Physical distribution refers to the movement of finished goods from a companys distribution and fulfillment network to the end-user. It involves several supply chain functions, including warehousing, inventory control, order processing, ecommerce fulfillment, and shipping. Physical distribution is a critical aspect of ecommerce, as it is linked to three critical business objectives that impact the bottom line: faster shipping, reduced logistics costs, and high customer satisfaction.
The components of physical distribution include customer service, warehousing, inventory control, order processing, materials handling, transportation, and retail fulfillment. These components are interrelated, meaning decisions made in one area affect the relative efficiency of others. For example, storing goods in convenient locations and creating fast, reliable means of moving those goods can help assure continued success in a rapidly changing, competitive global market.
The objective of physical distribution is to strategically distribute inventory across a fulfillment network so that customers orders are delivered faster and in the most cost-effective way to meet customer needs. Physical distribution contributes to the efficient utilization of time and resources, and transportation and warehousing are used to accomplish this. By creating a physical distribution system that can deliver products efficiently and quickly, retailers can prevent price spikes when demand is high and supplies are low, which helps stabilize prices.
In summary, physical distribution is a critical aspect of supply chain management that involves the movement of finished goods from a companys distribution and fulfillment network to the end-user. It includes several supply chain functions, such as warehousing, inventory control, order processing, ecommerce fulfillment, and shipping. The objective of physical distribution is to strategically distribute inventory across a fulfillment network to meet customer needs, and it contributes to the efficient utilization of time and resources.
