The Steps involved in designing a physical distribution system as shown below.
The first step, distribution objectives of the firm must be properly articulated and the minimum service level to be guaranteed in delivery must be clearly specified. In fact, the guaranteed minimum service level in delivery is the key to a physical distribution system. It is also the touchstone for measuring the efficiency of the system.
Component Functions of Physical Distribution/Marketing logistics
* Planning the overall physical distribution system.
* In plant-warehousing.
* Field warehousing
* Secondary transportation, secondary handling and sub distribution.
* Inventory management at each level in the chain.
* Order processing/execution.
* Accounting / record keeping.
Steps involved in designing a physical Distribution System
* Articulating distribution objectives and specifying the minimum service level desired in product delivery.
* Finding out what the customers want in product delivery.
* Finding out what competitors do.
* Keeping the costs of the system as low as possible, without sacrificing the guaranteed minimum service level.
* Keeping the system sufficiently flexible.
Finding out What the Customers Want
Finding out the customerâ€™s expectations is another equally important task. In fact, it is a building block in articulating the distribution objectives. As a general rule, al customers want timely deliver. Most also want exceptionally speedy delivery in situations of emergency. The firm must prioritize the requirements of the customers and provide fully for the essential ones in the design of a physical distribution system.
Finding out What the Competitors do
The firm must also find out what its competitors do. The competitors do. The competitors may be following differing policies and offering different types/levels of services in product delivery. The firm must rank them appropriately and decide the services it must emulate, the ones in which it should go one better and the ones it can ignore.
Optimizing Costs and keeping the system flexible
The firm has to evolve an economical system without sacrificing the minimum guaranteed service in delivery. The physical distribution system should also be kept flexible. Marketing is never static. Thus, in keeping with the dynamic nature of marketing, the physical distribution system should remain flexible. At the same time, flexibility has an associated cost. Often, that is why, the issue of economy Vs flexibility is raised while designing a physical distribution system. Even at the cost of economy, some flexibility must be retained. It would come to the help of the firm in the future.