Physical Distribution (PD) refers to the set of activities concerned with efficient movement of finished goods from the end of operation management to the consumer. It takes place between numerous wholesaling and retail channels and includes such important decision areas as customer service, inventory control, material handling, protective packaging, order processing, transportation and warehousing.
Physical Distribution is part of a larger process called distribution which includes wholesale and retail marketing as well as physical movement of products. By storing goods in convenient locations for shipment to wholesalers and retailers and creating faster and reliable means of moving the goods, business owners can help assure continued success in a rapidly changing competitive global market. The importance of physical distribution is also based on its relevance to customers‟ satisfaction. Physical distribution can be viewed as a system of components linked together for the efficient movement of products. Business can ask the following questions in addressing these components.
- Customer service
What level of customer service should be provided?
- Order processing
How should the orders be handled?
- Inventory control
How much inventory should be maintained at each location?
How will the products be shipped?
Where will be the goods located, how many warehouse should be utilized?
- Material handling
How can efficient methods be developed for handling goods in factory and transport terminals? These components are interrelated in way that decisions made in one area affects the relative efficiency of another. Viewing physical distribution from a systems perspective can be the key providing a defined level of customer services at the lowest possible costs.