The planning, implementation, and controlling of the physical flow of material or product from one point to another to meet the customer requirements in the market is known as physical distribution.
Importance of Physical Distribution
The importance of physical distribution becomes significant when the manufacturers and market are geographically far from each other. The following points highlight the importance of physical distribution −
Execute physical flow of product from the manufacture to the customers.
Grant time and place for the product
Build customer for the product
Cost reduction
Fulfill the demand of the product in the market so that business takes place
Steps in Designing a Physical Distribution System
To design a physical distribution system for a product, following steps need to be followed −
Step 1 − Defining distribution objective and services required for product distribution
Step 2 − Articulating customer requirement
Step 3 − Comparing the strategy with market competitors
Step 4 − Managing the cost of distribution to decrease cost without compromising on the quality of service
Step 5 − Building physical distribution system that is flexible for implementation of changes, if required
Designing of a physical distribution system involves these steps. It is necessary to consider all steps involved for smooth distribution of goods and services.
Components of a Physical Distribution System
Physical distribution can be controlled and monitored by its different components. Each component should be evaluated and managed in order to accomplish physical distribution without any problems.
The following are the different components of the physical distribution system −
Planning of physical distribution system
Storage planning in plant
Logistics
Warehousing on field
Receiving
Handling
Sub distribution of product
Management of inventory at various levels
Execution of order
Accounting transactions
Communication at different levels
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