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physical distribution management

Christine Harland


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Physical distribution is a concept or approach to managing the finished goods inventory of the firm. Typically it includes transportation, warehousing, inventory, and order‐processing functions. It can also refer, more simply, to the storage of goods and their transport from one firm to another in the supply chain. Most authors on physical distribution management now use the term logistics to include consideration of business processes and information flows as well as physical flows. Many of the systems for physical distribution are “multi‐echelon” systems with storage at different points in the supply chain. For example, a manufacturer stores products in its own warehouse. From there the products may be distributed to a regional warehouse for a retailer. Regional warehouses have several benefits. First, they act as an intermediate point which is located closer to the retailer than their manufacturing site, therefore facilitating quicker delivery. Second, they enable the manufacturer to deliver to a limited number of customer locations, rather than do store‐by‐store delivery. Third, the retailer has to request stocking up from only one source of supply. The introduction of a warehouse stage in the physical distribution network can therefore simplify communications and routes. However, warehouse locations have costs. These include the opportunity cost of the capital tied up in ... log in or subscribe to read full text

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