Logistics is the coordination of organizational activities, resources, and infrastructure to enable the smooth and efficient flow of goods, and related information between the point of origin and the point of consumption to meet customer requirements. Transportation and logistics are crucial parts of any business that ships physical products to its customers, whether they’re big or small.
What is the difference between inbound vs. outbound logistics? And how does this difference affect your business? By understanding these differences, you can choose an option best suited to your business model and goals.
What is Inbound Logistics?
Inbound logistics involves the movement of items towards the business. This could be raw materials from suppliers or assembly parts from original parts manufacturers. It also includes warehousing and logistics for goods purchased by customers and returned to a warehouse for exchange and components brought in for processing and packaging.
The goal of inbound logistics is to reduce costs and increase efficiency by having goods move directly to where they’re needed when they’re needed to ensure efficiency in production and manufacturing.
What is Outbound Logistics?
Regardless of how you ship your products, if you’re a business, outbound logistics move your product from where it’s made to where it will be sold (or stored). The focus of outbound logistics is getting the finished product to the end-user.
It includes any and all processes involved in moving goods to their destination. This could include shipping via rail, trucking, or air transportation; storing goods in a warehouse; packaging and labeling items for shipping; and more.
What are the Processes in Inbound Logistics?
There are several processes in inbound logistics:
1. Purchasing Raw Materials or Inventory:
The first step in any logistics process is to purchase inventory, raw materials, and other goods for resale. This can be done by a company itself or through an outside supplier. For example, when a grocery store purchases goods from a distributor, they engage inbound logistics to get the goods to their store.
2. Receiving Inventory:
After goods are purchased, they must be received by a company or warehouse. This can be done by employees of a company or through an outside supplier. For example, when an online retailer purchases inventory from a manufacturer, they have to pay for it and then receive it into their warehouse before shipping it out to customers.
3. Reverse Logistics:
A business must also plan for returns and exchanges. For example, when a customer purchases a product from an online retailer, they have 30 days to return it if they don’t like it. Once they decide to return an item, inbound logistics gets the item back to the seller.
What are the Processes in Outbound Logistics?
Various processes ensure goods move onwards towards the end-user:
1. Order processing:
Order processing is the first process when a customer buys an item, wherein all information about delivery and billing are checked, and processes such as payment are completed. This allows for goods to be shipped out promptly to customers, who expect prompt delivery in line with their purchase agreements.
2. Sorting and packing:
Sorting, packing, and labeling are carried out for items ordered by customers. This process allows segregating items for different customers to ensure the right item reaches the right customer.
3. Transportation and Delivery:
Transportation is one of the most important steps in moving goods from one place to another on their way to the customer’s doorstep. It involves moving goods from warehouses to distribution centers or directly to retail outlets or customers’ homes.
What are the Benefits of Working With a Logistics Company?
Many companies choose to manage their own logistics, handling everything in-house, but when it comes to delivering your products efficiently, there are several benefits to outsourcing transportation and logistics:
1. Knowledge and experience:
An outside company can bring more experience and knowledge about cutting-edge shipping technologies and techniques than your team likely has on hand. They also have a better understanding of keeping costs down while keeping your products safe.
2. Outsourcing means you don’t have to hire new employees:
Another benefit of outsourcing transportation and logistics is that it allows you to focus on other areas of your business without adding new employees or training existing staff members for transportation and logistics.
3. It could be more cost-effective:
When companies choose to handle their own logistics, they often end up paying for more equipment than they need and paying for services they aren’t even using. Using a specialist lets you pay strictly for logistics and not the auxiliary services around it.
Conclusion
Both inbound and outbound logistics are essential in modern commerce. If you handle physical items in your business, you must make arrangements for transportation and logistics. Knowing what kind of logistics you need at different times ensures your business operations are smooth while you achieve maximum customer satisfaction.