Describe each of the elements of the six components of physical distribution. Customer service (Organisational Structure), Transportation, Inventory control, Order processing, Communications, Protective packaging and materials handling.
a) Customer service (Organisational Structure)
The person in charge of the physical distribution should co-ordinate all Activities into an effective system to provide the desired customer service in the most efficient manner. Examples of organizational consideration are: (i) How can the five elements of physical distribution best be coordinated so that a team effort results? How can compartmentalization thinking be avoided? (ii) If a central head is established to direct all physical distribution activities, to whom should he report—The Head of the Marketing or The Chief Executive Officer?
b) Transportation
It is an essential element of physical distribution. It involves integrating the advantages of each transportation method by adopting containers and physical handling producers to permit transfers among different types of carriers.
For example, to place containers in railway flat cars and then load the containers on motor vehicles is called "piggy back" and if the containers are off loaded to water carriers, it is called "flash back." Exchange of containers between air and truck carriers are referred to as "Air truck" or "birdy back".
The marketing manager has to decide to (i) what mode or combination of modes of transportation (rail, truck, pipeline, water ways or air) should be used to transport products to warehouses and from there to customers? (ii) Should the transportation cost be reduced and the desired levels of customer service still maintained.
c) Inventory control
Inventory refers to the stock of products a firm has on hand and ready for sale to customers. Inventories are kept to meet market demands promptly. Inventory is the link interconnecting the customer's orders and the company's production activity.
Infact the entire physical distribution management rotates around the inventory management. Inventory management is the heart of the game of physical distribution.
Marketing managers undertake an inventory planning to develop adequate assortments of products for the target market and also try to control the costs involved in obtaining and maintaining inventory.
Marketing managers generally take three decisions while conducting inventory management, viz, (i) how can the track be kept, on a day-to- day basis of location, amount and the condition of the inventory? (ii) How can inventory information best be channelled to production managers or buyers for resale to help them schedule their activities? (iii) What inventory information can other departments in the organisation use to help them perform their functions efficiently?
d) Protective packaging and materials handling
It involves moving products in and out of a stock. It consists of routine tasks that can be performed through mechanisation and standardisation. Efficiency is increased through use of electronic data processing to control conveyor systems, order picking and other traffic flaws.
The modern mechanised handling services and protective packaging have improved the level of customer service and at the same time lowered physical distribution costs. Material handling and packaging services have also speeded up the order processing and movement of consignments.
e) Order processing
Order-processing and inventory control are related to each other. Order processing is considered as the key to customer service and satisfaction. It includes receiving, recording, filling, and assembling of products for dispatch. The amount of time required from the dates of receipt of an order up to the date of dispatch of goods must be reasonable and as short as possible.
It comprises in undertaking the processes that are needed to make certain orders processed quickly, accurately, and efficiently. The marketing manager has to decide about these along with such issues as what is the most efficient way to bill customers; how cans the paper work may be minimized? And how can the physical function of assembling orders more efficiently?
f) Communications
It is a process of passing information and understanding from one person to another. This includes the information system which should link producers, intermediaries, and customers. Computers, memory systems, display equipment and other communication technology facilitate the flow of information among other members in the channel.
A manager to be successful must develop an effective system of communication. So that he may issue instructions, receive the reactions of the subordinates, and guide and motivate them.