What does 'physical distribution' encompass?

The term 'physical distribution' refers to the processes involved in transporting goods from one location to another and storing them until they are needed. This encompasses key activities such as transportation, warehousing, and inventory management.

Transportation ensures that products are moved efficiently from manufacturers to various distribution points or directly to consumers. Warehousing involves the storage of these products until they are required, facilitating efficient order fulfillment. Inventory management is crucial for maintaining the right levels of stock to meet customer demand without overstocking or running into shortages. Collectively, these components ensure that products are available at the right place at the right time, which is essential for effective supply chain management.

The other options do not align with the definition of physical distribution. Inventory valuation and financial forecasting relate more to the financial management aspects of inventory rather than the physical handling of goods. Sourcing of raw materials focuses on the procurement side of supply chain management, while supplier and vendor negotiations pertain to relationship management and procurement strategies. Thus, they fall outside the scope of what physical distribution specifically addresses.