A Dissertation paper submitted in partial/fulfillment of the Requirements for the Degree of Masters of Science in Procurement and Supply Chain Management (MSc. PSCM) of Mzumbe University.This study titled “Performance of physical distribution of bank’s supplies and its impacts on the profitability” was carried out as a case study of CRDB Bank Plc. The purpose of this research was to study the performance of the physical distribution of Bank supplies and its impacts on profitability of CRDB Bank Plc. Specifically, the researcher aimed to answer the following research questions; what are the impacts of transportation in physical distribution of bank supplies and on the profitability of CRDB Bank Plc? What are the effects of order processing in physical distribution of bank supplies and on the profitability of CRDB Bank Plc? What are the influences of materials handling in physical distribution of bank supplies and on the profitability of CRDB Bank Plc? The study was descriptive in nature and a sample of 54 respondents was selected from a population of 2000 staffs, purposive sampling was used because it is more convenient and guaranteed inclusion of relevant element in the sample as a result data were collected from Tender Board, Procurement unit, CRDB bank’s branches and Hired transporter, and questionnaires, interviews and documentary review were the methods used to analyze and collect data. The study revealed that there are higher transportation costs, delays of delivery of items to users, shipment of items to the wrong users, poor specification of ordered items due to lack of considering users’ requirements, rush orders from customers, injuries of labourers, theft, losses, and damage of items due to lack of materials handling equipment such as automatic and mechanical and also, shortage of storage space and result into poor performance of physical distribution which culminated into increasing operational costs hence impacts into Bank’s under-achievement of profitability targets. The researcher recommended that Government should improve transport infrastructure to facilitate performance of physical distribution, CRDB Bank should eradicate rush orders by complying with its budget and annual procurement plan, and application of mechanical and automatic materials handling to reduce injuries of labourers, damage, losses of items.