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1. Physical Distribution system
1.1 Activities in the Physical Distribution System
1.1.1 Transportation
1.1.2 Distribution inventory
1.1.3 Warehouses (Distribution centers)
1.1.4 Material Handling
1.1.5 Protective Packaging
1.1.6 Order Processing and communication
1.2 Total-Cost Concept
The objective of distuibution management is to provide the required level of customer service at the least total system cost
1.2.1 Cost trade-off
The cost of transportation increased with the use of air transport, but the cost of carrying inventory decreased. There was a cost trade-off between the two.
1.2.2 Total cost
By considering all of the costs and not just any one cost, the total system cost is reduced. Note also that even though no cost is attributed to it, customer service is improved by reducing the transit time. The total cost should also reflect the effect of the decision on other departments, such as production and marketing.
1.3 Global Distribution
Global distribution is the movement of goods to and from locations around the world. Organizations are moving toward the global sourcing and selling of goods due to lower manufacturing costs in other nations and the ability of both foreign and domestic manu-facturers to supply a global market. Global distribution of goods is similar to movement within North America since information is needed to control inventories, customer needs must be satisfied, and carriers depend on communications to reach their destinations. Some differences, however, must be taken into consideration when dealing with organiza-tions around the world: distance, language, culture, currency, and measurement.
1.4 3PLs
Buyers and suppliers of goods often work with a third party who is in a position to offer physical distribution services at less cost than the buyer or seller would incur performing these services themselves. Beyond providing delivery services, a 3PL supplies services such as warehousing, electronic data interchange (EDI), packaging, warehousing, freight for-warding, and delivery. They can provide these services at an economical rate since they already have the infrastructure in place and combine one company’s distribution needs with those of their other clients. FedEx is an example of this, providing customers over geographically dispersed markets with local warehousing, inventory management, labeling requirements, and more.


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