Everything happens for a reason. In the research and real life practice in logistics operations these days, efficiency related with cost and speed has been put more emphasis upon, but the quality control of the goods and the cost of damage in distribution operations have somewhat been more or less underestimated.

This research is carried out in Distribution Center II (DC II) of Schenker Logistics AB, Jönköping. It deals with distribution operations focusing on the physical damage prob-lem and operation management. The purpose of this research is to find out the possible reasons which bring damage to the finished products stocked in DC II within both inbound and outbound logistics operations, and to give further solutions.

During the research, the authors investigated the material flow, information flow, and distribution center operations including all the daily routine activities which are carried out. In order to reach reliable conclusions and give valuable suggestions, the authors adopted various research methods including practical fieldwork, literature study, observations, operations, statistical analysis and interviews.

Finally, the authors analyze the collected data and conclude the possible causes which lead to the problem. Insufficient packaging from suppliers and somewhat unsatisfactory motivation in operations are discovered by the authors as the two major contributors to the damage problem. Furthermore, in order to reduce damage and optimize distribution center working efficiency in the future, suggestions and managerial implications are provided.