Question

Explain the following components of Physical Distribution :

(i) Order Processing

(ii) Transportation

Hint:

Order processing covers receiving, checking and dispatching the order. Transportation moves goods from the point of production to the point of sale.

Answer 1

Step 1: Component 1: Order processing - meaning:
Products flow from manufacturers to customers through channel members, while orders flow in the reverse direction, from customers to the manufacturers.
Order processing is the work of receiving, checking and handling these orders, and preparing the goods for dispatch.

Step 2: Component 1: Order processing - importance:
A good physical distribution system should provide for an accurate and speedy processing of orders.
Without it, goods would reach customers late, or in wrong quantity or specification. This leads to customer dissatisfaction and a loss of business and goodwill.
Steps are order entry, checking stock and credit, packing, billing and dispatch.

Step 3: Component 2: Transportation - meaning:
Transportation is the means of carrying goods and raw materials from the point of production to the point of sale.

Step 4: Component 2: Transportation - importance:
It is important because unless the goods are physically made available, the sale cannot be completed.
Modes are road, rail, air, water and pipeline. The choice depends on cost, speed, nature of goods and distance.
Example: perishable goods go by air or in a cold truck, and bulky goods go by rail.

Final Answer:
Order processing handles the order and dispatch work accurately, and transportation physically moves the goods to the point of sale.