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Introduction
to Business MGT 211
VU
Lesson
30
PHYSICALDISTRIBUTION
Physicaldistribution
encompasses allactivities
required to movefinished
products from a
producer
to the consumer. It is a
complexstrategic activity
with manytrade-offs that
affectthe
organizationand
profits. Technology used in
physical distribution
systemstoday includes
satellitenavigation
and communication,robots,
machine vision,voice input
computers,on-
boardcomputer
logbooks, andplanning
software that usesartificial
intelligence.
Theoverriding
objective of allphysical
distribution systemsshould be to
achieve a competitive
level
of customer service standards at
the lowest total
cost.Producers must be able
to analyze
whether
it is worth it to deliver a product in
three days instead of five,
if doing so
reducesthe
cost
of an item. The goal is to
optimize the total cost of
achieving the desired level
of service
by
analyzing each step in
theprocess and its
relation to the other
steps.
WarehousingOperations
--
Warehousesare holding
facilities forinventory,
whereas
distributioncenters
serve as commandposts for
moving goods to customers
and collect,sort,
code,and
redistribute products to fill
customer orders.
i.
Types
of Warehouses:
1.
PrivateWarehouse-warehouseowned
by and
providingstorage
for
a single company.
2.
Public
Warehouse-independently
owned and
operated
warehousethat
stores goods formany
firms.
3.
StorageWarehouse-warehouseproviding
storage forextended
periods
of time.
4.
DistributionCenter-warehouseproviding
short-term storage of
goodsfor
which demand is bothconstant
and high.
ii.
Warehousingcosts
includerental
or mortgage
payments,insurance,
andwages.
Other costsinclude:
1.
InventoryControl-warehouseoperation
that tracksinventory
on
handand
ensures that an
adequatesupply is in stock at
all
times.
2.
Material
Handling-warehouse
operation
involving
the
transportation,arrangement,
and orderlyretrieval of
goods in
inventory.
TransportationOperations
i.
Majortransportationmodes
are:
1.
Trucksare
mostfrequently used and
offerdoor-to-door
delivery
anduse
of public highways, butare
unable to carry alltypes
of
cargo.
2.
Railroadsare
able to carry heavier and
morediversified
cargo,
butare
unable to deliverdirectly to
thecustomer.
3.
Watercarriers--Boatsare
the cheapest form of
transport,
especiallyfor
bulk items, butservice is
slow andinfrequent,
and
delivery
is restricted.
4.
Airtransport
is
thefastest means of
movinggoods, but it
doesn't
go everywhere, it can
carryonly certain types of
cargo,
and
is unreliable
andexpensive.
5.
Pipelines,
although expensive to
build, are
extremely
economical
to operate
andmaintain.
121
Introduction
to Business MGT 211
VU
ii.
Changes
in Transportation Operations
1.
IntermodalTransportation--combineduse
of severaldifferent
modes
of transportation.
2.
Containerization--use
of standardized heavy-duty containers
in
whichmany
items are sealed at points
of shipment andopened
only
at final destination.
3.
PhysicalDistribution
and
E-CustomerSatisfaction--New e-
commercecompanies
need to focus notonly on
sales butalso
on
after-sale distribution in
order to avoid
customer
dissatisfactionthat
discourages repeatsales.
OrderFulfillment
andE-Customer
Satisfaction--Orderfulfillment
beginswhen
thesale
is made: It ends withgetting
the product, in good
conditionand
on time, to the customerfor
each sales
transaction.
Distribution
as a Marketing Strategy
Distribution
is an increasingly important way of
competing for sales.
Manyfirms have
turned
to
distribution as a cornerstone of
theirbusiness strategies,
whichmeans assessing
and
improvingthe
entire stream of activities
involved in gettingproducts to
customers.
i.
TheUse
of Hubs--centraldistribution
outlet thatcontrols all or
most of
thefirm's
distribution activities.There
are three contrastingkinds
of
hubs.
1.
Supply-sidehubs
handlethousands
of incoming
suppliesand
canrun
into
logisticalnightmares.
2.
Prestaginghubs
are a form
of outsourced distribution
thatcan
alleviatesome
of the congestion of supply-side
hubs; theyare
locatednear
the manufacturing
firm,managed by
separatefirms,
andfunction
solely to meet thefirst
company'sproduction
schedules.
3.
Distribution-sidehubs
arelocated
far from
theirindustrial
customers
and help to
streamline delivery
system by
consolidatingstorage,
sorting, andshipping in
fewerlocations
aroundthe
world.
122
Table of Contents:
- INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
- BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
- SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
- PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
- PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
- PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
- JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
- LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
- WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
- COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
- WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
- HUMAN RESOURCE MANAGEMENT:Human Resource Planning
- STAFFING:STAFFING THE ORGANIZATION
- STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
- BUSINESS MANAGER’S RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
- COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
- COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
- STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
- MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
- MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
- THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
- MARKET RESEARCH:Market information, Market Segmentation, Market Trends
- MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
- MARKETING RESEARCH:Data Warehousing and Data Mining
- LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
- UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
- THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
- PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
- PROMOTION:Information and Exchange Values, Promotional Strategies
- ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
- PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
- SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
- THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
- THE PLANNING PROCESS:Strengths, Weaknesses, Threats
- TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
- TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
- TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
- BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
- NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
- BUSINESS ORGANIZATIONS:Organization as a System
- ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
- TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
- FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures