering > Market outlets > Products display > Customers > Products Demand|

2) Role and importance of distribution – To bridge the geographical and time gaps between the producer and the consumer. Consumer’s needs are the factor which set the whole process of production and distribution in motion. Producers and manufacturers fulfill the demand of the consumer’s needs. The job of the various distributive organizations is to ensure good are produced at the right time & place, at a reasonable price. EFFICIENT AND SPEEDY TRANSPORT IS THE KEY FACTOR.

Raw materials have to be transported to the factories and finished goods have to be dispatched to wherever required. (1) The geographical gap.
Gap between the place of production and the place of consumption.

Example: Coffee beans grown in Brazil tin of coffee powder in the cupboard at home.

* Complex nature of distribution when we consider the enormous range of merchandise.

(2) The Time Gap
Gap between the time of production and time of consumption.

Scenario 1: Time gap may be short.
Example: Strawberries picked on Friday the same strawberries on tea table on SUNDAY

Scenario 2: Time gap may be long.
Example: Fireworks manufactured in Jan To be used in AUGUST during National Day

* The time period between production of goods and their eventual consumption must be bridged. * Perishable commodities such as fruits cannot keep for a long time. Therefore, even though they can be canned/frozen, they still need appropriate care to be exercised before reaching consumer.

* For slower-moving/ seasonal goods, the time gap may be relatively long so appropriate care must be taken until they are sold. Example: Fireworks need protection from dampness, furniture from woodworm, metal goods from corrosion and etc.

As goods move from producer/manufacturer to consumer, they are handled by VARIOUS DISTRIBUTOR. Therefore, transport and handling costs increase the price of the goods. (JUSTIFIED) Because the distributor is fulfilling an essential function to give consumer easy access to goods.

End result: A wide variety of goods & services are ready available to every consumer.

3) Major Tasks in Distribution Management

5 elements of physical distribution
* Inventory location and warehousing
[Require mechanical handling equipment eg. Cranes/forklift truck. Number and locations of inventory sites influence inventory size and transportation methods.]

* Materials handling and care of product
[Use of appropriate equipment can minimize losses from breakage, spoilage and theft, and the time required for handling, and consequently the cost. Containerization is a cargo-handling system which is important in physical distribution. Involves enclosing a shipment of products in large containers of metal, wood or other materials. Transported unopened from the time they leave until reach destination. Thus, containerization minimizes physical handling, which reduces damage More efficient transportation. ]

* Inventory control
[Maintaining control over the size (quantity) and composition (type) of the inventories.] Goal: 1) Minimize both the investment and the fluctuations in inventories. 2) Filling customer’s orders promptly and accurately. Inventory size determined by balancing market needs and costs. Anticipated through sales forecasts. The more...
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