Physical distribution is the movement of materials from the producer to the consumer. This movement of materials is divided into two functions: Physical supply is the movement and storage of goods from suppliers to manufacturing. Physical distribution is the movement and storage of finished goods from the end of production to the customer. The particular path in which the goods move through distribution centers, wholesalers, and retailers is called the channel of distribution. A channel of distribution is one or more companies or individuals who participate in the flow of goods and/or services from the producer to the final user or consumer. The transaction channel is concerned with the transfer of ownership. Its function is to negotiate, sell, and contract. The distribution channel is concerned with the transfer or delivery of the goods or services.
To a large extend market requires a well-run distribution system. Distribution adds place value and time value by placing goods in markets where they are available to the consumer at the time the consumer wants them. The specific way in which materials move depends upon many factors, some of which are the channels of distribution that the firm is using, the types of markets served, the characteristics of the product, and the type of transportation available to move the material.
Role of warehousing:
The service functions warehouses perform can be classified into two kinds: (1) General warehouse where goods are stored for long periods and where the prime purpose is to protect goods until they are needed. (2) The distribution warehouse has a dynamic purpose of movement and mixing. The emphasis is on movement and handling rather than storage. The size of the warehouse is not so much its physical size as it is the throughput, or volume of traffic handled. Items should be warehoused only if there is an offsetting benefit gained from storing them. Warehouses serve three important roles: transportation, consolidation, product mixing and service. Any distribution system should try to provide the highest service level (the number of orders delivered in a specified time) at the lowest possible cost. Warehouses are used to store inventory.
The management of warehouses makes decisions on site selection, number of distribution centers, layout and methods of receiving, storing and retrieving goods. Material handling: Materials handling is the movement and storage of goods inside the distribution center. The type of materials handling equipment used affects the efficiency and cost of operating the distribution center. Materials handling represents a capital cost, Receipt: unloading, inspection and accounting.
Protective packaging: Goods moving in a distribution system must be contained, protected and identified. In addition, goods are moved and stored in packages and must fit into dimension of the storage spaces and the transportation vehicles. It also includes careful labeling and identification.
Order processing and communication: Order processing includes all activities needed to fill customer orders. Many intermediaries are involved in the movement of goods and good communication is essential to a successful distribution system.