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Physical Distribution Essay

3172 words - 13 pages






Physical distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective ...view middle of the document...

Small business owners can ask the following questions in addressing these components:
* Customer service—What level of customer service should be provided?
* Transportation—How will the products be shipped?
* Warehousing—Where will the goods be located? How many warehouses should be utilized?
* Order processing—How should the orders be handled?
* Inventory control—How much inventory should be maintained at each location?
* Protective packaging and materials handling—How can efficient methods be developed for handling goods in the factory, warehouse, and transport terminals?

These components are interrelated: decisions made in one area affect the relative efficiency of others. For example, a small business that provides customized personal computers may transport finished products by air rather than by truck, as faster delivery times may allow lower inventory costs, which would more than offset the higher cost of air transport. Viewing physical distribution from a systems perspective can be the key to providing a defined level of customer service at the lowest possible cost.



Physical distribution of goods and services require transportation. Transportation plays a vital role in marketing. Transportation means physical movement of people and goods from place to place. Transportation creates place utility and enables the suppliers to supply goods and services on a regular basis. Production takes place in a few places but the products have to be delivered and distributed throughout the length and breadth of the country and often even across national boundaries into other countries. Transportation helps in the physical movement of goods from the production centers or point of origin to the consumption centers. As a result, transportation increases the mobility of labor, goods and services and capital.


Transportation helps in performing a number of functions while taking goods and services from the point of production to the point of consumption. Its Functions are as follows:

1. Widens Market
Transportation helps in delivering the products to different places. In doing so, products can be sold in old markets as well as the new markets. Transportation widens the market by bringing the producers, distributors, and consumers closer to one another.

2. Increases Mobility Of Labor And Capital 
Certain factors of production like labor and capital are to be physically transported from one place to another. Labor becomes mobile with the development of transportation. It also encourages migration of people from place to place in search of job.

3. Encourages Job Specialization And Division Of Work
Transportation facilitates regional and geographical concentration of labor and production centers. As a result, labor becomes specialized, i.e. transporters. Transportation also facilitates in producing goods and services as desired by the consumers....

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