7.02Classify the activities of physical distribution

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7.02 Classify the activities of physical
distribution
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Physical distribution is

• The activities in the distribution process that
  organizes and moves the products through the
  channels.
• This movement (also called logistics) includes
  ordering, transporting, storing, handling, and
  inventory control.

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Transportation is

• The physical movement of the product from one
  place to another.
• Methods include
• Trucking or motor carriers
• Railroads
• Marine shipping
• Pipelines
• Air cargo services

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Trucking or Motor Carriers

• Tractor trailers are most frequently used.
• For example, tractor-trailer trucks deliver most
  of Wal-Marts products.

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Railroad

• Move heavy and bulky freight.
• For example, coal, steel, lumber, grain, and
  equipment.

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Marine Shipping

• Transporting goods within the US and around the
  world.
• For example, barges transport steel, iron ore,
  and grain along the Mississippi River.

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PIPELINE

• Move oil and natural gas. The companies using
  the pipelines own them.
• For example, BP owns pipelines that move crude
  oil from the oil field to the refineries.

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Air Cargo Services (Planes)

• . High value, low-weight, and time-critical
  products.
• For example, the owner of an exclusive floral
  shop might order flowers from France. The order
  will be shipped by air.

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• Transportation service companies are additional
  means of moving small to medium-sized packages.
• For example, US Postal service, express delivery
  services, bus package carriers, and freight
  forwarders (private companies that combine
  shipments from several businesses to help reduce
  costs to those businesses) would deliver these
  smaller parcels

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Methods to store merchandise

• Storage The holding of products until they are
  sold. Products produced in large quantities
  require storage.
• For example, a new Harry Potter book is
  published and must be stored until book retailers
  place their order.

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Methods to store merchandise

• Private warehouse A facility designed to meet
  the needs of the owner. It may be based on size,
  temperature control, or refrigeration.
• For example, Carols Linens has its own private
  warehouse to replenish inventory when needed.

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Methods to store merchandise

• Public warehouse Storage and handling facility
  that may be provided for any business willing to
  pay for the space.
• For example, Singletary Warehouse Company has a
  variety of rental spaces to lease business
  owners. They can select refrigerated or
  temperature controlled space.

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Methods to store merchandise

• Distribution center A storage facility used to
  centralize and speed up the delivery of goods and
  reduce the cost of storage.
• For example, JC Penneys has a distribution
  center in Atlanta to reach all the JC Penney
  stores in the southeast.

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Methods to store merchandise

• Bonded warehouse Private or public warehouse
  used to store products until federal taxes have
  been paid on the product(s).
• For example, a warehouse operated under U.S.
  Customs supervision to store imported products
  until the payment of duties has been made.

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Methods of handling inventory include

• Products ordered are received, checked, marked
  (priced), and transferred
• A receiving record is a document used by a
  business to keep track of its incoming inventory.

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Methods of handling inventory include (cont)

• Check the received merchandise
• Blind check method
• Direct check method
• Spot check method
• Quality check method

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Blind Check Method

• Writing a detailed list of the merchandise and
  its quantity. This list is then compared to the
  actual invoice. This method is time consuming
  but is considered the most accurate.

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Direct Check Method

• The merchandise is verified against the invoice
  or purchase order.

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Spot Check Method

• Merchandise is randomly checked for quality and
  quantity.

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Quality Check Method

• Merchandise is inspected for workmanship and
  making sure there is no damage to merchandise.

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• When merchandise has been received and checked,
  other information must be marked on the
  merchandise.
• The most common form of marking is placing the
  selling price on the merchandise.
• The most common method of marking is UPC
  (universal product codes). UPCs are scanned at
  check out.
• Once marked, merchandise must be transferred to
  the selling floor.

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Inventory

• The storing of merchandise before it is sold.
  There are two methods for tracking inventory,
  perpetual and physical.

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Perpetual Inventory Control

• Tracks inventory on a continuous basis. A
  company can track and know the value and quantity
  of products on hand at any time.
• For example, Harris Teeter may use perpetual
  inventory control of products. As an item is
  sold, the scanner communicates to the warehouse
  that the item is in need of restocking.

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Physical Inventory Control

• Stock is physically counted periodically and
  verified for accuracy.
• For example, Sams Club physically counts each
  item in each warehouse once each year.