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Introduction to Business

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Introduction to Business ­MGT 211
VU
Lesson 30
PHYSICALDISTRIBUTION
Physicaldistribution encompasses allactivities required to movefinished products from a
producer to the consumer. It is a complexstrategic activity with manytrade-offs that affectthe
organizationand profits. Technology used in physical distribution systemstoday includes
satellitenavigation and communication,robots, machine vision,voice input computers,on-
boardcomputer logbooks, andplanning software that usesartificial intelligence.
Theoverriding objective of allphysical distribution systemsshould be to achieve a competitive
level of customer service standards at the lowest total cost.Producers must be able to analyze
whether it is worth it to deliver a product in three days instead of five, if doing so reducesthe
cost of an item. The goal is to optimize the total cost of achieving the desired level of service
by analyzing each step in theprocess and its relation to the other steps.
WarehousingOperations -- Warehousesare holding facilities forinventory, whereas
distributioncenters serve as commandposts for moving goods to customers and collect,sort,
code,and redistribute products to fill customer orders.
i.
Types of Warehouses:
1. PrivateWarehouse-warehouseowned by and providingstorage
for a single company.
2. Public  Warehouse-independently  owned  and  operated
warehousethat stores goods formany firms.
3. StorageWarehouse-warehouseproviding storage forextended
periods of time.
4. DistributionCenter-warehouseproviding short-term storage of
goodsfor which demand is bothconstant and high.
ii.
Warehousingcosts includerental or mortgage payments,insurance,
andwages. Other costsinclude:
1. InventoryControl-warehouseoperation that tracksinventory on
handand ensures that an adequatesupply is in stock at all
times.
2. Material
Handling-warehouse
operation
involving
the
transportation,arrangement, and orderlyretrieval of goods in
inventory.
TransportationOperations
i.
Majortransportationmodes are:
1. Trucksare mostfrequently used and offerdoor-to-door delivery
anduse of public highways, butare unable to carry alltypes of
cargo.
2. Railroadsare able to carry heavier and morediversified cargo,
butare unable to deliverdirectly to thecustomer.
3. Watercarriers--Boatsare the cheapest form of transport,
especiallyfor bulk items, butservice is slow andinfrequent, and
delivery is restricted.
4. Airtransport is thefastest means of movinggoods, but it
doesn't go everywhere, it can carryonly certain types of cargo,
and is unreliable andexpensive.
5. Pipelines,  although  expensive  to  build,  are  extremely
economical to operate andmaintain.
121
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Introduction to Business ­MGT 211
VU
ii.
Changes in Transportation Operations
1. IntermodalTransportation--combineduse of severaldifferent
modes of transportation.
2. Containerization--use of standardized heavy-duty containers in
whichmany items are sealed at points of shipment andopened
only at final destination.
3. PhysicalDistribution and E-CustomerSatisfaction--New e-
commercecompanies need to focus notonly on sales butalso
on  after-sale  distribution  in  order  to  avoid  customer
dissatisfactionthat discourages repeatsales. OrderFulfillment
andE-Customer Satisfaction--Orderfulfillment beginswhen
thesale is made: It ends withgetting the product, in good
conditionand on time, to the customerfor each sales
transaction.
Distribution as a Marketing Strategy
Distribution is an increasingly important way of competing for sales. Manyfirms have turned
to distribution as a cornerstone of theirbusiness strategies, whichmeans assessing and
improvingthe entire stream of activities involved in gettingproducts to customers.
i.
TheUse of Hubs--centraldistribution outlet thatcontrols all or most of
thefirm's distribution activities.There are three contrastingkinds of
hubs.
1. Supply-sidehubs handlethousands of incoming suppliesand
canrun into logisticalnightmares.
2. Prestaginghubs are a form of outsourced distribution thatcan
alleviatesome of the congestion of supply-side hubs; theyare
locatednear the manufacturing firm,managed by separatefirms,
andfunction solely to meet thefirst company'sproduction
schedules.
3. Distribution-sidehubs arelocated far from theirindustrial
customers  and  help  to  streamline  delivery  system  by
consolidatingstorage, sorting, andshipping in fewerlocations
aroundthe world.
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Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures