A group of activities involved in the production of goods and services and making them available in a final form to the consumers is termed physical distribution. The finished goods reach the consumers through various wholesale and retail channels. The physical distribution is concerned with business activities like procurement of materials, inventory management, order processing, packaging, and customer service. These activities are part of the marketing budget of the business organization. The nature of physical distribution depends on the type of products and the customer service required for them. Supply chain management collects all those activities that help convert the products from the raw material stage to their finished form. It helps in the smooth function of supply-side activities to enhance customer satisfaction and achieve a competitive advantage in the market. It helps organizations to establish efficient supply chains for the uninterrupted flow of raw materials and other items required in the production process. These chains encompass all activities required for product development. A supply chain is an interconnected network of organizations, individuals, technology, resources, and other activities that are involved in the production and sale of goods and services. It starts with the procurement of raw materials and ends with the delivery of goods to the suppliers.
Functions of Physical Distribution
Physical distribution involves the processes that help in making the goods and services available to the consumers. The main functions of physical distribution are:
Customer Service â€“ It is one of the main functions of physical distribution. The customer service manager sets up a standard according to which the goods and services are supposed to be delivered to the consumers.
Order Processing â€“ The orders should be taken correctly in a proper manner from the customers and processed according to set standards. The efficient functioning of this process helps in minimizing other costs involved in the process of physical distribution.
Inventory Control â€“ This aspect has an important role to play in the physical distribution of goods and services. The cost involved here is inventory transportation costs, a loss incurred due to a fall in demand and depreciation.
Transportation and Logistics â€“ These include the cost involved in transferring raw materials to the production centers and delivering the finished goods to the end-users.
Packaging â€“ This depends on the nature and perishability of the products. The degree of protection of the products is also considered here.
Mechanism of Supply Chain Management
Supply chain management ideally controls all the links that are concerned with the production, distribution, and selling of goods and services. An efficient supply chain management enables a business organization to reduce its costs and ensure fast delivery of the products to the consumers. It helps inappropriate control of both own and vendor inventories, production process, distribution, and sale of products and services. Supply chain management involves establishing a link between various organizations, individuals, and resources involved in converting the product from the initial to the final stage. Such chains are known as supply chains. The importance of these chains has been recognized by organizations in recent times as a means of adding value to business operations. The supply chain manager is entrusted with the following logistics aspects:
The strategy or plan
Procurement of raw materials
Process of production or manufacture that focuses on productivity and efficiency
Transportation and logistics
Return of defect or unwanted items.
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