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ABSTRACT

On the Physical Distribution Cost Reduction Effect through its System Improvement.

Chung, Yun Soo(Major in Marketing Management Graduate School of Business Administration. Sogang University.)

Until very recently, the subject of physical distribution has received very little attention from academic researchers and corporate managers in Korea.

Thus, physical distribution is presently not only under-managed but also inefficiently managed in most of Korean firms. That is the prevailing situation, despite of the fact that physical distribution is considered to be "the darkest continent" in the field of distribution on the last remaining area useful for both reducing manufacturing and marketing costs as well as enhancing market competitiveness.

Under such circumstances, this study is intended not only to disseminate the importance of efficient physical distribution management to today's business but to empirically show how its system improvement can greatly contribute to the reduction of physical distribution costs. In order to carry out the objective of this study, a review on the physical distribution management activities of U.S., Japan and Korea, and their effects was firstly carried out. And to show the cost reduction effects of an improved physical distribution system, a well-known large steel manufacturer was used as a case.

Based on this study, the following recommendation could be made for to improve physical distribution management by the Korean manufacturers:

1.Top management should pay more attention to and provide necessary support for improving corporate physical distribution management.

2.A company's entire physical distribution functions should be centralized and placed under the manager responsible for physical distribution at the company level.

3.The most viable physical distribution system should be fashioned at the company not only to reduce its cost but to enhance its cost-effectiveness.

4.Physical distribution facilities should be automated and related information processing be computerized to the extent possible.

5.For to encourage business firms to execute the above mentioned measures, financial and administrative inducements and incentives should be provided by the government.