Physical Distribution Management and Strategy

1. Physical Distribution Management and Strategy

2. Physical Distribution • The process of • planning, implementing, and controlling • the efficient, effective flow and storage • of goods, services, and related information • from point of origin to point of consumption • for the purpose of conforming to customer's requirements. • Physical distribution cost can represent 20% or more of the selling price of a product.

3. Logistics Management • The efficient management of the flow of materials inbound-through and outbound of an organization. • Two primary product flows: • Physical supply (materials management): Flows that provide raw materials, components, and supplies to the production process. • Physical distribution management: Flows that deliver the completed product to customers and channel intermediaries.

4. Supplier Customer Materials management Physical distributionmanagement Manufacturer Inbound Logistics Outbound Logistics Logistics Management

5. Study Area Map Supply chain management (a series of connectedlogistics flows) Logisticsmanagement Materials managementPhysical distribution Incoming transportation Traffic management Receiving Shipping Purchasing Customer service Incoming warehousing Finished goods Inventory control

6. Functions of Traffic Management • Mode and carrier selection • Routing • Claims processing • Operation of private transportation

7. Many of the imported goods you purchase were shipped in 20-foot (TEU) or 40-foot (FEU) steel containers

8. Large cranes load the containers onto ships. (Image courtesy of the Port ofCharleston)

9. Larger container ships can hold 4,000 to 6,000 containers. (Imagecourtesy of Maersk Sealand)

10. After unloading from ships, containers can be loaded onto a flatbed rail car, or truck flatbed, for additional intermodal shipping. (Imagecourtesyof CSX Corp.)

11. Alternatively, a container can be attached to a set of wheels for motor transport (as an 18-wheeler trailer).

12. Major Advantages by Transportation Mode • Rail • Mass movement of goods • Low unit cost of movement • Dependability • Long-haul moving • Wide coverage to major markets and suppliers • Many auxillary services (i.e., switching) • Transfer of goods to other carriers • Specializedequipment • Water • Very low unit cost of movement • Movement of low-unit-value commodities • Long-haul movement • Mass movement of bulk commodities • Motor • Speed of delivery • Diversity of equipment • Flexibility • Frequency of movement • Transfer of goods to other carriers • Convenient to both shipper and receiver (continued)

13. Major Advantages by Transportation Mode • Air • Frequent service to major markets • Large capability • Overnight service • Most rapid speed of any carrier • Intermodal • Cost savings • Lower loss and damage claims due to containerization • Service extended to more shippers and receivers • Reduced handling and storage costs • Pipeline • Lowest unit cost of movement • Mass movement of liquid or gas products • Long-haul moving • Large capacity • Most dependable mode

14. Controllable Elements in a Logistics System • Customer service • Logistics communications • Warehousing • Packaging • Production planning • Order processing • Transportation • Inventory control • Materials Handling • Plant and warehouse location