STUDENTS' CORNER - 101
As a significant part of logistics, physical distribution which is
itself a part of a very large process called distribution, has some key
functions which, incidentally, we have seen their basics while discussing
logistics and its integral components.
The key functions of physical distribution are customer service, order
processing, inventory control, transportation logistics and packaging and
materials. We have seen in some details what these functions are earlier in our
study of the logistics components. We will try to add new facts leaving aside
those already seen.
Physical distribution management, a complex process, forms one of the
weightiest elements of any business. It
refers in simple to the movement of products from their source to their
destination. Actually, this occupies a
top place in marketing making marketing an efficient process that sees to it
that the customer is satisfied.
Distribution as such can be studied in terms of channels of
distribution. Let us see them briefly.
Business talks about Indirect,
Direct, Intensive, Selective and Exclusive types of distribution.
In Direct distribution channel, the firm itself directly deals with
the customer in the sense that the producer sells his products directly to the
customers without any intermediary or intermediaries. But in the Indirect distribution channel,
obviously the producer uses intermediaries to reach his customers,
intermediaries like the wholesaler and retailer. A direct distribution may involve
face-to-face sales, or mail order; in whatever context, the original
manufacturer or the producer acts directly and distributes his products to the
customers. Farmersí selling their products on their site or in the farmers
markets is a good example of direct distribution.
Direct distribution has both advantages and disadvantages. The greatest advantage is the profit
margin. There are no intermediaries
claiming their share of profit. Exploitation of Internet brings in great
advantage because of its customer-friendliness; customers can access to
Internet at their convenience 24 hours a day.
Direct distribution has its disadvantage too. It cannot compete with
wholesalers with its very much limited geographical reach. Individual selling his products cannot hope
to reach the volume of business a chain of stalls can reach with just a little
Having seen Distribution and its basic points, we shall move on to the
next objective of logistics: Inventory Reduction