James H. Hinz

Publication Date


Document Type


First Advisor

Green, Gerald G.||Novak, Ralph S.

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Management


Materials handling; Materials management


The physical distribution concept has been studied by an increasing number of firms in the last few years. This increased interest was prompted by the desire to reduce operating costs and to establish competitive customer service standards. Many of the firms have set up physical distribution departments to coordinate and control at least some of their operations. The emphasis was directed to those activities that offered the least resistance to change and the greatest potential savings. The study revealed that no representative organizational pattern existed for any firm in the same industry. Although model distribution organizational patterns could be charted, each firm has sought to design the system that best fit its own organizational philosophy. Once the firm understood and accepted the systems concept, it concentrated on grouping the related activities together, as applied to their particular circumstances, and placed them under the direction of the physical distribution department. Many high level organizational changes needed to be made if the integration of the physical distribution function was to rank with production, marketing, and finance. Most firms traditionally had the activities associated with physical distribution fragmented among their major functional departments. Then as they relinquished them one by one the organizational structure changed. As the changes occurred physical distribution took on new proportions and their acceptance as another primary functional department was established. Since the prime motivator of many firms was to reduce distribution cost, the organizational planners failed to view the physical distribution concept in total. Then as they developed their distribution systems they quickly recognized that many trade-off costs existed that involved the other functional departments and that another approach had to be taken. The major factors needed to implement the physical distribution concept were: Understanding, A long ranged plan, Acceptance, Support. To the extent that top management acknowledged the four factors as mandatory, were they able to benefit proportionally. The concept of the totally integrated materials handling system has not been completely developed. Firms that operated under the centralized organizational concept have made better progress in the transition than those that started out with the decentralized organizational scheme. The reason why the firms having the centralized organizational structures moved faster toward implementing the physical distribution concept was because they offered less resistance to the integration of their line activities. What form the final organizational structure will take will be up to the ingenuity of the organizational planners and when the point of diminishing returns is reached.


Includes bibliographical references.||Includes illustrations.


viii, 64 pages




Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type