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inventory management in which supplies arrive just when needed for production or resale20Copyright 169。 Houghton Mifflin Company. All rights reserved.The Nature of Physical Distribution? Physical Distribution (Logistics)– Activities used to move products from producers to consumers and other end users? Order processing? Inventory management? Material handling? Warehousing? Transportation? Outsourcing– Contracting physical distribution tasks to third parties with specialized logistics skills who do not have managerial authority within the marketing channel16Copyright 169。 Houghton Mifflin Company. All rights reserved.12Copyright 169。 Houghton Mifflin Company. All rights reserved.The Nature of Wholesaling (cont’d)? Advantages in Utilizing Wholesalers– Have closer contact with retailers– Are less expensive and more efficient than maintaining an independent sales force– Can spread selling costs over more products– Can assist in selecting optimum inventory– Are experts in negotiating final purchases– Are knowledgeable about sources of supply– Perform physical distribution activities efficiently8Copyright 169。 Houghton Mifflin Company. All rights reserved.Chapter Outline? The Nature of Wholesaling? Types of Wholesalers? The Nature of Physical Distribution? Functions of Physical Distribution? Strategic Issues in Distribution4Copyright 169。 Houghton Mifflin Company. All rights reserved.Objectives5. To examine the major physical distribution functions of order processing, inventory management, materials handling, warehousing, and transportation6. To discuss the strategic implications of physical distribution systems3Copyright 169。 Houghton Mifflin Company. All rights reserved.The Nature of Wholesaling (cont’d)? Services Provided by Wholesalers– Serve as an extension of the producer’s sales force through contact with suppliers and retailers– Lend financial assistance for the distribution channel? Transporting and warehousing inventories? Assuming credit risks of buyers/customers? Purchasing producers’ entire output: converting producer’s output immediately to working capital? Channeling information from and to sellers and buyers7Copyright 169。 Houghton Mifflin Company. All rights reserved.Types of FullService WholesalersGeneralMerchandise WholesalersFullservice wholesalers with a wide product mix but limited depth within product l