Chapter 6:

Physical
Distribution
System
 CONCEPT OF DISTRIBUTION
SYSTEM
What are Distributed System?
An intranet which is a portion of the internet
managed by an organization. The internet are World
Wide Web (WWW) is the biggest example of distributed
system. EXAMPLES continuing advances in
communication technology availability of powerful yet
cheap microprocessors (PCs, workstations).
WHY DISTRIBUTED SYSTEM?

1.Reliability
2.Economics
ADVANTAGES OF D.S. OVER CENTRALIZED
SYSTEM:
 SPEED
 INCREMENTAL GROWTH
 RESOURCE SHARING
 FLEXIBILITY
 ORGANIZATION OF D.S.

 A distributed system organized as

middleware.

Goals of d.s.

-Resource Sharing- Openness,-

Transparency,- Scalability,- Concurrency.
RESOURCE SHARING
 The openness of DS is determined primarily
by the degree to which new resource sharing
services can be added and be made available
for use by a variety of client programs.
 Transparency is of various forms as follows:
It hides the fact that the processes and
resources are physically distributed across
multiple computers.
TYPES OF D.S.:

 GOAL
 GRID COMPUTING SYSTEM
 DISTRIBUTED PERVASIVE SYSTEM
 AUTOMATIC SELF CONFIGURATION
 Physical Distribution System

 Broad range of activities aimed at efficient

movement of finished goods from the end of
the production line to the consumer.
Activities to achieve efficient movement of
inished goods from the end of the
production line to the consumer.
 Creation of customer is task of marketing. Product availability
leads to satisfaction. To achieve this value adding generally has a
distribution activity known as distribution system, traffic mgt.,
mktg. logistics, or physical distribution. So it is a marketing activity
hat concerns the handling & movement of goods. It includes all
those activities toncerned with the efficient movement of goods
from the place of production to the place of consumption. It
involves the handling of raw material fabricates parts, supplies &
faisbed goods from producers to consumers via intermediaries.
William Stanton bolves the mgt.of physical flow of products &
establishments & operation of flow s. Philip Kotler: Involves
planning, implementing, & controlling the physical flow material &
final goods from the point of origin of use to meet customer need at
a profit.
Objective of Physical Distribution

Basically two broad objective:

 Attain customer satisfaction

 Profit maximization

Getting the right product, at the right
place, at the right time, in right
quantity, at the night customer at the
lower cost.
 Proper co-ordination of distribution
activities.
 To use powerful tool of competitive
mktg.
 To provide better service of lower prices
 To increase profit margin
a. Meetings standards of customer service for
i.Timeliness of order fulfillment
ii. Accuracy of order fulfillment

b. Reducing total distribution costs

i. Inventory levels against warehousing costs
ii. Materials costs versus transportation costs
iii.Distribution costs against customer service standards iv. Overall goal is
to achieve the lowest total distribution cost compatible with the firm's
customer service objectives.
c. Reducing cycle (process completion) time
i. Faster processes for increased customer service.
3. The process of

a. planning, implementing, and controlling

b. b. the efficient, effective flow and storage
c. c. of goods, services, and related information
d. d. from point of origin to point of consumption
e. e. for the purpose of conforming to customer's requirements.
f. f. Physical distribution cost can represent 20% or more of the selling price of a
product.
Significance of Physical Distribution

1.Creation if utilities: Place-Transportat: Time-

Warehousing
2.Improved consumer service in distribution cost
3.Cut in distribution cost
4.Market share
5.Price stabilization
6.Play vital role where production location &
markets are distanced
Cost of Physical Distribution Functions
Participants in physical distribution

1.Supplier
2. Manufacturer
3. Intermediaries- Wholesalers, Retailers
4. Agents-Selling, Manufacturing, C & F
etc.
Component functions of physical
distribution
1.Planning the overall physical distribution
system
2. In bound transport
3. Receiving-Raw material, orders
4. In plant warehousing
5. Inventory management
Logistics Management The efficient management
of the flow of materials inbound-through and
outbound of an organization.

Two primary product flows: Physical (materials

supply management): Flows that provide raw
materials, components, supplies to and the
production process.
Component function of physical
distribution
1.Packaging
2.Dispact of goods
3.Out bound transport
4.Field warehousing
5.Customer service
6.Order processing
The Receipt and transmission
of sales order information

A.Order Entry
B.Order Handling
C.Order Delivery
Steps in order processing
1.Communication of order
2.Credit Check
3.Inventory Check
4.Order of dispatch
5.Intimationto customer
6.Dispatch of goods
7.Collection of payments
Material Handling
1.Sub system of pds
2.Stands for movement and handling of goods
3.Represent product handling from plant to warehouse and
warehouse to place of loading.
4.An agent of cost reduction and improved customer
service.
5. Reflects on efficiency and speed of warehousing
operations.
6. Efficient and effective MHS contributes effeciency and
effectiveness of total PDS.
Equipments and system
*Manual - Use of man power and animal.
*Mechanized system- Wheeled trolleys,
Forklift trucks, Side loaders, Mobile cranes,
conveyors wheel, Roller, Belt, Chain.
*Semiautomatic system- Sorting device
robotics.
Warehousing
 An act of storing amd assorting the
finished goods so as to create maximum
time utility at minimum cost. Sub
function - Storage, movement,
Assorting, Hold Consolidation,
Packaging.
Advantage of warehousing
1.Serves as safeguard
2.Make provision for unloading
3.Serves economically at lower prices
4.Helps in determining the channel of distribution
5.Assist in maintaining continuos sales
6.Balancing demand and supply
7.Stabilizing prices
8.Reduces need for instant transportation.
LOGISTICS

-Process of coordinating the flow of information, goods and

services among umbers of the distribution channel.
-The task of coordinating material and information flow across
the supply chain. A coordinator carrier customs broker customer
receiving location supplier distribution center freight forwarder
manufacturing plant logistics- A coordinator assembly plant cross
dock.
Logistics Objectives
1.Cost Reduction
2. Minimizing the variable costs associated with movement
and storage
3. Service Improvement Pre- transaction Elements
Transaction Elements Post- transaction Elements Capital
Reduction Minimizing the level of investment in logistics
system. Maximizing the return on logistics assets.
Logistics Challenges Inventory
1. Materials Inventory leveis Control methods Forecasting
Inventory Planning
2. Planning & Procurement Wave Management Transport
Strategy Modes of transport Routing scheduling Shipment size
3. consolidation Distribution Requirements Planning Customer
Service Written statement of CS policy Technical services
System Accuracy Installation, warranty, alterations, repairs,
parts Customer claims/complaints Facility
4. Location Number, size & location of facilities Assignment of
stocking points to sourcing points Assignment of demand to
stocking or sourcing points Location & Yard Management
Logistics-Decision
1. Focus Order Releasing & Expediting Suppliers Contracting,
2. Vendor Selection
3. Forward Buying Developments of Suppliers-Buyer Relationships Purchasing Order Picking
4. Restocking Seasonal Space Choices
5. Space Utilisation Equipment Selection, Layout Design Warehousing Expediting Deliveries
Priority Rules for Customer Orders Setting Standards Customer Services Processing Orders, Filling
Backorders Order Entry, Transmittal
6. Processing System Design Order Processing Routing, Dispatching Seasonal Equipment
Leasing Mode Selection Transportation Replenish Quantities
7. Timing Safety Stock Levels Stocking Locations
8. Control Policies Inventories #, Size
9. Location of Warehouses, Plants & Terminals Facility Location Operational Tactical Strategic
Decision Area
Logistics Networks

-Product Flow Links The movement of materials

between various inventory storage points
(nodes). Nodes Points where the flow of
inventory is temporary stopped (e.g. retail
stores, warehouses, factories, vendors).
Logistics Networks Information Flow Links
(Non)/Electronic Methods Revenues, Product
costs, Inventory. levels, Warehouse, Utilisation,
Forecasts, Transportation Rates Nodes Data
collection & processing points - computerised or
manual.
Measuring Logistics Performance
1. Measure Strategy Performance
2. Cash Flow
3. Money that a strategy generates
4. Savings/Profit Improvement
5. The change in all relevant costs associated with a strategy
6. ROI
7. The ratio of the annual savings from the strategy to the
investment required by the strategy
Logistics planning
 Logistics planning is the process of obtaining
relevant supply chain information and then
constructing a plan to secure a constant
availability of goods, while ensuring they
reach your customers as quickly as possible.
Strategic logistics planning

1. Understand & asses the macro environment

2. Analyse & understand the internal capabilities
3. Combines these to set objectives and consultation
& with the support of major elements of the
organization.
Key issues in logistics planning
1.costume services: demand for improved service quality a
major element in competitive advantage
2. Logistics cost: physical distribution up to 30% of sales
value
3.external pressures: regulatory change pressures,
competitive pressures of globalization
4.trade offs: response to change requires complex
adjustment
5.organisational conflict: often no clear responsibility for
logistics
Efficiency Supply Chain Management
 System Orientation- system orientation is at the existence of any supply
chain. Service Orientation (i.e services to customers) the very basis of
supply chains has been to provide superior customer service
 Improving visibility Demand- Efficient supply chain improves visibility of
demand by each one of the partners.
 Improving Pipeline Visibility- efficient supply chain improve the visibility
of each one of the activities of the supply chain by each one of the partner.
 Minimizing the time- efficient supply chain is an organization reduces the
time required for converting orders into cash.
 Competitiveness and Efficiency- Supply chain is a business organization. It
provides value to the customers while being competitive.
 Improving Quality- Efficient supply chain management helps in improving
the quality of operation of the organization.
THANK
YOU!!!!!
Group Members:
Bernardo, Yvone
Enrile, Geraldine Rose
Galang, Raymond
Lucero, Angela
Peralta, Janella
Sumaway, John Rafael