Logistics is the key to success for any business aiming to increase its sales and profit. It has now become an essential part of supply chain management and is responsible for planning, implementing, and controlling the flow and storage of goods and services to meet the requirements of end-users. A highly efficient logistic mechanism comes with plenty of benefits such as smooth flow of goods, well-organized delivery, and quality customer satisfaction.
Here in this blog, we will explain all the necessary aspects of logistics.
What is Logistics?
People are often confused about the difference between logistics and the supply chain. Logistics is the subset of a supply chain, whereas the latter is a whole more comprehensive term. Logistic is the management of the flow of things between the beginning point to the destination point to meet the necessities of the corporations and customers. Logistics management includes all the processes such as information, transportation, inventory, warehousing, packaging, and material handling.
Logistics is further categorized into inbound and outbound logistics.
Every commercial enterprise needs both inbound and outbound logistics processes for smooth functioning. They serve different purposes and are equally crucial in the logistic management chain. Below is a detailed explanation of what precisely inbound and outbound processes are and their importance in the business network.
Inbound logistics refers to the movement of raw material and spare parts from the supplier/vendor to the manufacturing plant. The vendor and the manufacturing plant/firm are essential aspects of inbound logistics.
Inbound logistic process
The inbound logistic process starts with the company finding the right vendor/supplier to deliver raw material and spare parts at the correct prices. Once the company sees its potential vendor, it places the order and receives a payment receipt. The supplier then prepares the order and ships the material—an electronic notification from the supplier to the company, including the shipment tracking information is sent. The goods arrive at the company facility, and the receiving team then evaluates the quality and condition of the goods and confirms acceptance. Goods are then sent forward to manufacturing inventories or staging points for cross-docking.
The inbound process also includes another vital aspect of logistics, i.e., reverse logistics, which deals with customer returns and exchanges.
Objectives of Inbound logistics
- It ensures that the material received, and associated information is processed and made available to the production store and other departments.
- It assists in accurately documenting the goods received, and goods returned.
- It ensures only those orders are accepted that meet the purchase order specifications.
- It makes sure that all the mandatory information concerning vendor, inventory and purchase are accurately updated.
- It helps with the returns process of the rejected items and accurately documents all transfers to and from storage.
Outbound logistics refers to the outward movement of final or finished goods from the company to the customer. The company and the customer are the two essential aspects of outbound logistics.
Outbound logistic process
The outbound logistic process generally initiates with the customer placing an order. After receiving the order, the company then authenticates the order and prepares the required documentation. The reserve inventory moves to the primary storage to replace the bought product. This method may additionally trigger the production of extra goods or ordering raw substances from suppliers to maintain the inventory stock. The next step is picking and packing, where the products are picked from their designated inventory. Products are then packed, labelled, and shipped out. As soon as the product leaves, the warehouse company updates the shipment tracking details in its system. The last and final step is delivering the product in the proper condition at the right time.
Objectives of outbound logistics
- It helps to make available the correct quantity of products at the right time and place.
- It helps fulfil all customer requirements and ensures customer satisfaction.
- It helps to maintain the balance between supply and demand.
- It also helps deduct the operation cost and brings transparency to the entire logistic management chain.
Inbound Vs Outbound logistics
- Inbound logistics follows the inward direction, i.e., it focuses on bringing supplies and raw materials into the business. In contrast, outbound logistics follows the outward path, i.e., it focuses on moving finished goods and products to the customers.
- Activities like sourcing, procuring, material handling, and put away are part of Inbound logistics. On the other hand, inventory management, order fulfilment, and shipping are these activities that are concerned with outbound logistics.
- Inbound logistics focuses on the connection between the dealer and the enterprise. In contrast, outbound logistics focuses on the enterprise’s and its customers’ relationship.
- Inbound logistics are involved with material management and production, whereas outbound logistics are concerned more about the distribution of finished merchandise in addition to customer service.
- The main objective of inbound logistics is obtaining the material that the company requires to make its product, while the primary goal of outbound logistics is to fulfil customer demand and generate higher revenues for the company.
Although inbound and outbound logistics have different roles in the logistic management chain, their activities are still interconnected. Inbound logistics have an immediate impact on the production operations of the enterprise. Any inefficiency inside the inbound logistics operations might additionally cause delays in delivering items and lead the production to halt, making significant losses and wastage of assets for the business.
It is crucial to gain necessary insights into the inbound and outbound logistics and analyze the variations between them to understand the logistic management system. If we sum up the above-given information, we can see that logistics play a significant role from the product’s point of origin to its destination. The inbound process ensures the safe and smooth delivery of raw material from supplier to manufacturer. The outbound process ensures the safe delivery of products from the manufacturer to the customer. Both these processes require specialized networks and tools for their efficient functioning. If logistics management strategies are followed appropriately, it can help companies generate high revenues.
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