what are the importance of physical distribution
Answers
Explanation:
Physical distribution helps in maintaining stable prices. Even customers expect price stability over a period of time. Proper use of transportation and warehousing facilities can help in matching demand with supply and thus ensure stabilisation of price.
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Answer:
The physical distribution arrangement or system designed to move the goods from producers and manufacturers to the users has a definite role. That is why; all wise business firms have forged ahead with investment of good deal of time, treasure and talent in physical distribution system improvements to get best to others.
It provides a new orientation for marketing. It gives distribution factors the importance they deserve in marketing and business policies, plans and decisions.
This ‘dark continent’ the other half of marketing has some constructive contributions to make. These are:
1. Creation of utilities:
The physical distribution function of a firm provides the place and time dimensions which contribute a basic element of marketing mix. The major components of physical distribution are transportation and warehousing.
Creation of or addition of utility is addition of value to a thing. It is transport system that creates place utility making goods more useful by bringing them from the places where they are not needed to the places where they are badly needed.
Warehousing system is known for creating time utility. By holding the goods from the time of their production till their consumption thus avoiding gluts and shortages over a given period of time. The outcome is the maximisation of consumer satisfaction and profits to the firm.
2. Improved consumer services:
In general terms, ‘consumer service’ is the service provided to the customer from the time of order placed till the product is delivered.
In fact, it is much more than this and covers price, sales representation, after-sale services, product range offering, product availability and the like. Customer service in physical distribution function consists of providing products at the time and location corresponding to the customer needs. Improvement in customer service is possible when we talk of a service level.
A customer service level is a measure of how well the customer service function is being performed. Customers would be cent-percent satisfied if a wide range of products were available at the right place and time in sufficient quantities to meet the needs and wants of all who were willing and able to buy.
This is an ideal case indeed which is rate to a customer. However, high levels of customer satisfaction can be possible through a viable distribution system that takes into account the factors that affect customer service such as time, dependability, communication, availability and convenience.
3. Cut in distribution costs:
The prices paid by the user consist of not only production costs but also delivery costs. Experts have estimated that the physical distribution costs are in the range of 20 to 25 percent of the price.
If the total physical distribution costs are taken, transportation accounts for 45 percent; warehousing 25 percent; inventory carrying costs 10 per cent; receiving and shipping costs 5 percent; packing 6 percent; administration 5 per cent and order processing 4 percent. Therefore, physical distribution system can be instrumental in slashing down these costs.
There are tangible and intangible costs for which the customer is to bear the brunt. Economy can be brought about in tangible and intangible costs by systematic planning of inventory levels, warehousing location and operations, transportation schedules and modes, material handling, order processing and communication. It is the ‘last frontier’ for cost economies and the economy’s dark continent. It is the virgin land for cost control and cost reduction.
4. Increased market share:
A new look and approach to physical distribution can contribute beyond the attainment of the twin objectives of improving consumer satisfaction and dealer profit margins. An increased market share one of the major aims of any growth aspiring marketing unit can be possible. There are definite ways in which an efficient physical distribution system can contribute towards this end.
A well designed physical distribution frame can decentralize its warehousing operations; devise the combinations of efficient and economic means of transport to pen errata into the areas untapped so far, planning inventory operations to avoid