Q1.

Ans-Physical distribution is the set of activities aiming to provide

intermediaries and customers with the right quality goods in right time and at
the right location .sound system of physical distribution does not result in cost
cutting but leads to high level of quality service .cost cutting is achieved through
maintaining low level inventory level ,to the extent possible with use of
inexpensive forms of transportation and shipping goods in mass quantity .while
high customers service level can be achieved through quick and reliable delivery
systems and having high inventory so that customers would have deep
assortment of products without the chance of stocks outs.
Distribution is termed as the second half of the marketing ,the reason is that the
expenses incurred and efforts involved in distribution and supplying nearly
accounts close to fifty percent of the total marketing budget.Manufacturers only
produce goods and at maximum provide them to wholesalers.These produced
goods must be provided in proper quantities ,convenient locations and at
times ,when customers want them .simply stated ,distribution is value added
task through which the finished goods are supplied to the place of demand and
stored till sold .
Patterns of distribution are determined on the basis of the intensity of the
distribution.There are three broad patterns of distribution ,Intensive
,Selective,Exclusive distribution:
1)Intensive distribution provides the scope of covering the market to the
maximum level.By adopting this method ,a marketer sells its products in the
market on all possible stores where a customer is likely to look for the products
and purchase it.
Example:Marketers of convenience products like biscuits,snacks,potato
chips,soaps, detergents,salt,magazines,cfl bulbs,cigaretts,soft drinks .intensive
distribution is generally necessary where customers have range of acceptable
brands to choose from it.
2)Selective distribution is a sort of distribution channel where a manufacturers
sells its product through multiple ,but not all possible outlets.By adopting this a
manufacturer selects the best retail stores in a particular geographical area to
sells his products.
Example:selective distribution is appropriate for consumer shopping products
such as various types of garments,consumer appliances etc.
3)Exclusive distribution one of the extreme form of the selective distribution
where manufacturers sells its goods and services through only very few
middlemen like one wholesalers,retailer,or distributor is used in a specific
geographical area .This type of distribution pattern is frequently used in the
marketing of consumer speciality products .Exclusive distribution is also
attractive to intermediaries .The manufacturers promotion effort benefits
intermediaries exclusively in their market area.

Q2.Ans-The wholesalers essentially purchase the goods from the

producer,stocks them and redistributes these to the other intermediaries like the
retailers who subsequently sell them to the end users or the customers .
The different type of wholesaler intermediaries have evolved based on the
different needs that have arisen in reaching the products from the producers to
the end users via the retailers.Broadly wholesalers can be classified into three
categories wholesaler merchants,brokers or agents and producers wholesalers.
A)Wholesaler merchants are merchants performing the full range of duties of
wholesalers are termed as wholesaler merchants.They purchase goods from the
producer in bulk and segregate and sell in small lots to retailers and other
customers both commercial and industrial.for the sale of industrial goods they
also appoint salesperson on their roll if the need arises.good wholesaler
merchants are in demand in view of services rendered by them .On this basis
such merchant can be further categorized as Full service and Limited service
wholesalers based on the function performed by them:
1)Full service wholesaler merchants:As it is clear from the terminology ,Full
service wholesaler merchants are responsible for all activities of purchase from
the producer ,getting the title of the product ,warehousing,sale and delivery to
retailers,distribution and credit provision.these merchants can once again be
categorised into,
a)General merchandise merchants.
b)Limited line merchants
c)Rack jobbers
d)Speciality line merchants
e)Cooperatives
2)Limited service wholesaler merchants:Merchants offering selected services
through their self-limited are termed as limited service wholesaler
merchants.They can further be categorised as:
a)Cash and carry merchants
b)Drop shippers
c)Mail order merchants
d)Truck wholesalers,
B)Brokers and agents:-The role of brokers and agents pertains to bringing
together the seller and the buyer for making a sale transaction .They do not
purchase the product or assume its title in any manner whatsoever and are not
involved in any activity related to the product delivery
,viz.,storage,transportation ,etc.In essence ,brokers and agents are middlemen
and their responsibility is restricted to taking all actions which enables the seller

to meet the potential buyer.The difference between the broker and the agents
would be in the terms of their service duration a broker performs his role
intermittently for a temporary period with specific customer.while an agent
represent either his buyer or seller on permanent basis. Ex.-insurance agent.
C)Producers as wholesalers :-when producers them self take the charge of their
wholesaling functions,they are prefferd to as producer wholesalers.Normally the
sales department of the producer takes care of the wholesaling functions.

Q3.Ans-The term inventory means any stock of direct or indirect material (raw
material or finished items or both)stocked in order to meet the expected and the
unexpected demands in future.
A basic purpose of inventory management is to control inventory by managing
the flows of materials.It sets strategies and rules to examine levels of inventory
and determine what level should be maintained,when stocks should be
refilled,and how big the orders should be.
ABC Analysis:-ABC classification is one of the models of inventory classification
.ABC stands for always better control.The value of inventory items consumed in
a year is one of the important factors of this control method.

.Small quantities of inventory items form a very large portion of inventory

consumption throughout the year.
.Somewhat larger number of inventory items from a reasonable share of
inventory consumption throughout the year.
.Huge number of inventory items from a very small share of inventory
consumption throughout the year.

These essential facts have given rise to the concept of ABC analysis .
It has been observed that in manufacturing firm only

10% of items contribute to 70% of the inventory consumption throughout

the year.
20% of the items contribute to 20% of the inventory consumption
throughout the year.
70% of the items contribute to only 10% of the inventory consumption
throughout the year.

Economic order quantity:-It is defined as the level of the inventory order at

which the cost of holding inventory (i.e.,ordering cost+inventory carrying cost)is
the minimum.By using the EOQ model ,it becomes easy for a firm to understand
that its total expenditure will increase if it orders too much or too little of a stock
item.Simply put ,if a firm increases its order quantity then it will simultaneously
increase the investment of the firm and reduces the number of items each year
you send in replenishment order.

Example-A chemical process manufacturer needs only a few major raw

materials to manufacture finished products because he is familiar with the

amount of investment required and the fact that production rate is steady
over long time period.As a result many of the raw materials can be
procured in bulk quantities and can be transported through an inexpensive
mode of transport.
Just-in-time systems:-The concept has been popular by Japanese firms.In JIT
system manufactured components and parts are transported to manufacturing
site just few hours before they actually put to use.The delivery of material is
integrated with the manufacturing cycle and speed .Thus JIT system removes the
requirement of carrying large inventories,and hence saves other cost such as
transportation cost the manufacturer.However the system requires liaisoning
between the manufacturer and suppliers regarding information of the delivery
time and the quality of the raw material.

Q4.Ans-The SCOR model is used to understand simple or complex supply chains

through a common set of terms.Consequently ,different industries can be related
to each other to interpret any supply,chain.
SCOR is based on five unique management methods .These are
Plan,Source,Make,Deliver and Return.

i)Plan:-It includes methods required to balance collective demand and

supply to devise strategy which meet sourcing ,production and delivery
requirements in an optimum manner.
ii)Source:-It includes methods to prepare goods/services to meet the
actual or anticipated demand.
iii)Make:-It includes methods that convert a raw product to finished
product to meet the actual or anticipated demand.
iv)Deliver:-It includes method in which transfer of final products to the end
consumer.This
includes
concept
such
as
distribution
management,transportation,etc.
v)Return:-It includes methods which are involved in receiving the returned
products no matter what the reason for return is.

The SCOR model focuses on the following aspects:

Suppliers

1.All communication with the customer right from the purchase of a

product to its payment.
2.All product transaction that come in the process right from the supplier
to the end customer which includes equipment,bulk commodities,spare
parts,etc.
3.All market communication right from understanding the collective
demand to the fulfilment of each other.
Customers

Other key notions highlighted by the SCOR model are information

technology,guidance ,quality and administration.
Plan
P2 Plan source

P1 Plan supply chain

P3 Plan Make

P4 Plan deliver

P5 Plan Returns

Source

Deliver

Make

S1 source stocked products

M1 Make-to-stock

D1 Deliver stocked products

S2 source MTO products

M2 Make-to-order

D2 Deliver MTO products

S3 source ETO products

M3 Engineer-to-order

Return Source

D3 deliver ETO products

Return Deliver

Enable
Figure:-SCOR Model

Q5.Ans-A Vertical Marketing System (VMS)is a system in which almost all the
members of distribution channel such as manufacturers,wholesalers and the
retailers work together to satisfy human needs and wants by facilitating the
smooth flow of goods and services from manufacturer to the ultimate consumer.
In traditional marketing system,manufacturers,wholesalers and the retailers are
separate entities who try to maximize their profits.The philosophy behind
developing vertical marketing system is that when one member distribution
channel tries to maximize its profits at the expense of rest of the members, it will
create conflict resulting in the decline of profits for the whole channel of
distribution.To avoid these conflicts,now retail firm has started forming vertical
marketing system. Three types of VMS are in existence through which goods and
services are usually distributed to customers.These are:
Independent firm VMS is a marketing system where manufacturers play a
vital role to provide goods and services to customers.This is the case where
retailers are very smalland therefore ,manufacturers have to reach the whole
market.Also when a firms financialresources are limited and channel members
are not in a position to share risks and expenses,therefore,they want the
manufacturer to come forward and lead the retailing efforts.Independent
retailers on other hand ,target their customer base and build loyalty by becoming
a friendly reatailer and word of mouth publicity.
Example:

Campbell
Coke
GE
JC penny
Kellogs
Mckesson corp
P&G
Pepsi

Toys R Us
Wal-Mart

Partially integrated VMS is a marketing system in which two

independent,financially strong firms along a channel of distribution perform all
manufactruring and distribution function without the involvement of any
intermediary.This is the case where involvement of the wholesalers may be
expensive and/or unaffordable.The example of such system is where
manufactures and retailers divide all retailing activities like production,storage
and distribution without any independent wholesalers.partially integrated VMS is
most suitable where:

i)Wholesalers are costly to afford

ii)Company has ample resources
iii)Both manufacturers and retailers are large
iv)Unit sales are moderate,and
v)strict control over channel is required.
For example-Wholesale sponsored group of retailers.

Fully integrated VMS is a system where one member of the distribution

channel for say manufacturer performs all production, storage and distribution
function without the involvement of any channel member.This is the case where
manufacturer having sufficient resources wants direct interaction with its
customers .Earlier this system was usually employed by manufacturers of repute
but now due to easy availability of finance and retail facilities that significantly
contribute to a nationeconomy,retailers are also moving upward in the
chain.Vishal mega mart and reliance fresh work on the principle of integrated
marketing system and provide efficient customer service,wider assortment
without increasing the price of commodities.In short, fully integrated system is
based on the concept of manufacturing to retailing.other examples are:

Banana republic
Gallo
Giant foods
Hallmark
Oil companies
Sears
Sherwin Williams
The Gap

Q6.Ans-Benchmarking is systematic and continuous measurement process:a

process of continuosly measuring and comparing an organizations business
processes against process leaders anywhere in the world to gain information
which will help the organization to take action to improve its performance.
There is a procedure for defining the methodologies and metrics,achieve
milestones and set comparisons for benchmarking.At the implementation level
application of bencmarking is generally believe to involve seven keys steps:

i)Determine which function to benchmark:-The organization needs to first

ascertain which functional areas are to be benchmarked,those which will gain the
most from the benchmarking procedure.
ii)Identify performance variables and collect data:- The organization needs
to recognize the performance variables which will be used to measure those
functional areas and then accordingly collect data.
iii)Select best in class companies:-The organization needs to first choose the
best in class company for each area that is to be benchmarked.The choosen
company should one that performs its functions at the lowest cost and achieves
the highest level of customer satisfaction.
iv)Compare:-An organization needs to compare its performance with that of
best in class company for each benchmark being considered.The results need to
be compared in an easy format to ascertain the gap between its own
performance and that of the best in class company.
v)Specify programmes and action to meet and surpass:-The organization
needs to specify the programmes and action to meet and exceed the
competition which is based on a strategy to improve the areas which have some
possibility of improvement.The organization can either devise its own methods to
improve its weak areas or look up to the industry leaders for guidance.
vi)Implement and monitor:-The organization needs to implement these
programmes by setting specific goals to be achieved within stipulated time
period.The organization also needs to develop a monitoring mechanism to review
and update the examination/study done within the stipulated time period.
vii)Recalibrate:-The monitoring mechanism developed by the organization will
form the basis for revision and change measurement in the subsequent
benchmarking studies.

Determine which function to be

benchmark
Identify performance variables and
collect data
Select best in class companies
Measure
own
Performance

Compare
Specify programmes and action to meet

Measure
best in
class
Performanc

Implement and monitor

Recalibrate

Figure-The Benchmarking procedure

Figure explains the benchmarking process.This exercise leads to better
performance in the critical functions of a business organization or in main areas
of business environment.