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Physical Distribution Management and
Strategy
Physical Distribution• The process of
– planning, implementing, and controlling– the efficient, effective flow and storage– of goods, services, and related information– from point of origin to point of consumption– for the purpose of conforming to customer's
requirements. • Physical distribution cost can represent 20%
or more of the selling price of a product.
Logistics Management• The efficient management of the flow of
materials inbound-through and outbound of an organization.
• Two primary product flows:– Physical supply (materials management):
Flows that provide raw materials, components, and supplies to the production process.
– Physical distribution management: Flows that deliver the completed product to customers and channel intermediaries.
Supplier
Manufacturer Customer
Materials manageme
nt
Physical distribution
management
Logistics Management
InboundLogistics
OutboundLogistics
An integrated philosophy to manage the multidirectional flow of materials and information through an entire channel, from the first raw material supplier to the ultimate user of the finished product.
Supply Chain Management
Study Area Map
Supply chain management (a series of connected logistics flows)
Logistics management
Materials management Physical distribution
Incoming transportation Traffic managementReceiving ShippingPurchasing Customer serviceIncoming warehousing Finished goodsInventory control
Functions of Traffic Management
• Mode and carrier selection• Routing• Claims processing• Operation of private transportation
Many of the imported goods you purchase were shipped in 20-foot or
40-foot steel containers
Large cranes loaded the containers on a ship.
(Image courtesy of the Port of Charleston))
Larger container ships can hold 4,000 to 6,000 containers.
(Image courtesy of Maersk Sealand)
After unloading from the ship, the containers can be loaded onto a flatbed
rail car for additional intermodal shipping.
(Image courtesy of CSX Corp.)
Alternatively, a container can be attached to a set of wheels for
motor transport (as an 18-wheeler trailer).
Intermodal container motor carrier
(Image courtesy of Maersk Sealand)
Rail freight carrier Barge/river freight carrier
(Image courtesy of CSX Corp.)
PipelineAir freight carrier
Container stack train Jumbo jet air freight
Major Advantages by Transportation Mode• Motor
– Speed of delivery
– Diversity of equipment
– Flexibility– Frequency of
movement– Transfer of
goods to other carriers
– Convenient to both shipper and receiver
• Rail– Mass movement of
goods– Low unit cost of
movement– Dependability– Long-haul moving– Wide coverage to
major markets and suppliers
– Many auxillary services (i.e., switching)
– Transfer of goods to other carriers
– Specialized equipment
• Water– Very low unit
cost of movement
– Movement of low-unit-value commodities
– Long-haul movement
– Mass movement of bulk commodities
(continued)
• Pipeline– Lowest unit cost
of movement– Mass movement
of liquid or gas products
– Long-haul moving
– Large capacity– Most
dependable mode
• Air– Frequent
service to major markets
– Large capability– Overnight
service– Most rapid
speed of any carrier
• Intermodal– Cost savings
– Lower loss and damage claims due to containerization
– Service extended to more shippers and receivers
– Reduced handling and storage costs
Major Advantages by Transportation Mode
Controllable Elements in a Logistics System
• Customer service• Logistics communications• Warehousing• Packaging• Production planning• Order processing• Transportation• Inventory control• Materials Handling• Plant and warehouse location