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MARKETING CHANNELS
Physical Distribution Strategy Berman Chapter 6
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Physical Distribution
Activities
• A. Transportation • B. Facilities
• C. Inventory
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•Transportation - inbound/outbound/ international carrier/ mode/ carrier
•Facilities - warehouse mngt/ planning distribution center/ planning/ plant site
•Inventory - purchasing/raw materials/ work-in-process/ finished goods/
parts- service support/return goods handling
• Materials handling - salvage-scrap disposal/ materials handling/ packaging
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Symptoms of a poor PD System
•Transportation - unprofitable, peripheral hauls few backhauls
•Facility Structure - uneven warehouse utilization
•Inventory Mgnt - stockouts, emergency orders, inventory turns
•Materials handling - goods received defective •Communication, Information - lost orders,
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A. Transportation Decision Making •railroads
•motor carriers •waterways
•pipelines •air freight
•third party providers
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B. Facilities
•Warehouse Decision Making •public vs private
•private warehouses
•distribution centers, direct store delivery •cross docking, store front system
•public warehouses
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C. Inventory Mgnt Principles •types of inventory
•process stock
•lot size (cycle stock) •safety stock
•seasonal, smoothing stocks •Computing Inventory Turnover
•unit inventory turnover
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Inventory Decision Making
•Just-in-time and Quick Response Systems •Characteristics of JIT
•supplies, quantities, quality, shipping •Efficient Customer Response
•Reorder Point Determination
•order cycle time, floor ready mdse
•usage rate, review period, accurate response •Economic Order Quantity Determination
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ABC Inventory Analysis
A. average inventory on hand = 1/2 order qty B. annual inventory holding costs
C. annual order processing costs
D. B + C = Total annual inventory costs
•Service Levels % % Cus Co Sls Co Prods ServLvl product group A= 80 20 98
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D. Materials Handling
• Salvage and Scrap Disposal • Materials Handling
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E. Communication and Information
• Order Processing
