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Inbound and outbound logistics mean different things depending on the kind of business you are operating, but for a retail company that deals with physical goods, it concerns receiving and sending goods.
Every business on the planet that deals in actual goods will need inbound logistics and an outbound logistics process to ensure that their business operations run smoothly and goods make it to customers in a timely manner.
Inbound logistics deals with inventory, manufacturing, and restocking, whereas outbound logistics is the process by which customers receive their goods. Supply chain logistics needs both of these processes.
In this article, we’re going to take a detailed look at what inbound and outbound logistics operations are, what the different processes entail, and how you can optimise each of these processes. To learn more, keep reading now.
So, what are inbound and outbound logistics and how do they support good supply chain management?
Essentially, both the inbound logistics processes and the outbound logistics processes are used to move goods through a retail supply chain. Both processes deal with different systems and both are needed to support a good logistics network.
Inbound logistics refers to the goods that are coming into your distribution network, fulfilment centres, or warehouse, depending on the kind of business you’re operating.
Inbound logistics focuses on raw materials and supplies that are moved into warehouses for manufacturing, finished goods that arrive from other suppliers and into distribution centres, or even the movement of finished goods into retail stores, depending on which part of the supply chain you are at.
Inbound logistics processes also include reverse logistics, i.e. returns and exchanges that come in from customers.
Outbound logistics processes cover fewer areas than inbound logistics processes.
Outbound logistics focuses on the end product to end user pipeline, but it can involve different versions of this process. Goods that move through the outbound logistics supply chain usually begin in distribution centres, fulfilment centres, or warehouses and end with consumers, stockholders, or wholesalers.
Outbound logistics ensures that products make it to their final destination.
Though both kinds of logistics networks deal with the movement of goods, they work in opposition to each other. Below we have summarized a few of the processes that both kinds of logistics operations deal with so you can understand them a little bit better.
To begin with, inbound logistics deals with the movement of raw materials into warehouses and production facilities. These raw materials then go on to be manufactured into finished products for movement out of the facility.
Finished goods may also be part of your inbound logistics operation, wherein you receive finished goods from suppliers to be stored, or to be sold, depending on the part of the supply chain you are at.
An inbound logistics example that you may not have considered is the reverse logistics part of your operation. This is particularly important for eCommerce retailers, wherein customers who are not satisfied with their product may arrange to return or exchange the goods. This returning and exchanging process needs to be dealt with within the inbound logistics of your operation.
Your inbound logistics process needs to have good organisation, for example, you need to stay on top of your inventory management and facility organisation so that when goods arrive, they are logged properly and inventory is updated. This will ensure you don’t have too much stock, taking up space and money, when it is not needed. It will also ensure you don’t run out of stock or raw materials needed for manufacturing.
Outbound logistics deals much more in finished goods and is about making sure your goods get to consumers in a timely manner to increase customer satisfaction.
Whether you do it yourself or use supply chain logistics providers, outbound logistics processes involve the processing of incoming orders, smart route planning, and last-mile delivery, to ensure that your goods make it to your customers.
Another outbound logistics example that may not be obvious is the movement of goods to wholesalers or stockists, like retail stores. This is another version of an end-user and may apply to you depending on the kind of business you are operating.
Your outbound logistics network will consist of a range of areas including product picking and packing, which includes labelling and stock taking, as well as packaging and shipping goods out into the distribution network.
The aim of all outbound logistics operations is to get your goods to the end-user.
Optimising your inbound and outbound logistics processes can help to streamline your operations, save you money, and take the stress out of your supply chain management strategy.
Below, we’ve summarized a few of our recommendations for how to optimise your processes. Take a look now to learn more.
Building strong relationships should be an essential part of your business operations anyway. Building a good relationship with the people who make your supply chain possible can help to ensure you get the best possible service. Whether it be your suppliers or the guys at the manufacturing plant, keeping people happy helps your operation run more smoothly.
So, pay your suppliers on time, be respectful, and communicate clearly to make those you work with’s lives easier – it’ll make yours easier too!
By building a good relationship, you’ve got more chance of gaining favourable terms in new contracts, better prices, and improved quality overall. Business is about building long-term relationships, so work with everyone as if you intend to for the rest of your life – even if you don’t.
We’ve spoken a bit about how inventory management is important, particularly for inbound logistics, but we’re going to reiterate the point here! Good inventory management systems mean that you know what you need and when you need it.
Better inventory management begins when you understand which of your stock sells best and which doesn’t, it means knowing when you will need more stock and when you won’t – at the root of it, it means that you need to know your products and your customers back to front.
Knowing your inventory well means that you can order in the stock that you actually need and optimise the space that you have for storing it. Using your inventory space effectively can help save you money and ensure you’re not overpaying for space. It also means that you will actually sell the stock that you have and not waste money on stock that is sitting around.
It will also help with customer satisfaction. If you have popular inventory constantly in stock, it means that customers aren’t waiting around for out of stock items, or waiting while you replenish items. It will increase customer satisfaction and help to keep customers coming back to you.
Keeping your inventory management under control and in good working order makes your supply chain run more smoothly and can help you to make more money!
A good Warehouse Management System manages the operational efficiency of both the physical space you run and the labour. It can help to improve operations from the ground up and help you to run a more sustainable business.
Like with good management of inventory, a good WMS helps to optimise your inventory storage by making sure the space is being used efficiently and keeping all of the inventory visible. This means stock levels remain visible, helping to ensure you’re ordering in the right inventory.
In terms of labour, a good WMS can ensure that workers are operating at their skill levels, working in spaces that are safe, and utilising the space and equipment effectively for getting the best out of their time.
Using a WMS can also help to improve the whole of your supply chain. If your warehouse is working efficiently then other parts of your operation will benefit and an optimised supply chain is going to help you to increase your profit margins and operate a sustainable business.
A WMS goes hand in hand with automation too. Automation can mean moving from paper to electronically recorded activity which can speed up your processes within your facilities and can help to ensure that all of your information is accurate and up to date.
Finally, a good WMS allows for ongoing improvement, meaning that you and your business operations can continually improve to meet customer demand and increase customer satisfaction.
Finally, if you feel that your inbound and outbound logistics processes cannot be optimised by you alone, why not consider turning to the help of a third-party logistic company?
Supply chain management is a complex area and not having the expertise can mean that your operations don’t run as efficiently and sustainably as they could. A third-party logistics provider has all of the expertise that you will need to optimise your business practices and can help you to ensure that your own processes are running smoothly.
Other benefits of partnering with a 3PL include helping you to focus on other parts of your business, like creating new products and working on marketing strategies to engage new customers, gaining flexibility and helping you to scale up your operations by offering extra distribution facilities and smoother operations, and helping you to save money on your logistical operations.
If you think this could be good for you and your business, why not get in contact with a 3PL today?
Good inbound and outbound logistics are integral to a smooth operation. It means receiving and sending goods in a way that keeps your business running efficiently and sustainably and it can be optimised with a few easy steps.
Take a look at a few of the ways we recommend optimising your inbound and outbound logistics and see how your operations evolve.