Physical distribution efficiency and customer satisfaction
Whether a business is small or big, especially when we talk about finished goods, there should always be considered as one of the most important things – the delivery of the products, and if the delivery satisfactory or not.
In the rapidly evolving and developing world full of people continually in need of sustenance from small businesses and large enterprises, how do these business owners satisfy the demands of the customers? Does the efficiency of distribution of goods and services directly affect the customer satisfaction? Or do we need to create a new system to meet the increasing standards of the people when it comes to supply and demand of finished goods?
Physical distribution is a set of activities concerned with the efficient and safe movement of goods from the end of the production line to the consumers. With companies from the country contributing up to 20 percent of the Gross National Product (GNP) just from the physical distribution cost, is this enough to satisfy the consumers?
There are different components that are linked together forming the system of physical distribution. Those components must always be taken into account in order to carry out an efficient movement of products. The components that should be considered by companies in physical distribution are (1) the customer service, (2) transportation or the shipping of the products, (3) warehousing or the storage of the goods, (4) order processing, (5) inventory control, and (6) the protective packaging and materials handling.
In the component of customer service, companies must recognize if what level of customer service should be provided and at the same time, intended. A buyer always needs the customer service that meets his/ her satisfaction. There are instances when the buyers demand for something that is a little too hard for the company to meet, or the company is not willing to give the service due to its high-price shipping. So, in the beginning of the dealing, the company must first know whether it can meet up that standard from a customer or not and, by the time that the company determines that it will not hit a costly delivery, then it could already proceed.
Another important component of physical distribution that companies, whether big or small is the transportation. This part of the process may determine the probable cost that the company needs to provide to ship the goods. More or less, the shipping is not included in the fees that most of the companies present to the customers, or sometimes, shipment is already included in the prices presented. But, once they include those fees in their product price, the customers would more likely go for the cheaper products, giving out no additional shipping fee. Hence, a company must consider what kind of transportation that it should use in the shipment. There are a lot of means of transportation in the world; by land, water, and air. In those different settings, there are still a lot of choices, each vary in the speed and of course, the cost. Depending on the kind of products does a company ship, it should choose among the many choices. Air freight may be fast and it provides safety especially to products which are fragile, but it is costly. Trucks deliver goods fast, but only by land. Water carriers may be economical but they are slow. Other choices of transportation of goods can be options depending on the kind of products that a company ship.
Warehousing or storage of goods should also be paid attention. There are products that are easily broken or run out over time, there are also products that demands a level of temperature in order for it to last long and do not end up unuseful. There are products that don’t need any of these kinds of treatment because they can go long-term. However, companies must consider that warehousing must always keep their products safe and still efficient for use until they meet their buyers. They should still consider whether they go for public warehousing, which makes them save more rather than going for a private warehouse.
Then certainly, inventory control can be the major component of the physical distribution, especially for the small business. It always a need to keep track on how much a company has spent for their shipping and whether they have been cost-effective in their past deals or are they losing something. This way, a business can always organize their way of distribution and it can even make some modifications in their way of physical distribution, but still considering its efficiency and meeting its customer satisfaction.
Order processing is a way in which the business owner often does credit check, sale recording, making the appropriate accounting entries order, and keeping track of the item, shipping, and regulation of inventory records. With the innovation available in the industry today, it will be much easier for the companies to do the order processing. They can use Bar Code System, Electronic Data Interchange (EDI), and other technological innovations to help them in order processing.
Finally, protective packaging and material handling play a great role in physical distribution too. This component includes all of the handling from having the finished product from the manufacturer to storing it to the warehouse and shipping the product by any means of transportation. All the products are assets of the company to customer satisfaction, that once a product is delivered to the buyer’s doorstep, nothing is altered from the product from the moment it was materialized. Thus, safety packaging and handling the products carefully, most especially to fragile products, is a must…or else, some loss may occur both from the buyer, especially to the business owner or the company.
If any of these components are taken for granted, making a mistake in the very beginning of the process, the business may fail to get its goal – which is to move the finished products at a lowest possible cost while maintaining a good reputation in the market, meeting the standards of the customers.
Reference:
Reference for Business (Encyclopedia of Business, 2nd edition), 2000. Physical Distribution. [online] Available at: <http://www.referenceforbusiness.com/small/Op-Qu/Physical-Distribution.html> [Accessed 23 May 2011]
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