Physical Distribution and Logistics Management

Companies has to decide on the best way to handle, store and move their products and services so that they are available to customers in the correct assortments, at the correct time, and in the accurate place. Logistics effectiveness has a chief impact on both customer satisfaction and company costs. Here we consider the nature and significance of marketing logistics, goals of the logistics system, chief logistics functions, and the requirement for integrated logistics management.

Nature and Importance of Physical Distribution and Marketing Logistics

To some of the managers, physical distribution means just and warehouses and trucks. But modern logistics is much more than it. Physical distribution-or marketing logistics-involves planning, controlling, and implementing the physical flow of materials, ultimate goods, and associated information from points of origin to points of consumption to meet customer needs at a profit. Shortly, it involves obtaining the accurate product to the correct customer in the accurate place at the accurate time. Traditional physical distribution normally started with products at the plant and then tried to discover low-cost solutions to obtain them to customers. Although, today's marketers prefer market logistics thinking, which begins with the market and works backward to the factory? Logistics addresses not just the problem of outbound distribution (by moving products from the factory to customers) but the problem of inbound also distribution (by moving materials and products from suppliers to the factory).

 It involves the management of whole supply chains, value-added flows from suppliers to final users, as shown in given figure. Therefore, the logistics manager's job is to coordinate activities of, purchasing agents, suppliers, marketers, channel members, and customers.  These activities   include information systems, forecasting, purchasing, production planning, order inventory, processing, warehousing, and transportation planning.

Companies nowadays are placing larger emphasis on logistics for different reasons. First, satisfaction and customer service have become the cornerstones of marketing strategy, and distribution is significant customer service element. More and more, companies are discovering that they may attract and keep customers by giving better service or lower cost through better physical distribution. Secondly, logistics is a chief cost element for most companies. According to one study, in a current year American companies "spent $670 billion-a gaping 10.5 % of gross domestic product- to, bundle, wrap ,load, unload, sort, reload, and transport goods." Almost 15 % of an average product's price is accounted for by shipping and transport alone. Weak physical distribution decisions result in great costs. Improvements   in physical distribution efficiency may yield marvellous cost savings for the   company   and its customers both. Third, in product the explosion variety has created a requirement for improved logistics management. At last, improvements in information technology have formed opportunities for major achieve in distribution efficiency. Enhanced use of computers, uniform product codes, point-of-sale scanners, electronic data interchange (EDI), satellite tracking and electronic funds transfer (EFT) has permitted companies to create advanced systems for order processing, inventory control and handling, and transportation scheduling and routing.