Physical Distribution

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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Physical Distribution (P.D) refers to the process by which raw materials are transported from the plant to the factories and the point where they end up in your hands. In terms of the overall supply chain management, P.D is also known as logistics or shipping. Basically, physical distribution is divided into two sub categories PDS or production distribution and PMS or product distribution. Physical distribution can either be the result of direct transport or a combination of PDS and PMS.

A lot of companies in the supply chain management have failed because of poor physical distribution. If you want your company to be on top, you need to have a proper physical distribution so you will be able to meet all your customer demands properly. First of all, physical distribution keeps your inventory updated and organized. With the proper management, you will know what inventory you have on hand and you can easily make the necessary adjustments should there be a change in the demands of your customers. Furthermore, physical distribution also helps in improving customer service. When you can easily deliver your products to your customers, you will also increase your customer loyalty and retention.

On the other hand, poor logistics service can lead to your company's financial disaster. It is not enough to just have good inventory management; the chain of custody also plays a huge role. The chain of custody describes the complete sequence of the products' movement from their source to their final destination, from their raw material sources to their storage facility until their delivery to your customer. Hence, poor logistics service results to poor inventory management and hence to poor financial performance.

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