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Physical Distribution (PD)
Place
customer service level: deliver speed, deliver quality
with a good PD system, there will be less shortage problems and late delivery problems.
Physical Distribution Concept
lower cost + better service => increase customer value
transporting, storing, and product-handling
activities... should be coordinated as
one system to minimize the cost for a given customer service level
Factors that
Affect PD Service Levels
Advance information on product availability
• Time to enter and process orders
• Backorder procedures
• Where inventory is stored
• Accuracy in filling orders
• Damage in shipping, storing, and handling
• Online status information
Advance information on delays
• Time needed to deliver an order
• Reliability in meeting delivery date
• Complying with customer’s instructions
• Defect-free deliveries
• How needed adjustments are handled
• Procedures for handling returns
Supply chain
total cost approach: evaluate possible PD systems -> identify their cost -> select one
all of the firms in the supply chain should work together to meet the needs so it creates most value for final customer
information
electronic data interchange (EDI) :puts information in a standardized format shared between different computer systems
transporting
government may influence transportation
pick transporting alternative depends on the product: cost, speed, frequency, number of locations served,
transporting cost is higher in developing countries
Transportation choices have environmental costs
storing
Most channel members provide the storing function.
inventory cost: Interest expense, opportunity cost of money tied up in inventory, damaged inventory, risk of inventory being damaged, storage and maintaining, obsolete items
goods are stored at a cost -> rapid response reduce this cost
private warehouse/ public warehouse/ distribution center
Physical Distribution (PD)
Supply chain
Information
Transporting