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CONTENT/TEACHING OUTLINE
COMPETENCY:
7.00
Understand distribution of products.
OBJECTIVE:
7.02
Classify the activities of physical distribution.
A. Summarize transportation systems.
1. Physical distribution: The activities in the distribution process that organizes and
moves the products through the channels. This movement (also called logistics)
includes ordering, transporting, storing, handling, and inventory control.
2. Transportation: The physical movement of the product from one place to
another. There are five major methods:
a. Trucking or motor carriers. Tractor trailers are most frequently used. For
example, tractor-trailer trucks deliver most of Wal-Mart’s products.
b. Railroads. Move heavy and bulky freight. For example, coal, steel, lumber,
grain, and equipment.
c. Marine shipping. Transporting goods within the US and around the world. For
example, barges transport steel, iron ore, and grain along the Mississippi
River.
d. Pipelines. Move oil and natural gas. The companies using the pipelines own
them. For example, BP owns pipelines that move crude oil from the oil field
to the refineries.
e. Air cargo services. High value, low-weight, and time-critical products. For
example, the owner of an exclusive floral shop might order flowers from
France. The order will be shipped by air.
3. Transportation service companies are additional means of moving small to
medium-sized packages. For example, US Postal service, express delivery
services, bus package carriers, and freight forwarders (private companies that
combine shipments from several businesses to help reduce costs to those
businesses) would deliver these smaller parcels.
B. Classify the storage of products.
1. Storage: The holding of products until they are sold. Products produced in large
quantities require storage. For example, a new Harry Potter book is published
and must be stored until book retailers place their order.
2. Private warehouse: A facility designed to meet the needs of the owner. It may
be based on size, temperature control, or refrigeration. For example, Carol’s
Linens has its own private warehouse to replenish inventory when needed.
3. Public warehouse: Storage and handling facility that may be provided for any
business willing to pay for the space. For example, Singletary Warehouse
Company has a variety of rental spaces to lease business owners. They can
select refrigerated or temperature controlled space.
4. Distribution center: A storage facility used to centralize and speed up the
delivery of goods and reduce the cost of storage. For example, JC Penney’s has
a distribution center in Atlanta to reach all the JC Penney stores in the southeast.
5. Bonded warehouse: Private or public warehouse used to store products until
federal taxes have been paid on the product(s). For example, a warehouse
operated under U.S. Customs supervision to store imported products until the
payment of duties has been made.
Marketing
Summer 2006
158
CONTENT/TEACHING OUTLINE
COMPETENCY:
7.00
Understand distribution of products.
OBJECTIVE:
7.02
Classify the activities of physical distribution.
C. Understand the methods of handling inventory.
1. Products ordered by a business must be received, checked, marked (priced),
and transferred.
2. A receiving record is a document used by a business to keep track of its
incoming inventory.
3. When checking the received goods, verification must be made on the quality,
quantity, and condition of the merchandise. The most commonly used methods
for checking merchandise are blind, direct, spot, and quality check.
a. Blind check method: Writing a detailed list of the merchandise and its
quantity. This list is then compared to the actual invoice. This method is
time consuming but is considered the most accurate.
b. Direct check method: The merchandise is verified against the invoice or
purchase order.
c. Spot check method: Merchandise is randomly checked for quality and
quantity.
d. Quality check method: Merchandise is inspected for workmanship and
making sure there is no damage to merchandise.
4. When merchandise has been received and checked, other information must be
marked on the merchandise.
a. The most common form of marking is placing the selling price on the
merchandise.
b. The most common method of marking is UPC (universal product codes).
UPCs are scanned at check out.
5. Once marked, merchandise must be transferred to the selling floor.
D. Understand inventory control methods.
1. Inventory: The storing of merchandise before it is sold. There are two methods
for tracking inventory, perpetual and physical.
2. Perpetual inventory control: Tracks inventory on a continuous basis. A company
can track and know the value and quantity of products on hand at any time. For
example, Harris Teeter may use perpetual inventory control of products. As an
item is sold, the scanner communicates to the warehouse that the item is in need
of restocking.
3. Physical inventory control: Stock is physically counted periodically and verified
for accuracy. For example, Sam’s Club physically counts each item in each
warehouse once each year.
Marketing
Summer 2006
159