What is Physical Distribution in Supply Chain Management
Physical Distribution in supply chain management is the way retailers make their products available to the end consumers. It’s one of the major aspects of the supply chain that you need to master to ship your goods to market in the fastest way possible.
Physical distribution deals with the series of steps from production to the consumer. The channels involved in the process are:
- Inventory Control
- Order Processing
- Materials Handling
- Customer Service
The physical distribution gives the ability to make a product available to a consumer quickly and conveniently to the nearest location. Also, creating fast and reliable physical distribution can help assure continued success in a rapidly changing and competitive global market.
Elements of Physical Distribution
Physical distribution is a way for the efficient movement of products in a supply chain. There are elements of physical distribution that are interrelated to each other and affect the efficiency of others.
Transportation is an important part of physical distribution management. Different transportation modes are LTL, Parcel, Air Freight, and Ocean Freight which enable retailers to make their goods and services available at the customers’ doorstep.
Trucking is the best shipping method for most enterprises in India. It is best for carrying manufactured products in bulk for fast and economic delivery to more destinations in the country. Trucks are particularly useful for both large and small shipments and they offer relatively fast shipments.
Intermodal shipping is best suited for small business owners. It utilizes a combination of rail and truck transportation for specific shipments. The costs of the shipments are significantly lower than trucking methods.
Air Freight is typically good for the movement of valuable or perishable items. It is a costly mode of transportation for small businesses. But, the high cost of air transportation can be reduced with the inventory-holding costs and the increased business opportunity that may also ensure faster customer service.
Ocean freight is transporting of goods via sea in shipping containers. It is also the most common mode of transport used by importers and exporters for foreign shipments around the world.
Parcel delivery is the most important element of physical distribution that is provided by most express shipping companies, private courier companies, and less than truckload shipping carriers.
Warehousing refers to the process of storing goods, receiving inbound shipments, breaking down items, eCommerce fulfillment, and delivery to the customer. Warehouse distribution generally deals with storing goods for longer periods, whereas fulfillment centers operate as central distribution locations for quick shipments of the finished product to customers.
Order processing is also a part of the physical distribution function that varies from industry to industry. It directly impacts the ability of a retailer to meet the order processing system efficiently.
Inventory control is a major element of a physical distribution system. It is the process to keep inventories in the desired location while continuing to adequately supply inventory items to customers.
Material handling is another important element of the physical distribution system that comprises all of the activities associated with moving products within a production facility, warehouse, and transportation terminals.
Efficient customer service is an important business function. It plays a crucial role in a business’s success. It refers to the method of customer satisfaction that a small business provides to its customers. Providing optimum customer satisfaction increases repeat purchases.
Physical distribution is important for eCommerce businesses as it ensures that their supply chain is handled with care. It is critical to streamline the physical distribution of goods and better accommodate fluctuating supply and demand throughout peak seasons and volatile market conditions. Request more information to see how Shiprocket Fulfillment can help you with your business agility.