When you have streamlined logistics, your business is slated for success and growth, but that is easier said than done. The first aspect is understanding these terms, such as what inbound logistics is and how important it is compared to outbound logistics. Let’s discuss this in detail in this article.
Keep reading till the end to learn how you can better optimize your inbound and outbound logistics with the best solution.
Part 1. What is Inbound Logistics?
Inbound logistics is the term we use for all materials and supplies received from manufacturers and sellers. Typically, it involves important aspects and processes such as sourcing materials, purchasing them, and, if necessary, returns. Keep in mind that it includes both raw materials and finished goods, anything that you use to sell to customers.
This will also include not just manufacturing concerns but also warehouses and distribution centers where they can be later dispatched to customers or retailers.
Part 2. What is Outbound Logistics?
This type of logistics involves moving all the goods or inventory from your storage to your customers. Some even say that fulfilling orders and getting your inventory out of the regular supply chain can be considered outbound logistics.
Part 3. Inbound vs Outbound Logistics- What Are the Differences?
Let’s discuss the major differences between them to help you understand these logistic methods better.
The Definition of the Process
Moving into the inventory is inbound while moving out of the inventory is outbound. Similarly, the same goes for doing with the supply chain. In inbound logistics, you secure your inventory, which helps you sell later, while in outbound, you take care of fulfilling your order.
Processes Involved
When concerning inbound logistics, the following are the key processes involved:
- Managing Materials – Taking care of raw materials or products to sit in the inventory properly.
- Sourcing – Helping your team, warehouse, or seller to outsource properly.
- Warehouse Receival – Getting inbound material into the warehouse to be delivered later.
- Storing in the Inventory – Holding the packages and products to then dispatch out at a later date.
In the case of outbound logistics, the following are the key processes. - Order Confirmation and Processing—Before you dispatch the order to the customer, you process it so it can be delivered to the right address.
- Picking and Packing – Whether it’s from a collection center, inventory, or fulfillment center, you pick and pack the package to be delivered.
- Shipping – The carrier takes the order to the customer.
- Last-mile Delivery – Using a courier to deliver at the doorstep.
- Customer Service till Delivery – This facilitates smooth delivery.
Key Touchpoints and Milestones
The following are for inbound logistics:
- Transported from supplier, manufacturer, distributor, and placeholder.
- Delivered to the company, brand, retailer, or any 3rd party logistics service
Now for the outbound logistics:
- Transported from a company, brand, or retailer, any 3rd party logistics.
- Delivered to the end customer or buyer.
Part 4. Key Steps of Inbound & Outbound Logistics Process
Let’s now discuss the key steps involved in inbound and outbound logistics, detailed below and summarized in the image.
Inbound Logistics
Starting with inbound:
- Purchasing and Sourcing: In the first step, you purchase while also sourcing all your material, whether raw or parts that you can use to assemble.
- Recording and Receipts: In this setup, you need to purchase the order and have the finance department record it in detail for later records. This involves placing a purchase order, making invoices, and giving or getting receipts to make the process smoother.
- Real-time Information: Here, you can inform your customers that your goods have been shipped and will be delivered to the collection or warehouse.
- Load Arrival: The shipment has arrived at the destination point for the last-mile delivery process, where the carrier will collect it and then deliver it to the warehouse or hub.
- Receiving: The carrier or logistic company will collect all the goods, unload them, confirm everything is in order, and take them to where they are needed for the inventory.
Outbound Logistics
Here the steps are as follows.
- Customer Order: A customer places an order online or by calling the warehouse.
- Order Processing: The logistic company or store will now validate your order and ask the inventory manager to allocate it to the concerned product
- Replenishment: The product is then moved out of reserve inventory and into the primary storage area, where it can be delivered. Here, the inventory item is replaced with a purchased item.
- Picking: Once the item is in primary storage, the staff looks into all the products that need delivery and fulfillment. They then enter the information into the next step to keep everything in order.
- Packing, Staging, and Loading: In this step, the loader and packer look at the items to be loaded for the day and start packing them. They then load the first item on the list into the delivery truck, and so on.
- Shipping and Documenting: The delivery truck or van then takes the order to the customer while the customer is informed beforehand to be available. Once the customer collects it, it is documented.
Part 5. Inbound & Outbound Logistics Examples
Let’s discuss each type of logistics and provide examples to help you understand them better.
Example for Inbound Logistics
Let’s take a clothing company that has made a forecast on the volume for a season of its sales. They need to identify what amount of material is required, such as buttons, thread, fabric, etc. They start by selecting vendors for each component and choosing based on pricing, styles, colors, etc. Managers negotiate to finalize the vendors.
They then make purchase orders, and invoicing is done to purchase the material. The vendors will deliver the product and keep communication open.
The material arrives at the clothing manufacturing company, which they take and check to verify and move them to the storage unit. The manufacturing process is separate from this process. Here, you can include the returned products from customers or retailers that didn’t sell or had issues with them.
Example of Outbound Logistics
Suppose the same company above gets an order from a clothing chain that can take these materials or designs. The clothing chain will be designed based on customer demand and what is hot and place the order with the above company.
They place the order so the manufacturing concern can make them based on their inventory or order new ones to complete the order. Once the order is ready, it is taken to the store chain, or if they already have it in the inventory, they place it in the selling area.
The order is then packed and delivered to the retailer with proper packing and printed information. Once the goods arrive at the clothing boutique chain, they collect and send them to their different stores.
Optimize Inbound and Outbound Logistics with NextSmartShip
There are many steps involved in inbound and outbound logistics. Even though both logistical powerhouses will manage their deals, sometimes keeping track of everything becomes too complex.
That’s why you assign a third-party logistics company that is an expert in the field.
NextSmartShip is a company that takes its systems very seriously. Some of the key services that they can provide are as follows.
- Chinese Outsourcing – You don’t need to be in China or have a direct connection with Chinese suppliers; they can do it for you.
- Store Integration—Your store can be integrated with their system with the click of a button. You only have to manage your store, while everything from order receipt to inventory management and shipping will be taken care of.
- DTC and Marketing—With NextSmartShip’s latest offer, you need not worry about marketing your product. Let them do it for you.
- Streamlined Interface—The dashboard provides all the information you need, from the number of orders fulfilled to real-time location monitoring, customer scores, and more.
- Massive List of Shipping Partners—You will have the best advantage with more carriers, higher strategic partnerships, and one of the biggest, truly global outreaches
So contact one of the experts and get the best quotation customized according to your business.
Conclusion
Understanding the difference between inbound logistics and how outbound logistics work can give you a real edge over others. You will know which partners to target and how to get the best deals.
But if all that is too complex and time-consuming for you, why not employ NextSmartShip’s services at an affordable price? They can easily take off all the logistical demands your business will have.
