Objectives and Importance of Physical Distribution Management

 

Objectives and Importance of Physical Distribution Management

The main objectives of physical distribution are to deliver the right goods to the right customer at the right time and place.

In other words, efficiency and satisfactory service are the major goals of physical distribution, although there may be some conflicts with each other.

Objectives of Physical Distribution Management:

(i) To provide better customer service:

By improving the physical distribution system, the promotional efforts of the company are strengthened.

 

(ii) To Increase Sales:

By ensuring that basic products in regular demand are always available, and having contingency plans in place for quick order processing of items.

(iii) Cost Reduction:

By intelligently organizing the physical distribution system and determining the optimal number and location of warehouses, improve material handling, increase stock turnover, and use sealed containers to ship products.

Significance or Importance of Physical Distribution Management:

Due to the increasing competition for the markets, physical distribution of goods has assumed great importance especially in recent years.

 

The importance of physical distribution lies in the following directions:

1. It Creates Utilities of Time and Place:

By making a product available where it is needed.

2. It Accounts for a Major Part of Marketing Costs:

According to one estimate, physical distribution costs account for 60% of total marketing costs and range, by industry, from 10% to 30% of sales revenue ; These were 9.8% for machinery; wood products 16.1%; paper and allied products 16.7%; chemicals, petroleum and rubber 23.1% and primary and fabricated metals, 26.5%. ,

3. Large share in national wealth:

It represents a large share of national wealth in the form of facilities, rail, road, trucks, highways, aeroplanes, ships, docking facilities, pipelines, storage facilities and equipment.

 

4. Specialization Gives it Geographical Specialization:

Each region produces goods that enable its pool of natural resources, climate or manpower resources to produce them more efficiently.

5. Determines the Standard of Living:

This is because proper distribution of products makes them available to a large number of people at a relatively low cost. Thus it can be said that physical distribution directly affects sales, customer service and satisfaction and costs.