Page 588 - Business Principles and Management

Chapter 21 • Product Development and Distribution

TRACKING PRODUCTS
An important part of product handling is keeping
track of the products. Businesses and customers
want to know where products are in the distribution
channel and when they will be delivered. The record
keeping required is often a very time-consuming task.
Businesses now use bar coding to track products dur-
ing distribution. Bar codes are product identification
labels containing a unique set of vertical bars that
computer scanning equipment can read. Each product
or container has a bar code. The scanning equipment
can read the code at any time during distribution to PHOTO: © GETTY IMAGES/PHOTODISC.
track the product’s progress.

PRODUCT STORAGE
Manufacturers or channel members often must store
products at points along the way from producer to
How are bar codes used in
consumer. Usually, consumers do not buy products as
product handling?
soon as they are produced. Producers and channel members may want to accu-
mulate a large quantity of products to make shipping more efficient. Also, con-
sumers buy some products more during one time of the year than another. Lawn
mowers, air conditioners, snowmobiles, and skis are examples of such products.
Most companies produce those products throughout the year to make produc-
tion more efficient. They then store the products until they are ready to distribute
them for sale.
Warehouses are buildings used to store large quantities of products until they
can be sold. They are usually large buildings with racks, shelves, or bins for stor-
ing products. Warehouse operators may control temperature or humidity if the
stored products need special protection. They must carefully handle and store the
products to prevent damage. Warehouse personnel keep computerized records
of where each product is stored in the warehouse. When they receive an order,
the computer displays the quantity of the product available and its location in the
warehouse.
Handling products and storing them for a long time is expensive. Also, moving
them around increases the chances for damage. For more efficient handling with
less risk of damage, many companies use mechanical equipment and robots to
handle the products in their warehouses. Computers control both the equipment
and the robots as products are moved into storage and subsequently removed for
shipment.
Large wholesalers and retailers that handle a variety of products and sell
them through a number of outlets have replaced traditional warehouses with
distribution centers. A distribution center is a large building designed to accu-
mulate and redistribute products efficiently. A wholesaler or retailer usually
buys products from a number of manufacturers. Each manufacturer ships
these products to the distribution center in large quantities. Center workers
then repackage the products into smaller quantities, combine them with prod-
ucts from other manufacturers, and ship them to stores that sell that bundle
of products to consumers. Distribution centers can save businesses a great
deal of money. They reduce transportation and storage costs and provide
individual stores with the products they need quickly. Individual stores can
order smaller quantities than if they had to order merchandise from each
manufacturer, so products will not become outdated as easily.

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