Management perspectives in physical distribution

Distribution problems may conveniently be divided into three categories--strategic, tactical and operational--and although each is bound to be affected by the others, they involve different time scales, different constraints and different requirements for information inputs. At a strategic level, models can be constructed for the rate of return on investment and for unit cost to help identify the major elements that affect performance, and in this way any specific change in given components in the distribution system can be traced and its possible effects can then be identified. Another strategic issue is the problem of depot location, and a particular feature of the number of depots in a distribution network is their effect on stock holding. In cases where 80-90% of total costs are independent of total mileage, it is more profitable to examine means for reducing fixed costs (including the size of the delivery fleet) than to invest an inordinate amount of resources on vehicle scheduling. However, the level of sophistication of distribution studies is likely to grow, as management becomes increasingly concerned about rising costs.