These days, we have seen how the price of physical distribution is getting higher and higher. The concept of physical distribution is always trying to decrease the price of the distribution. According to the book “Basic Marketing” defines the physical distribution concept includes “all transportation, storing and product- handling activities of a business and a whole channel system should be coordinated as one system that seeks minimize the cost of distribution for a given customers service level” (318). In the introduction of the article, it mentions that the biggest achievement of the physical distribution is lower cost of the distribution with better customer’s service. Therefore, the sales will increase, and it will help the firm to gain profits.
According to the Article, two benefits come from good strategy in physical distribution.
The first benefits are to decrease the total cost of distribution through eliminating the number of warehouses. For example, the article gives real examples regarding to this point: “European union’s unification of the elimination of transportation barriers among member countries”. Eliminating the transportation will reduce the total cost of distribution, and it will reduce warehouse numbers, as well as, the cost of warehouses will reduce also.
Secondly, the physical distribution system can help the companies to determine the demand for a specific product, so they can send the goods fast. In this way, the company will reduce the price of warehouses. As a result, the company will gain profit for selling their product in a high- demand market.
In summary, physical distribution systems is very hard to understand, especially in unstable economic situations.
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