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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

33

Functions of Physical Functions of Physical DistributionDistribution

1. Transportation

2. Order Processing

3. Storage

4. Stock Handling

5. Inventory Control

44

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

66

Types of TruckersTypes of Truckers

» Common Carriers» Contract Carriers» Private Carriers» Exempt Carriers

77

Trucking VideoTrucking Video

» Trucking in Australia (2:43)» http://www.history.com/video.do?name=

science&bcpid=1681694258&bclid=1683773406

88

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

1111

WaterwaysWaterways

» Internal Waterways (across rivers, lakes)

» Intracoastal Waterways (between ports, same coast)

» International Waterways (across

oceans)

1212

4. Pipelines4. Pipelines

» Advantages» lower long-term costs

» dependable

» Disadvantages» high initial costs

» risk of breakage or leaking

» costs for any damages

1313

PipelinesPipelines

» Used to transport oil and natural gas Fun Fact:Fun Fact:

There are more than 200,00

miles of pipeline in the US

1414

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

1919

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

2020

VideoVideo

» Ice Road Truckers – Dash for the Cash» http://www.history.com/video.do?

name=iceroadtruckers