What is Physical Distribution The key link between a business and its customers also known as logistics Logistics the process of physically delivering goods to customers Comprises ALL ID: 742796
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Slide1
Physical Distribution
Marketing Co-OpSlide2Slide3Slide4
What is Physical Distribution?
The key link between a business and its customers – also known as logistics
Logistics
– the process of physically delivering goods to customers
Comprises
ALL
activities that help to ensure the
right
amount of a product is delivered to the right place at the right timeSlide5Slide6
Distribution Careers
Supply Chain and Distribution Opportunities at TargetSlide7
Inventory
Inventory – All the goods shipped and stored by a business before it is soldSlide8
Distribution Activities
Ordering Processing
–
placing and organizing product orders
Transporting -
moving goods from sellers to buyers
Storing -
holding the goods while they await transport
Stock Handling -
shipping, receiving, and checking goods
Inventory Control –
controlling and cataloging merchandise while in storageSlide9
It can be Costly!!
Physical Distribution is the 3rd largest expense for most businesses
Surpassed only by the cost of material and laborSlide10
Types of Transportation Systems
Trucking
Railroads
Marine Shipping
Pipelines
Air Cargo ServicesSlide11Slide12
Trucking
Types of Carriers
Common Carriers
– Provide transportation services to any business for a fee
Accounts for 1/3 of all motor freight
Ex: UPS, Fed Ex
Contract Carriers
– for-hire carriers that provide equipment and drivers for specific routes between the carrier and the shipper
Ex: Estes, Pitt Ohio Slide13
How UPS WorksSlide14
Trucking
Types of Carriers
Private carriers
– transport goods for an individual business
- Businesses can lease equipment or own their own fleet
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Trucking
Mostly commonly used mode of transportationCarry high value products that are expensive or impossible to keep in inventory
Ex: Produce
Slide16
Trucking
Intermodal Transportation – combines two or more transportation modes to maximize the advantages of each
Interstate Transportation –
when distribution crosses over state lines Slide17
Railroads
Most useful for delivering bulky freight
Coal Chemicals
Grain Lumber
Steel Farm Equipment
Shippers pay a lower rate if they fill an entire boxcar
Carload
– the minimum number of pounds of freight needed to fill a boxcar
Slide18
Railroad Transporting
Advantages
Very low cost
Use 50-70% less energy than trucking
Seldom slowed or stopped by bad weather
Disadvantages
Lacks flexibility
Can only be delivered to stations along designated rail lines
Require another form of transportation to get goods to storage locationSlide19
Marine Shipping
Barges and container ships transport merchandise around the world
Regulated by The United States Maritime CommissionSlide20
Marine Transporting
Advantages
Cheapest form of transportation
Disadvantages
Slowest form of transportation
Require another form of transportation to get goods to storage location
It is affected by bad weather and seasonal conditionsSlide21
Pipelines
Advantages
Best safety record among all major transportation systems
Suffer minimal damage or theft
Are not affected by bad weather
Disadvantages
High initial investment, but lower operational costs
Products move slowly
Most commonly used to transport oil and natural gas
The risk of a pipeline leak are low, but if one does occur, the damage to the environment can be extensiveSlide22
Air Cargo Service
Advantages
The speediest form of transport
Reduces inventory expenses and storage costs
Disadvantages
Most costly form of transport (twice as costly as motor transport)
Can easily be delayed by bad weather and mechanical issues
Represents less than
1%
of the total freight shipped
Mostly used for high-value, low-weight, time-sensitive items – like overnight mail Slide23
Transportation Service Companies
U.S. Postal Service
Ships small packages by parcel post or first class mail
For an extra fee, packages can be insured against loss or damage
Bus Package Carriers (Greyhound)
Provide transportation service for packages under 100 pounds
Provide same-day or next-day service to cities and towns along scheduled route
Cost – based on weight of package and distance traveledSlide24
Transportation Service Companies
Express Delivery Service
Specialize in delivering small, lightweight packages and high priority mail (less than 150 pounds)
Rates based on speed of delivery, size and weight of package, type of delivery required
Freight Forwarders
Private companies that combine less-than-truckload shipments and deliver them to the destination
Combining multiple shipments helps to reduce rates for shippersSlide25
SHIPPING TERMS
F.O.B. (free on board) destination
the title of ownership remains with the seller until the goods reach destination
F.O.B. shipping point
the buyer pays the shipping costs and is responsible for losses
F.O.B. factory freight prepaid
seller pays shipping charges
goods become the property of the buyer at the factory
F.O.B. destination charges reversedmerchandise becomes the buyer’s only when goods are receivedbuyer pays for shipping charges