ROLE/IMPORTANCE OF PHYSICAL DISTRIBUTION SYSTEM
The physical distribution system has a definite role. It provides a new orientation for marketing. The following points will reveal the role of the physical distribution system.
1. Creation of Utilities: Creation of or addition of utility is the addition of value to a thing. The major components of physical distribution are transportation and warehousing. It is the transport system that creates place utility, making goods more useful by bringing them from the places where they are not needed. Warehousing system is known for creating time utility.
2. Improved consumer services: Customer service in the physical distribution system consists of providing products at the time and location corresponding to the customer needs. High level of customer satisfaction can be possible through a viable distribution system that takes into account the factors that affect customer service such as time, dependability, communication, etc.
3. Cut in distribution cost: The prices paid by the customer consists of not only production costs but also delivery cost. Delivery cost can be minimized by systematic planning in inventory levels, warehousing location, and operation, transportation schedule, and modes, material handling, order processing, and communication.
4. Increased market share: There are definite ways in which an efficient physical distribution system can contribute towards the objective of increased market share. It is possible by decentralizing its warehousing operations, devise the combination of efficient and economical means of transport, planning inventory operations to avoid stock-outs, etc.
5. Price stabilization: It can contribute considerably to the attainment of price stabilization. It is the best use of available transport and warehousing facilities that can bring about an amicable and matching adjustment between the demand for and supply of goods thus preventing price fluctuations.
2. Improved consumer services: Customer service in the physical distribution system consists of providing products at the time and location corresponding to the customer needs. High level of customer satisfaction can be possible through a viable distribution system that takes into account the factors that affect customer service such as time, dependability, communication, etc.
3. Cut in distribution cost: The prices paid by the customer consists of not only production costs but also delivery cost. Delivery cost can be minimized by systematic planning in inventory levels, warehousing location, and operation, transportation schedule, and modes, material handling, order processing, and communication.
4. Increased market share: There are definite ways in which an efficient physical distribution system can contribute towards the objective of increased market share. It is possible by decentralizing its warehousing operations, devise the combination of efficient and economical means of transport, planning inventory operations to avoid stock-outs, etc.
5. Price stabilization: It can contribute considerably to the attainment of price stabilization. It is the best use of available transport and warehousing facilities that can bring about an amicable and matching adjustment between the demand for and supply of goods thus preventing price fluctuations.
What is the importance of Physical Distribution System?
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Reviewed by enakta13
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September 14, 2019
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