Directorate of distance education

Monitoring and Control of PDM
The objective of PDM is: 
Getting the right goods to the right 
place at the right time for the least cost’.
The objective seems reasonable, although it gives little guidance on 
specific measures of operational effectiveness. Management needs objec-
tives or criteria that, in turn, allow meaningful evaluation of performance. 
This is the basis of monitoring and control.
Basic Output of Physical Distribution Systems
The output from any system of physical distribution is the level 
of customer service. This is a key competitive benefit that companies 
can offer existing and potential customers to retain or attract business. 
From a policy point of view, the desired level of service should be at least 
equivalent to that of major competitors.

---

Notes
24
The level of service is often viewed as the time it takes to deliver an 
order to a customer or the percentage of orders that can be met from stock. 
Other service elements include technical assistance, training and after-
sales services. The two most important service elements to the majority 
of firms are:
➢ Delivery - reliability and frequency;
➢ Stock availability - the ability to meet orders quickly.
Distribution Strategy 
Distribution strategy is influenced by the market structure, the 
firm’s objectives, its resources and of course it’s overall marketing strategy. 
All these factors are addressed in the section on selecting Distribution 
Channels. 
The first strategic decision is whether the distribution is to 
be: Intensive (with mass distribution into all outlets as in the case of 
confectionery); Selective (with carefully chosen distributors e.g. speciality 
goods such as car repair kits); or Exclusive (with distribution restricted to 
upmarket outlets, as in the case of Gucci clothes). 
The next strategic decision clarifies the number of levels within 
a channel such as agents, distributors, wholesalers, retailers. In some 
Japanese markets there are many, many intermediaries involved. Two 
common strategies are Vertical Marketing Systems and Horizontal 
Marketing Systems. 
Vertical Marketing Systems involve suppliers and intermediaries 
working closely together instead of against each other. They plan 
production and delivery schedules, quality levels, promotions and 
sometimes prices. Resources, like information, equipment and expertise, 
are shared. The system is usually managed by a dominant member, or 
‘channel captain’. VMS is more flexible than vertical integration where the 
manufacturer actually owns the distribution channel, for example, Doctor 
Martens boot manufacturers own their own retail store. 
Horizontal Marketing Systems occur where organisations 
operating on the same channel level (e.g. two suppliers or two retailers) 

---

Notes
25
co-operate. They then share their distribution expertise and distribution 
channels. This can speed up the time taken to penetrate the market. There 
is room for creative alliances here. 
Resources available affect distribution strategy. Who can handle 
outbound logistics, marketing and sales, and servicing? Can the supplier 
afford to deliver small quantities, can it provide more trucks, can its sales 
force ‘push’ products into national retail chains? Can the organisation deal 
with thousands, maybe even millions of customers - can it cope? Does it 
want to devote huge resources here or would it prefer to utilise someone 
else’s resources in return for a slice of the profits? 
****

---

26