CONTENTS

1. MEANING-PHYSICAL DISTRIBUTION

2. A SYSTEM APPROACH (COMPONENTS)

3. COMPONENTS :- TRANSPORTATION i. MEANING ii. FUNCTIONS iii. MODES – MEANING,FEATURES,ADVANTAGES & DISADVANTAGES * ROAD * RAIL * WATER * AIR

PHYSICAL DISTRIBUTION

MEANING:
Physical distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing. Physical distribution is part of a larger process called "distribution," which includes wholesale and retail marketing, as well the physical movement of products.

Physical distribution activities have recently received increasing attention from business managers, including small business owners. This is due in large part to the fact that these functions often represent almost half of the total marketing costs of a product. In fact, research studies indicate that physical distribution costs nationally amount to approximately 20 percent of the country's total gross national product (GNP). These findings have led many small businesses to expand their cost-cutting efforts beyond their historical focus on production to encompass physical distribution activities. The importance of physical distribution is also based on its relevance to customer satisfaction. By storing goods in convenient locations for shipment to wholesalers and retailers, and by creating fast, reliable means of moving the goods, small business owners can help assure continued success in a rapidly changing, competitive global market.
A SYSTEM APPROACH (COMPONENTS)

Physical distribution can be viewed as a system of components linked together for the efficient movement of products. Small business owners can ask the following questions in addressing these components: * Customer service—What level of customer service should be provided? * Transportation—How will the products be shipped? * Warehousing—Where will the goods be located? How many warehouses should be utilized? * Order processing—How should the orders be handled? * Inventory control—How much inventory should be maintained at each location? * Protective packaging and materials handling—How can efficient methods be developed for handling goods in the factory, warehouse, and transport terminals?

These components are interrelated: decisions made in one area affect the relative efficiency of others. For example, a small business that provides customized personal computers may transport finished products by air rather than by truck, as faster delivery times may allow lower inventory costs, which would more than offset the higher cost of air transport. Viewing physical distribution from a systems perspective can be the key to providing a defined level of customer service at the lowest possible cost.

COMPONENTS – TRANSPORTATION

MEANING:

Physical distribution of goods and services require transportation. Transportation plays a vital role in marketing. Transportation means physical movement of people and goods from place to place. Transportation creates place utility and enables the suppliers to supply goods and services on a regular basis. Production takes place in a few places but the products have to be delivered and distributed throughout the length and breadth of the country and often even across national boundaries into other countries. Transportation helps in the physical movement of goods from the production centers or point of origin to the consumption centers. As a result, transportation increases the mobility of labor, goods and services and capital.

FUNCTIONS OF TRANSPORTATION

Transportation helps in performing a number of functions while taking goods and services from the point of production to the point of consumption. Its Functions are as follows:

1. Widens Market
Transportation helps in delivering the products to different places. In doing so, products can be sold in old markets as well as the new markets. Transportation widens the market by bringing the producers, distributors, and consumers closer to one another.

2. Increases Mobility Of Labor And Capital
Certain factors of production like labor and capital are to be physically transported from one place to another. Labor becomes mobile with the development of transportation. It also encourages migration of people from place to place in search of job.

3. Encourages Job Specialization And Division Of Work
Transportation facilitates regional and geographical concentration of labor and production centers. As a result, labor becomes specialized, i.e. transporters. Transportation also facilitates in producing goods and services as desired by the consumers. This leads to specialization.

4. Creates Time And Place Utility
Transportation facilitates physical movement of goods from one place to another. This results in the creation of place utility. Transportation also includes storage function. This means goods are made available at the time of consumers need. This results in creation of time utility.

5. Price Equalization
Transportation helps in supplying products to the consumers when it is demanded. The excess supply from one location can be transported to places where the demand is high. As a result, scarcity is avoided and price fluctuations are controlled.

6. Employment Opportunities
Transportation uses a lot of people while carrying out its functions. Therefore, it provides employment to millions of people.

7. Transformation Of The Economy
Transportation also develops modern industry as well as production of agricultural products. This leads to increased productivity resulting transformation of the economy.

8. Large Scale Of Production
Transportation helps in distribution of the products on a large scale. As markets continue to widen, production capacity has to be increased. This leads to large-scale production and reduction in cost.

9. Overall Economic Development
The development of transportation is part and parcel of economic development. It stimulates the development of other sectors of the economy like agriculture, industry and tourism. Even perishable products can be delivered to the markets with greater speed using transportation.

MODES OF TRANSPORTATION:

* Road Transportation * Rail Transportation * Water Transportation * Air Transportation

1. ROAD TRANSPORTATION

Road transportation is the oldest and best form of transportation. Through road transport, people and goods can be transported to different destinations. Road transportation is convenient and relatively fast. It can be used for door-to-door delivery of the products.

* FEATURES:

1. Small Investment
Road transportation requires relatively small level of investment compared to other modes of transportation.

2. Multipurpose
Road transportation is multipurpose. Different vehicles like trucks, buses, trolleys, tractors and wagons carry merchandise and people from one place to another.

3. Freedom Of Movement
Road transportation is flexible and can ply on highway or graveled roads.The owner or the user can take it anywhere according to his/her convenience as long as the roads exist.

4. Door-to-door service
Road transportation provides door-to-door service. Men and materials can be picked up or dropped off anywhere. The goods can be loaded at the sellers' doors and unloaded at the buyers' doors.

5. Economy Of Time
Road transport is generally meant for short distances and this saves a lot of time. It can be done at minimum cost. Roadways are the most preferred mode of transport over short distances.

* ADVANTAGES:

1. Flexibility
Road transportation is flexible and can follow any time schedule according to the convenience of clients or the owner. It can carry any cargo and can follow any route.

2. Economy
Road transportation is cheaper because construction and maintenance of road is cheaper compared to railways. The vehicles are also cheaper. Usually. road transportation is for short distance and the cost of transportation is also cheaper.

3. Convenience
Road transportation is more convenient because it can offer door-to-door service. This results in saving of time and money in terms of loading and unloading and the resultant damages or loss of the products.

4. Feeder Services
Road transportation serves as a link to the other modes of transportation. Several feeder roads are connected to a single highway for extensive transportation facilities. Road transportation can be used to deliver goods to the railway station, docks or airport.

5. Delivery In Good Condition
When products are transported by road, packing is hardly required; delivery can be made in good condition.

6. Safety
The owners and operators of road transport take direct interest in goods transported through them. Road transportation involves minimum loading and unloading. This results in the delivery of goods and services to the destination without much damage or pilferage.

7. Rural Development
Construction of roads in rural areas makes it possible for the development of other activities. People can also get goods delivered at their doors.

8. Suitable For Perishable Products
Road transportation is suitable for perishable products like fruits, vegetables, milk and fishes. Road transportation facilitates quick delivery from rural areas to the cities where they can be immediately marketed and consumed.

* DISADVANTAGES:

1. Unsuitability
Road transportation is not suitable for long distances. Goods can not be transported by road in case of cross border transportation over long distances. It is also not suitable for heavy or bulky products due to limited carrying capacity.

2. Less Speed
The speed of the road transportation is limited. There is speed limit and some routes do not allow speed greater than the prescribed level. Therefore, quick delivery cannot be made.

3. Unreliable
The road transportation may not meet the time schedule. Therefore, there will be delays in delivery. There might be breakdown during the journey and immediate repair may not be possible. There might also be disruptions due to landslide or flooding.

4. Unstable freight
Freight charges are subject to frequent changes and different transport operators use different rates. The rates are subject to bargain. It may be low for those who can bargain but not for others.

2. RAIL TRANSPORTATION

Rail transportation or railways are the cheapest mode of transport around the world. Rail transport is owned and operated by the governments of each country. They are more reliable compared to road or water transportation. Railways are popular and widely used transport system. Railways could be meter gauge or broad gauge depending on the capacity, speed and the traffic.

* FEATURES:

1. Monopoly
Rail transportation is the monopoly of the government because no private individuals or parties can operate it.

2. Huge Investment
The railway transport system requires huge capital investment. The cost of laying the lines, building bridges and tunnel, railway stations, manufacturing engines and wagons require very large financial outlays.

3. Specific Infrastructure
Rail transport requires specific infrastructure and these can not be used for other purposes. Railways can be used for transportation of passengers and cargo. Railway lines, wagons, stations and platforms are specific infrastructure required for rail transportation.

4. No Uniform Pricing
Rail transport has uniform fares for transportation of people. The fares for commodities are different compared to the passenger fares. Therefore, there is discrimination in the fares of passengers and commodities.

5. Large Carrying Capacity
Railways have large carrying capacity and can carry large quantity of cargo compared to road transport. The number of wagons can be increased or decreased according to the needs for the transportation of the cargo and people.

* ADVANTAGES:

1. Suitable For Bulky Products
Rail transport is suitable for transporting heavy and bulky products over long distances. Large quantities of raw materials for industrial use can be transported at cheaper rates.

2. Greater Speed
Rail transport is faster than road transport. As most trains are operated by electricity, the speed is greater in comparison with different modes of road transport.

3. Cheaper
Railways are cheaper for the transportation of bulky products over long distances. This is because government operates it as public utility services.

4. Dependable And Regular Services
Rail transport is operated round the clock. Time schedules are followed to maintain regularity in service. The materials can reach the destination in time due to fixed time schedules.

5. Safe Carrier
Very few accidents occur and this makes rail transport system much safer than road transport. There is less chance of damage to the cargo and loss by theft is rare.

6. Flexible Carrier
The number of wagons are increased or decreased according to the needs for carrying capacity. Therefore, rail transportation is more flexible compared to other modes of transportation.

* DISADVANTAGES:

1.Heavy Investment
The establishment of railways requires very heavy investment. The railway lines, platforms and stations have to be constructed. The wagons have to be manufactured. Similarly, the maintenance cost is also very heavy.

2. Costly
Rail transport is costly over short distances. Additional cost of loading and unloading increases the overall cost of transport.

3. Inflexible
Rail transport has fixed routes and can be used along those routes only. Door-to-door service is not possible and the time schedules can not be changed.

4. Unsafe For Perishable Products
Rail transport handles large-scale transportation and is not suitable for perishable products. Delay in transportation or carelessness in handling will result in damages to the cargo.

5. Unsuitable For Rural And Hilly Areas
Railways cannot be operated in rural and hilly areas. The unsuitability of the terrain makes laying the tracks in such areas difficult and costly.

6. Evils Of Monopoly
As rail transport is a monopoly of the government, consumers' needs may not be fulfilled. 3. WATER TRANSPORTATION:

Water transport includes river, oceans and canals as a means of transportation. It is the oldest mode of transportation. Water transportation is used for bulky products, which have low unit price. Water transportation is cheaper than other modes of transportation but is extremely slow. Water transport does not require heavy capital investment because the ships and boats can travel over natural waterway.

* FEATURES:

1.Natural Waterway
Rivers, oceans and seas are free gifts of nature that provide natural way for transportation. The construction cost of route is not required.

2. Little Power Consumption
The steamers and ships do not require costly energy so there is minimum power consumption. In some cases the transportation is directly propelled by river current. There may not be any need for fuel.

3. Low Operational Cost
Because of low power consumption, the operational cost of the water transportation is also low.

4. Flexibility
Water transportation does not require set routes. It can use the surface of water to adjust the voyage according to the needs. There is considerable freedom of movement subject to safety and security.

5. Slow Movement
Water transportation is the slowest of all modes of transportation.

6. Natural Hindrance
Waterway is subject to natural hindrance. The river could change its course; silting and flooding may prevent transportation.

* ADVANTAGES:

1. Cheapest
Water transport is basically a gift of nature and the cost of maintenance is very little. It also uses very little power. It can be operated with minimum power energy. Even large ships can be operated with little power.

2. Large Carrying Capacity
Water transportation is most suitable for bulky products as the ships have large carrying capacity. The ships will have adequate space to carry products in large volume.

3. Safer
There is no shaking or jerking and therefore brittle and fragile products are safely delivered to their destinations. Products like ceramics glassware , metal wares, can be transported with safety.

4. International Trade
Water transport can be used to reach all nations. Import and export trading of bulky products between countries occurs mainly through water transportation. For international trade water transportation is the most economical means of transport.

* DISADVANTAGES:

1. Slow Speed
Water transportation is the slowest of all the transportation. It is not suitable for the products that require quick delivery.

2. Limited Area Of Operation
Water transportation can be used only where the route is authorized. The natural surface of the water does not permit construction of new routes. The delivery can be made to the ports, which may be located at distant places from the point of consumption.

3. Seasonal Difficulties
Water transportation is seasonal in nature. Some of the ocean surface freezes in winter and ships can not travel. In summer, high sea cyclones affect the operation of water transport. These pose serious problems for importers and exporters.

4. Risky
Storms, high tides and cyclones cause damage to the cargo. These natural hazards may cause total damage to the cargo; the vessels may sink during the voyage.

5. Unsuitable
Water transportation is unsuitable for perishable goods and landlocked countries. There will be transit problems for the landlocked countries.

4. AIR TRANSPORTATION
Air transportation is the most advanced mode of transport. It has reduced the distance between countries and tourism industry has flourished. Air transportation is the fastest mode of transport and used mainly for travel by people and carrying mails. It is helpful in supplying relief services in time of emergency like floods or earthquakes and war. Air transportation has created time utility in both national and international markets. It links different parts in the country and the cities in different countries.

* FEATURES:
1. High Speed
Air transportation is the fastest mode of transport among all modes of transportation. It can cover long distances in a very short period of time.

2. Unbroken Journey
Air transport takes place over land and sea without any broken journey. There is no need to break a journey except for fueling. There are not much of in-transit formalities.

3. Expensive
Air transportation is the most expensive mode of transportation because of high operational costs and limited carrying capacity.

4. Extensive Network
Air transport network covers the entire world. It is not limited to few cities and countries. * ADVANTAGES:

1. Highest Speed
Air transport has the highest speed. Goods and people can reach their destination very quickly. It can transport people and product within the shortest possible time.

2. Boon To Perishable Product
Air transport has provided international market for perishable products. It moves perishable products from one place to another within a short period of time. High valued products like fruits and flowers can be transported from around the world within a very short period.

3. Regular, Comfortable and Punctual
Air transport provides regular and punctual service. All kind of comfort are provided to the passengers. Airplanes arrive and depart in time so that passengers are sure of reaching the destination as per schedule.

4. Shortest Route
Airplanes travel over ocean, land and mountains. There is no physical hindrance. Therefore, it follows the shortest and most direct route.

5. Access To All Areas
Air transport can easily reach all areas. The mountains and oceans do not hinder the journey. In times of emergency situation, food and medical supplies can be provided by means air transport.

* DISADVANTAGES:

1. Expensive
Air transport is expensive compared to other modes of transportation. The freight rates are higher compared to other modes.

2. Uncertainties and Unreliable
Air transport depends on weather conditions. In summer, the services become unreliable due to heavy rains. In winter, dense fog hinders flights from taking off and landing.

3. Limited Capacity
Air transportation has limited carrying capacity and large-scale bulky products cannot be transported by air.

4. High Construction And Operational Cost
Constructions of airports and facilities cost a lot of money. The repair, maintenance and operation cost is also high. Aircraft also cost very high.

5. Accidents
The probability of accident is very high and hundreds of lives can be lost in a single accident. It also involves a lot of technical complications.