An earlier resource pack described the decisions that must be taken when a company organizes a channel or network of intermediaries who take responsibility for the management of goods as they move from the producer to the consumer. Each channel member must be carefully selected and the company must decide what type of relationship it seeks with each of its intermediate partners. Having established such a network, the organization must next consider how these goods can be efficiently transferred, in the physical sense, from the place of manufacture to the place of consumption. Physical distribution management (PDM) is concerned with ensuring the product is in the right place at the right time. Place has always been thought of as being the least dynamic of the 4P’s. Marketing practioners and academics have tended to concentrate on the more conspicuous aspects of marketing. It is now recognized that PDM is a critical area of overall marketing management. Much of its expertise is borrowed from the military practice. During the Second World War and the Korean and Vietnam wars, supplies officers had to perform extra ordinary feats of PDM, in terms of food, clothing, ammunition, weapons and a whole range of support equipment having to be transported across the world. The military skill that marketing has adopted and applied to PDM is that of logistics. Marketing management realized that distribution could be organized in a scientific way so the concept of business logistics developed, focusing attention on and increasing the importance of PDM> As marketing analysis became increasingly sophisticated, managers became more aware of the costs of physical distribution whilst the military must win battles; the primary aim of business is to provide customer satisfaction in a manner those results in profit for the company. Business logistical techniques can be applied to PDM so that costs and customer satisfaction are optimized. There is little point in making large savings in the cost of distribution if, in the long run, sales are lost because of customer dissatisfaction, similarly, it does not make economic sense to provide a level of service that is not really required by the customer and leads to an erosion of profits. This cost/service balance is a basic dilemma that faces physical distribution managers. A final reason for the growing importance of PDM as a marketing function is the increasingly demanding nature of the business environment. In the past it was not uncommon for companies to hold large inventories of raw materials and components. Although industries and individual firms differ widely in their stockholding policies, nowadays, stock levels are kept to a minimum wherever possible. Holding stock is wasting working capital for it is not earning money for the company. A more financially analytical approach by management has combined to move the responsibility for carrying stock onto the supplier and away from the customer. Gilbert and Strebel (1989) pointed out that this has a domino effect throughout the marketing channel, with each member putting pressure on the next to provide higher levels of service. Logistical issues facing physical distribution managers today is the increasing application by customers of juts-in-time management techniques or lean manufacturing Hutchin(1988) stresses that companies who demand JIT service from their suppliers carry only a few hours stock of material and components and rely totally on supplier service to keep their production running. This demanding distribution system is supported by company expediters whose task it is to chase the progress of orders and deliveries, not only with immediate suppliers, but right along the chain of supply (called supply chain management). Lean manufacturing has been widely adopted throughout the automotive industry where companies possess the necessary purchasing power to impose such delivery conditions on their suppliers. Their large...
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