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Unit 7 - Chapter 22Unit 7 - Chapter 22Physical Distribution
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Physical Distribution Physical Distribution
» The process of transporting, storing, and handling goods to make them available to customers
» Third largest expense for most businesses
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Functions of Physical Functions of Physical DistributionDistribution
1. Transportation
2. Order Processing
3. Storage
4. Stock Handling
5. Inventory Control
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87.10%
4%
5.60%
1.90%1.30%
Trucks
Railroads
Air
Pipelines
Waterways
Transportation Transportation
» Moving a product from the place where it is made to the place where it is sold
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1. Trucking1. Trucking
» Advantages» convenient» require less protective
packaging» rapid deliveries» reduces inventory
costs
» Disadvantages» possible shipment
delays» long distances -
costly
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Types of TruckersTypes of Truckers
» Common Carriers» Contract Carriers» Private Carriers» Exempt Carriers
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Trucking VideoTrucking Video
» Trucking in Australia (2:43)» http://www.history.com/video.do?name=
science&bcpid=1681694258&bclid=1683773406
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2. Railways2. Railways
» Advantages
» large quantities =
lower costs
» few delays
» 70% less energy
than a truck
» Disadvantages
» lack of
flexibility due to
location
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RailwaysRailways
» Ton-mile: movement of one ton (2,000 lbs) of freight one mile
» Carload: minimum number of pounds of freight needed to fill a boxcar
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3. Waterways or 3. Waterways or Marine ShippingMarine Shipping
» Advantages» low cost
» Disadvantages» slow
» lack of flexibility to travel inland
» weather delays
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WaterwaysWaterways
» Internal Waterways (across rivers, lakes)
» Intracoastal Waterways (between ports, same coast)
» International Waterways (across
oceans)
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4. Pipelines4. Pipelines
» Advantages» lower long-term costs
» dependable
» Disadvantages» high initial costs
» risk of breakage or leaking
» costs for any damages
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PipelinesPipelines
» Used to transport oil and natural gas Fun Fact:Fun Fact:
There are more than 200,00
miles of pipeline in the US
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5. Air Transportation5. Air Transportation
» Advantages» SPEED» reduces storage &
inventory expenses
» Disadvantages» Costs (2x truck rates)» delays
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Other Transportation Other Transportation CarriersCarriers
» U.S. Postal Service
» Express Carriers
» Bus Package Carriers
» Freight Forwarders
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Warehousing or StorageWarehousing or Storage
» Holding goods until they are sold
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Warehousing or StorageWarehousing or Storage
» Reasons for Storing Goods» sell to customers» surplus of goods» stabilize prices» obtain discounts» faster delivery
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WarehousingWarehousing
» Private - company owned
» Public - rent space to others
» Bonded - pay a federal tax
» Distribution Centers - sorting and moving products
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Fedex Case StudyFedex Case Study
» Spend 5 minutes reading the case study on Fedex
» Note what the distribution strategies are for some of their customers
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2020
VideoVideo
» Ice Road Truckers – Dash for the Cash» http://www.history.com/video.do?
name=iceroadtruckers