A Promising Area for Cost Reduction

Physical distribution is a fertile area for cost savings. Over the years, in most businesses, physical distribution costs have grown into a sizeable chunk of the total costs and now ranks second among all cost elements, next only to material costs. And surprisingly, it has remained one of the neglected areas of cost control.

The Dark Continent: Peter Drucker has rightly compared physical distribution to the ‘dark continent of Mrica of Napoleon’s days’. He said, ‘we know about physical distribution today just as much as what Napoleon’s contemporaries knew about the interior of Africa. We know it is there and we know it is big and that’s all.’ The message is obvious. Physical distribution is the most promising area for cost control