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What are the Importance of Physical Distribution System?

Last Modified: 10 July, 2020 Leave a Comment

Physical distribution management is concerned with transportation, materials handling, packaging, warehousing (and locations of depots), inventory policy, stock control, and order processing.

importance of physical distribution
importance of physical distribution

Physical distribution has become an important function of sales and marketing in this industrial age.

Need and Importance of Physical Distribution

The importance of this function can be discussed under the following headings:

1. Provides Time and Place Utility

The physical distribution provides time and place utility and makes possession utility possible.

A marketing manager may have to make many decisions to ensure that the physical distribution system provides utility and meets customers’ needs with an acceptable service level and cost.

2. Carries Large Costs

Physical distribution costs are very important to both firms and consumers.

Physical distribution costs vary from firm to firm and, from a macro marketing perspective, from country to country.

However, for many physical goods, firms spend half or more of their total marketing budget on PD activities.

The total amount of money involved is so large that even small improvements in this area can have a big effect on the whole consumer’s quality of life.

Advanced Strategies for Building Maximum Customer Satisfaction.

3. Customer Want Products – Not Excuses

Customers do not care how a product is moved or stored, or what some channel member has to do to provide it.

Rather, customers think in terms of the physical distribution customer service level- how rapidly and dependably a firm can deliver what they, the customers, want.

Marketing managers need to understand the customers’ point of view.

4. Invisible to Most Consumers

Physical distribution is a part of marketing that is not visible to most consumers. It only gets their attention when something goes wrong.

But performing at the time, it keeps consumers happy.

In countries where physical distribution systems are inefficient, consumers face shortages and inconvenient waits for the products they need.

Physical distribution function creates consumer satisfaction.

5. Forces on the Whole Distribution System

The physical distribution concept says that all transportation and storage activities of a business and a channel system should be coordinated as one system, which should seek to minimize the cost of distribution for a given customer service level.

This physical distribution function focuses on many factors such as trade-offs, distribution costs, customer service level, sales, lost sales and inventory cost, etc.

6. Meeting Customer Service Standards

Physical distribution activities satisfy customer needs and want by maintaining customer service standards.

need of physical distribution system
the need of physical distribution system

Customers require a variety of services. At the most basic level, they need fair prices, acceptable product quality, and dependable deliveries.

In the physical distribution area, availability, timeliness, and quality are important dimensions of customer service and frequently determine whether customers are satisfied with a supplier.

Advantages of Logistics or Physical Distribution.

7. Reducing Total Distribution Costs

Physical distribution managers try to minimize the costs associated with order processing, inventory management, materials handling, warehousing, and transportation.

Managers prepare and implement a unified cost-effective distribution strategy.

8. Reducing Cycle Time

Another important goal of physical distribution involves reducing cycle time, the time it takes to complete a process, so as to reduce costs and increase customer service.

Read More:

  • Top 5 Types of Distribution Channels in Marketing.
  • Channels of Distribution: Meaning, Characteristics, Functions.
  • Top 8 Documents Used in Transportation and Warehousing.
  • Top 10 Conditions for Price Discrimination.

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