PHYSICAL DISTRIBUTION SYSTEM

PRESENTED BY
GROUP- SUMMER OF 69
Arijit Das
Atanu Ghosh
Eshita Sadhukhan
Prakram Majumdar
Sayak Ghosh
Tithi Sahoo

AGENDA :
§ PHYSICAL DISTRIBUTION DEFINITION
§ OBJECTIVE OF PHYSICAL DISTRIBUTION
§ DISTRIBUTION CHANNEL CHARACTERISTIC
§ PHYSICAL DISTRIBUTION COMPONENTS
§ ELEMENTS OF PHYSICAL DISTRIBUTION
SYSTEM
§ PHYSICAL DISTRIBUTION EXPENDITURES
§ IMPORTANCE OF PHYSICAL DISTRIBUTION
SYSTEM
§ DECISION AREA
§ WAREHOUSING FUNCTIONS
§ TRANSPORTATION COST ELEMENTS:
§ DIFFERENT MODE OF TRANSPORT OF INDIA
§ TRANSPORTATION CHARACTERISTICS
§ TRENDS IN PHYSICAL DISTRIBUTION
§ CONCLUSION
PHYSICAL DISTRIBUTION

Defination
Activities concerned with efficient movement of products and raw
material from producers to consumers. It is the set of activity
concerned with the physical flow of materials, components and
finish goods producer to channel and consumer .

Physical distribution refers to the actual physical flow of

products. It means the movement of materials from the producers
to the consumers.

C
S
U
U
MANUFACTURE DISTRIBUTION S
P
R SYSTEM T
P
O
L
M
I
E
E
R R

Physical Manufactur
Physical Distribution
Supply er Planning
and
Control

Dominant Flow of Products and Service

Dominant Flow of Demand and Design Information
OBJECTIVES :

ü To give an understanding of the institutional and physical

aspects of channels of distribution in global market.
ü To describe the different channels of distribution and show
their advantages and disadvantages.

DISTRIBUTION CHANNEL CHARECTARISTICS

ü To reconcile the needs of producers and consumers

ü To improve efficiency by reducing the number of
transactions and creating bulk
ü To improve accessibility by lowering location and time gap
between Producers and Consumers.

PHYSICAL DISTRIBUTION COMPONENTS

Three components:
ü Input: Order from the customer
ü Processor: Transportation
ü Output: Delivery to the customer

ELEMENTS OF PHYSICAL DISTRIBUTION

SYSTEM

A company’s physical distribution system contains the

following elements:
ü Customer Service
ü Transportation
ü Inventory Control
 ü Protective packaging and materials handling
ü Order Processing
ü Warehousing

PHYSICAL DISTRIBUTION EXPENDITURES

IMPORTANCE OF PHYSICAL DISTRIBUTION

SYSTEM

Physical distribution forms a pivotal part of the marketing

task.
ü It confers place-utility and time-utility to a product by
making it available to the user at the right place and at the
 right time thereby it maximizes the chance to sell the product
and strengthen the company’s competitive position.
ü Helps in carrying the goods to the places of consumption;
then storage & finally in distribution
ü Helps build clientele
ü Acts as a balance between production & consumption in case
of those products which are impacted by the seasonability
factor.

PHYSICAL DISTRIBUTION AREA

Inventory Management
Match quantity produced with quantity demanded
Holding costs
Ordering costs
Stock out costs
ü When to recorder ?
ü How much to recorder ?
ü How much to keep as safety stock ?

Forecasting Area:
ü Demand
ü Order filling time.
PHYSICAL DISTRIBUTION

PHYSICAL DISTRIBUTION
Inventory Management(cont.)
PHYSICAL DISTRIBUTION
Inventory Management(cont.)

WAREHOUSING

ü Receipt :
Unloading , Inspection, Accounting
ü Storing :
Carefully labeling , Identification & a/cing
ü Handling
ü Display
ü Order Handling
Information Processing : Depository of information
across the organization
TRANSPORTATION COST ELEMENTS

ü Line Haul Cost

ü Pick up and Delivery Costs
ü Terminal Handling Costs
ü Billing and Collection

MODES OF TRANSPORT

ü Road Transport
ü Rail Transport
ü Water Transport
ü Air Transport
ü Sea Transport
ü Pipelines

v Passenger Liner – This is normally used for carrying

passengers, mail and some express cargo. It has a regular
time table and only calls at major ports .

v Cargo Liner – This mainly used for carrying a variety of

cargo and sometimes a few passengers.

v TRAMP – This is essentially a cargo ship. It carry a full load

of any type to a certain specified destination where it unloads
whole bulk.

v Bulk Carrier–This is a ship which is specially built to carry a

particular type of cargo for e.g- a bulk carries for iron ore.

v Tanker – This is special bulk carrier which carries liquids and

gases such as oil or Liquefied natural gases.
 v OBO SHIP : This is an oil-bulk –ore carrier which uses
different holds to transport at one time a mixed bulk-cargo.

v Roll-on, Roll-off or Ro- Ro ship – This is highly specialized

ship which allow loaded vehicle like truck , trailer , cars , etc
. to be driven abroad through at the stern and sides .

v Container ship – This is built carry large standard sized

containers.

v Liners – Liners follow mixed routes and timetables .It Carry

mixed cargo and belong to shipping conferences.

v Coastal shipping – Sometimes goods are transported around

the coast rather than inland . These goods carried by coastal
ships.

v Ferries – These are small boats that carries passengers over

very short distances.

v Delivery vans – Mostly wholesalers and large scale retailers

make use of delivery vans for short distances for small
consignments.

CHARACTERISTICS OF MOTOR TRANSPORT

WATER TRANSPORT – Water Transport is cheaper than
various modes of transport of land transport .

ADVANTAGES:
1. Transportation of water is cheaper means of inland transport
for heavy and bulky goods like logs, grain , and metals.
 2. Building material can be carried in large quantities than by
road or train.
3. Loading and Unloading will be easy.

DISADVANTAG ES:
1. Its speed is lower than road, air and rail transport.
2. It is not reliable.
3. It provide service to limited areas.

PIPELINES

ADVANTAGES:
1. Liquids and gaseous goods are transported over long distances
from the place of production to the to the refineries, and from
their to consumers in their homes via pipelines.
2. Maintenance cost are low.
3. It is not affected by weather conditions.
4. There is less amount of pollution of the environment
compared to vehicles.

DISADVANTAG ES:
1. High initial capital cost is involved in installing the whole
system.
2. It is rather limited in use, once built these pipes can only be
used for particular type of product for which it was originally
installed .

ROAD TRANSPORT

ADVANTAGES:
1. Flexibility
2. Timetables
 3. Economy.
4. Motorways
5. Vehicles
6. Suitability
7. Containerization

DISADVANTAG ES:
1. Bulk
2. Congestion and delays
3. Social costs .

RAIL TRANSPORT

ADVANTAGES:
1. Cheap
2. Speed
3. Bulk Commodities
4. Containerization

DISADVANTAG ES:
1. Transshipment
2. Delays
3. Short Journeys.
4. Timetables.
5. Changing Outputs.
6. High Capital Costs.

SEA TRANSPORT

ADVANTAGES:
1. Cheap
 2. Bulk
3. Flexibility
4. Facilities.
5. Short notice.
6. Containerization

DISADVANTAG ES:
1. Slow speed
2. Documentation
3. Other Costs.

AIR TRANSPORT

ADVANTAGES:
1. Aircraft are now built larger to carry more goods.
2. Aircrafts are now available at short notice.
3. Mail, newspapers, medicine and perishable goods can be
transported quickly by Air.
4. Risks involved by transporting by air are less the insurance
charges are low.
5. Documents used in air transport are less complicated when
compared to sea transport.
6. Aeroplanes can take the shortest route.

DISADVANTAG ES:
1. Airfreight transport is very expensive because of high capital
investment and maintenance costs.
2. Aircrafts have limited cargo capacity, bulky, goods cannot be
sent.
3. Bad weather may restrict flights.
TRENDS IN PHYSICAL DISTRIBUTION

ü Increase in road and decline in rail transport.

ü Growth in light goods vehicle.
ü Growth in heavy goods vehicle .
ü Growth in Air and Sea transport.
ü Growth in just in time production .
ü Changing role of Distribution centers.
ü Restrictions on driver hours.

CONCLUSION

In the physical distribution system, distribution channel is an

important part so proper decisions has to be made on the
distribution system . However, it is in the channel of distribution
that the marketer encounters risk & dangers. It involves transaction
cost both apparent & hidden . Risk includes destruction,
negligence, non-payment, loss of transit etc. Therefore careful
choice & evaluation of the channel partner is a necessity.

Along with price and promotion decisions, a decision has to be

made on the distribution system. There are two components to this
– the physical (order processing storage/warehousing and
transport) and the institutional aspects. The letter involves the
choice of agents , distributors , wholesalers, retailers, direct sales
or sales forces. Again, each has its own advantages and
disadvantages .

THANK YOU