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The physical distribution function of a firm is a complex process. It consists of all the activities involved in the flow of goods from the raw material supplier to the final consumer and incorporates the major activity centres of purchasing, warehousing, transportation, order processing, and inventory control. The goal of a firm's distribution operation is to insure that established customer service levels are achieved at a minimum total cost.

Physical distribution organisations may be defined as organisational units whose duty is to administer economic activities that impact upon the flow of finished goods between points of production and consumption. Physical distribution components occupy a unique role in the organisation. Their mission has been defined as “getting the right assortment of materials to the right location in an efficient manner timely to marketing and manufacturing requirements”. To accomplish this mission there must be continual interaction between suppliers of materials and receivers of materials. Material suppliers can be thought of as the rest of the organisation of which the physical distribution component is a part, primarily the production or manufacturing component. Receivers of materials are the organisation's customers or distribution points. The physical distribution organisation, by virtue of the activities it performs, must deal with both the internal suppliers and the external receivers.

This monograph progresses from a consideration of definitional issues to the development of a conceptual model for marketing‐logistics interaction and finally to a discussion of the issues of implementation of the model within the context of marketing strategy. Thus, following an introduction, Part II begins with definition of the field and examines the position of physical distribution in relation to marketing. Part III discusses the relationship of physical distribution and macro‐marketing, and is thus concerned about the social, aggregative goals of logistics systems, including the costs of distribution. Part IV continues this argument, examining specifically the influence of physical distribution on channel structure. Part V then focuses on the assumptions underlying the customer service function, asking how physical distribution can influence final demand in the market place. Part VI presents a conceptual model of marketing‐logistics demand stimulation. The operational issues concerned with its implementation are shown in Part VII; and a summary of the relevant points is presented in Part VIII. The concern has been not with presenting either new computational models nor empirical data but with presenting a new perspective on the marketing‐logistics interface. There is a need to reduce the barriers between these fields and to present more useful ways for co‐operation.

The well‐known maxim “different products, different requirements” is, of course, derived from practical experience. This article seeks to establish whether this maxim also has significance when viewed from the perspective of physical distribution. In particular, it will consider what this significance is with reference to physical distribution strategy, production allocation and stock allocation policy. At the same time it will seek to establish which product characteristics can significantly shape this policy.

The physical distribution concept is a customer‐oriented business philosophy supported by integrated physical distribution activities aimed at generating customer satisfac‐tion as a means of satisfying fundamental organisational goals, of which profit is perhaps the most important. It can therefore be expected that those companies whose chief executives support this business philosophy and who consequently ensure that their organisations are physical distribution oriented, will perform better financially than similar organisations which are not physical distribution oriented.

Philip Kotler identified the term “marketing” with two different but related processes; the first dealing with “the search for and stimulation of buyers” and the second with “the physical distribution of goods”. The reason for superior international marketing performance by certain companies may be the result of a small number of correct strategic decisions, or of being in the right industry at the right time and being able to meet market demands. Continual high international marketing performance, however, is more likely to be the result of exceptional management control to overcome the problems of both the search and stimulation of overseas markets and the growing commitment successfully to feed those markets with the goods through a planned physical distribution pattern. International physical distribution management is not merely a marketing support system, but it is an integral part of the marketing mix which helps create and develop the international marketing process. Even though physical distribution does not portray the glamour associated with international marketing, it should not be forgotten as a part of the marketing mix. However, in the future, international marketing success may depend more and more upon the efficiency and practices employed to ensure economic physical distribution of goods especially as competition intensifies from developed and developing nations.

The total or integrated approach to physical distribution places an emphasis upon integrating those activities which are involved either directly or indirectly with the provision of customer service. As such, it contrasts with the traditional approach to physical distribution which emphasises the separate individual activities and the cost minimisation of such individual activities, while ignoring the interaction between the activities and their impact on revenue. While the total distribution concept has seemingly gained wide acceptance, Ray, Gattorna and Allen claim that the reason why it is rarely implemented is “lack of adequate cost data”. This view is shared by Shirley who states “particularly needed are new ways of thinking about distribution costs; to consider their interdependence and contribution to profit”. This monograph attempts to respond to this need by providing a consideration of the Mission Approach to Physical Distribution, and how physical distribution accounting systems may utilise this approach to provide information not only on the costs but also on the revenue aspects of providing varying levels of customer service.

Recently, a few major US firms such as General Motors and Dow Corning have begun to plan international physical distribution strategy on an integrated basis. However, many firms still plan international physical distribution strategy on a more fractionalised basis using several independent functional department and/or country plans. This is reflective of the polycentric orientation that has predominated in international marketing strategy. These non‐integrative approaches to strategy planning can result in ineffective and inefficient international physical distribution for several reasons.

Physical distribution management in New Zealand, is still, in many companies, subordinate to other functions in the corporate organisational hierarchy. In this study of three industries (Menswear, Foodstuffs and Pharmaceuticals) it was found that most distribution executives were responsible for warehousing and transport with very little involvement in setting customer service levels, the very essence of physical distribution. These results were surprising considering that it was claimed that there existed a large degree of awareness about the importance of physical distribution in terms of a company′s overall success. The actual level of adoption and successful implementation of an Integrated Physical Distribution system was around 50 per cent. Here there was considerable disagreement between top management of a company and the senior distribution executive. These conclusions were drawn from the response by the General Manager/CEO of participating companies, together with independent responses from the person in the company “responsible for the planning and control of the distribution activities”. These responses were examined in three distinct areas: attitudes towards distribution, adoption of integrated distribution concept and company organisation of distribution activities.

Deals with the structural problem of how to allocate work to sub‐units or departments within physical distribution organizations. Asks what bases or criteria should be followed in assigning duties to the various parts of physical distribution structures. Concludes with managerial implications.