-the transporting, storing, and handling of goods in ways that match target customers' needs with a firm's marketing mix-both within individual firms and along a channel of distribution

-also called Physical Distribution (PD)

-says that all transporting, storing, and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer service level

-both lower costs and better service help increase customer value

-in selecting a PD system, the total cost approach involves evaluating each possible PD system and indentifying ALL of the costs of each alternative.

-uses cost accounting and economics

-key advantage for business customers is that it reduces their PD costs-esp. storing and handling costs

-but since there's no backup plan, JIT requires that supplier have high quality control in every PD activity

-shifts greater responsibility for PD activities backward in the channel

-an approach that puts info in a standardized format easily shared between different computer systems

-replaced purchase orders, shipping reports, and other paper documents in many companies

-customers sends order directly to supplier's computer, and the EDI starts scheduling production, order assembly, transportation, etc.

-an approach that puts info in a standardized format easily shared between different computer systems

-replaced purchase orders, shipping reports, and other paper documents in many companies

-customers sends order directly to supplier's computer, and the EDI starts scheduling production, order assembly, transportation, etc.

-mkt. function of moving goods

-can help achieve economies of scale in production-if production costs can be reduced by producing larger quantities in one location, these savings can offset the added cost of transporting the finished products to customers

-transporting costs add little to the cost of products that are already valuable relative to their size and weight (ex. a case of medicine) but add a lot to the total cost for heavy products of low value

-workhorse of the US transportation system

-carry more over more miles than any other mode, but caount for less than 10% of transport revenues b/c they carry heavy/bulky but low cost goods.

-best for full carloads of goods

-worst for perishable items or those in urgent demand

-flexibility and speed makes them better at moving small quantities of goods for shorter distances

-go where rails cant

-relaiable in meeting delivery schedules

-75% of US consumer products travel at least part of the way from producer to consumer by truck

-slowest

-lowest-cost way of shipping heavy freight

-important for international shipments

-most expensive cargo transporting mode is airplane

-but greater speed may offset the added cost

-good for high-value, low-weight goods, small emergency deliveries and perishable items

-airfreight is growing

-benefits of this speed are less spoilage, theft, and damage

-althought transporting costs of air shipments may be higher, the total cost of distribution may be lower b/c it reduces the cost of packing, unpacking, and preparing goods for sale and helps reduce inventory costs by eliminating outlying warehouses

-grouping individual items into an economical shipping quantity and sealing them in protective containers for transit to the final destinations

-protects products and simplifies handling

-storing facilities owned or leased by companies for their own use

-firms use these when a large volume of goods must be stored regularly

-fixed investment, high unit cost if volume is low but very low unit cost if volume is high, high control, highly adequate for product lines, low flexibility-fixed costs have already been committed

-independent storing facilities

-firms use these if they dont have a regular need for space or if they must maintain stocks in many locations

-low cost, low managerial control, may not be convenient, high flexibility-easy to end arrangment

-a special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs

-faster inventory turnover and easier bulk-breaking reduce the cost of carrying inventory

-slower but less expensive method than direct shipping