Inbound vs. Outbound Logistics (2024)

Strong inbound and outbound logistics are crucial to the success of a business. Theseprocesses affect production, profits and customer service. There are many challenges ingetting logistics right, and the costs of not perfecting these processes can be enormous.But putting the right controls in place can help your business achieve success.

In this article:

• Step-by-stepbreakdowns of inbound/outbound logistic processes
• Examples ofinbound/outbound logistics
• Why inbound andoutbound logistics are critical to running a profitable business

What Is Logistics?

Logistics coordinates the movement and storage of resources such as goods, equipment andinventory. For manufacturers, logistics starts with the incoming supply of raw materials andcarries through to the delivery of finished products to customers.

For example, a logistics department would receive supplies, give components to a productionline, move finished goods to a distribution center, manage inventory and ship products to acustomer.

Logistics teams are responsible for making sure each of these steps run smoothly, includingpurchasing, accepting inbound delivery, storage, packaging, inventory management, shipping,outbound transportation and delivery. Choreographing these processes gets complicated whenvolume grows and there are multiple products to manage. Companies that use severaldistribution channels and operate facilities in different locations face another layer ofcomplexity.

In 2019, U.S. businesses spent $1.63 trillion onlogistics, equal to about 7.6% of GDP. To generate the best returns, a company needsto have the right supplies at the right place at the right time. Its manufacturing linecannot run unless it has all the necessary materials to build its product or items todistribute in the requested amounts. If the company does not have enough stock to fill anorder, it may lose a sale or make a customer unhappy by forcing them to wait for the item.

Role of Logistics

Logistics is the foundation of the supply chain and is vital to a company’s success.Well-organized logistics can reduce expenses, save time, help meet customer demands andenhance a brand’s reputation.

Effective logistics is key to managing the supply chain, the complex network of organizations,individuals, activities and resources required to supply a service or product.

In 2019, the average company spent 11% of revenue on logistics, with transportation andinventory accounting for about 72% of that spending.

What Is the Difference Between Inbound and Outbound Logistics?

Inbound logistics brings supplies or materials into a business, while outbound logisticsdeals with moving goods and products out to customers. Both focus heavily on thetransporting of goods. But inbound is all about receiving, while outbound focuses ondelivery.

What Is Inbound Logistics?

Inbound logistics is the way materials and other goods are brought into a company. Thisprocess includes the steps to order, receive, store, transport and manage incoming supplies.Inbound logistics focuses on the supply part of the supply-demand equation.

Inbound Logistics Activities

• Sourcing and procurement: Identifying and evaluating potentialsuppliers, obtaining price quotes, negotiating with and managing suppliers.
• Ordering/purchasing: Buying the goods and materials the company needsso the right quantity arrives at the right time.
• Transportation: Deciding whether to use a truck, airplane, train oranother method to move goods. This activity also involves selecting delivery speed forincoming supplies, contracting with third-party carriers and working with vendors onprice and route.
• Receiving: Handling the arrival of new materials, unloading trucks andensuring they match the order.
• Material handling: Moving the received goods short distances within thefacility and staging them for later use.
• Putaway: Moving goods from the receiving dock to storage. Staff putseverything away in assigned locations.
• Storing and warehousing: Managing the materials before they go tomanufacturing or customer fulfillment. This department is responsible for making sureitems are placed in logical locations for fulfillment and the right storage conditionsare met.
• Inventory management: Deciding the type and amount of rawmaterials/items you should store and where to locate them. Read the inventory managementguide to learn more.
• Expediting: Managing the progress of and schedule for materials as theymake their way to your facility.
• Distribution: Sending supplies to their destination inside thebusiness.
• Tracking: Checking on details about incoming orders, such as theirlocation and documents like receipts.
• Reverse logistics: Bringing goods back from customers for reasons suchas returns, defects, delivery problems, repair and refurbishment. Also, recycling andsalvage firms that work with used materials obtain their supply through reverselogistics.

How a company approaches inbound logistics varies depending on incoming goods, the industryand the buyer-seller relationship. The company may handle its own inbound logistics oroutsource it.

Challenges of Inbound Logistics

The primary challenges of inbound logistics are high costs, uncertain delivery dates andunpredictable lead times. These make it hard for businesses to maintain ideal inventorylevels and improve warehouse efficiency and productivity.

Here are some specific inbound logistics challenges in more detail:

• Inbound shipping inefficiencies: Some companies spend too much oftheir budget on shipping. To cut costs, you need to negotiate preferred rates withfewer carriers and consolidate inbound shipments to make full truckloads. You canalso set vendor inbound compliance standards (VICS) on price and service. Analyticscan help you identify any waste of time or money.

• Information vacuum: One frequent challenge is not knowing the exactlocation of a shipment, when it will arrive and how much it will cost. This lack ofknowledge causes some companies to carry extra inventory, make purchases too earlyand suffer delays in production and customer deliveries. Real-timeinformationsystems allow a company to track and trace shipments and communicate withsuppliersto make sure accurate data is captured when entering materials.

• Surges in deliveries and receiving: Without proper planning,businesses can end up juggling too many deliveries simultaneously. As a result,their yards become clogged with trucks, causing confusion among drivers about whichdock to use. Peaks and lulls in deliveries makes it hard to effectively staffreceiving personnel, as well. A weak receiving process leads to errors and a backupof materials. Solutions include scheduling arrivals, routing deliveries to specificdocks and maintaining a consistent pace throughout the day. Warehouse management software(WMS) can help with logistics. Another technique is cross-docking, where thereceiving department matches incoming inventory to open orders. When workers unloadproducts, they move them directly to another dock to load onto an outbound truck,without ever storing them.

• Processing returns: Returns processing is an afterthought for somecompanies, leading to lost sales when stock is not put back into inventory quickly.Inaccurate inventory counts and reduced customer satisfaction are additionalproblems. Create clear, efficient processes for returns and communicate theimportance of returns management to staff to combat this issue.

• Supplier reliability: A company needs dependable suppliers thatoffer competitive pricing and quality. However, reliable suppliers can be difficultto find and keep. To make this easier, try steps such as:

  • Build long-termrelationships
  • Pay suppliers on time
  • Negotiate as necessary to make sure contracts align with your business goals
  • Check supplier quality certifications
  • Evaluate supplier risks such as political climate, weather and labor relations
  • Forecast your growth patterns and pick suppliers that can scale
  • Check supplier lead time and on-time delivery rate
  • Assess their customer service
  • Consistently evaluate alternative suppliers

• Balancing supply and demand: Ensuring there are enough incomingsupplies to meet customer demand can be difficult due to seasonality, competitiveinfluences, economic conditions, pricing volatility in raw materials, fluctuationsin selling cycles and more. The best way to balance supply anddemand is throughdata. Software can compare incoming inventory to your order pipeline. It can alsomonitor the status and location of inbound deliveries, predict demand based onhistorical patterns, find opportunities to consolidate purchases and more.

How to Optimize Your Inbound Logistics

Optimizing inbound logistics means making the operation faster, leaner, more cost-efficientand more agile. Assess every process, identify strengths and weaknesses, and then makeimprovements.

1. Model your current process and measure performance.
   Look forinefficiencies related to cost, waste, quality loss, duplicate work, informationgaps and delays. The presence of invisible or intangible costs in inbound logistics,such as inventory carrying costsand the impact of poor customer service, can complicate matters. Compare youroperation to industry benchmarks and competitors.

2. Analyze your choices.
   Understand how your decisions affect costand efficiency. For example, if the procurement department makes purchases in largequantities to receive volume discounts, are those savings offset by the expense ofholding and managing excess inventory? The major cost drivers for inbound logisticsare purchasing, supplier management, transportation, receiving, warehousing,material handling and inventory management.

3. Develop strategies to address inefficiencies system-wide.
   Account for trade-offs among activities. Investing in automation and analytics willenable more data-driven decision-making.

Some of the most widely recommended actions to optimize inbound logistics include:

1. Build strong relationships with suppliers: Strong supplierpartnerships can yield benefits such as better terms, reduced lead time, costsavings and a sense of security during market fluctuations.

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   Prioritizingthis relationship helps your supplier understand your business better. A suppliercompliance plan explains your requirements and penalties for mistakes such as latedelivery or not following route guidelines. Such a program can reduce freight andwarehouse costs, improve speed and accuracy, and increase customer satisfaction.

2. Use a transportation management system (TMS): This softwareautomates, manages and optimizes freight operations. A TMScompares shipping quotes and service levels among carriers, schedules the shipmentand tracks it through delivery. These details help a company reduce costs, increaseefficiency and gain full visibility into its supply chain.

3. Use a warehouse management system (WMS): WMSsoftware optimizes warehouse operations by streamlining receiving, putaway,inventory management, picking and more.

4. Combine deliveries: Less-than-truckload (LTL) shipments have highershipping costs and longer receiving times. Sometimes there are barriers toconsolidating shipments, such as different handling needs (some goods needrefrigeration, for example). If a business struggles to make full truckloads, athird-party logistics provider (3PL) can combine its partial loads withthose ofother customers.

Video: What Is Inbound Logistics & How to Optimize It

What Is Outbound Logistics?

Outbound logistics focuses on the demand side of the supply-demand equation. The processinvolves storing and moving goods to the customer or end user. The steps include orderfulfillment, packing, shipping, delivery and customer service related to delivery.

Outbound Logistics Activities

• Warehouse and Storage Management: A company keeps a certain quantityof goods on hand to meet demand. Outbound logistics processes store these goodssecurely in the right conditions and organize them. Inbound and outbound logisticsoverlap in warehouse management. But outbound logistics deals with outgoing finishedproducts. For companies that sell finished products they receive from suppliers,inbound logistics concentrates on product acquisition and outbound logisticsfulfills orders sent straight to customers and distributes the products to retailoutlets.

• Inventory Management: Software often plays a central role ininventory management, a process that determines the best place to store goods in thewarehouse for fast order fulfillment and the order picking and packing operation. Inventorymanagement goals include inventory and order accuracy as well as maintainingproduct quality by preventing damage, theft, obsolescence or spoilage.

• Transportation: The modes and methods of shipping products varydepending on the type of goods. For example, huge items like heavy machinery mayship in small order quantities by truck. Perishable items like fresh flowers mayneed to be transported by plane in refrigerated containers.

• Delivery: On-time delivery is critical to success. Moreover, thecustomer’s order must have the correct items and quantities, and the packagecan’tget lost or damaged in transit. Outbound logistics takes responsibility for thisstep.

  • Distribution Channels: The ways your product reaches thecustomer, called distribution channels, affect how you organize outboundlogistics. Distribution channels can be broadly categorized into direct(when you sell directly to your customers) and indirect (when you sellthrough an intermediary such as a wholesaler or retailer). There are manydistribution methods, including direct toconsumer, value-added resellers, dealer networks, dual-distribution,omnichannel and drop shipping. When choosing distribution channels, considerlogistics complexity, cost, speed, quality, customer satisfaction andcontrol.

• Last-mile Delivery: The final step in an order’s journeycovers thelast shipping leg and delivery. The last mile is usually the most costly andinefficient part of delivery. The term comes from the early days of telephoneservice, when wiring homes to the mainline was slow and expensive. Last-milelogistics includes services such as home grocery delivery from a local store andpackage delivery by a common carrier. Before the last mile, shippers can handle lotsof orders at the same time in the same way (for example, they can load dozens oforders going to the same city in one truck). But in the last mile, each deliveryrequires individual handling because it goes to a single address. Deliveries toaddresses get spread over a suburban region or packed within a gridlocked citycenter where parking is difficult—last-mile services account for 41% of overall supply chain costs.

• Delivery Optimization: Optimizing delivery involves not onlyreducing costs but meeting ever-increasing customer expectations for speed andvisibility. Often, these two things go hand-in-hand. Route planning software groupsorders more efficiently for delivery, sorts packages by route, plots the best coursewith an eye to traffic, fuel consumption and other variables, and assigns routes todrivers.

Challenges of Outbound Logistics and How to Overcome Them

Outbound logistics challenges can hurt profits and customer satisfaction. Inventory andshipping costs can rise quickly, while incorrect or late orders will drive customers away.

These are some specific outbound logistics challenges:

• Coordinating Operations: Outbound logistics teams must monitorproduction, storage and distribution—coordinating the optimal movement of goods isnosmall task. If production rises, the logistics team needs to free up more warehousespace, and as production increases to meet customer demand, shipping and delivery needto scale. Software and automation can help close the information loop by connectingproduction to storage capacity and demand.
• Achieving the Seven Rs: Coined by John J. Coyle, professor emeritus oflogistics and supply chain management at Penn State University, the seven Rs are:getting the right product, to the right customer, in the right quantity, in the rightcondition, at the right place, the right time and at the right cost. Consistentlyhitting these targets requires an integrated management process that uses data to assessperformance, identify areas of weakness, and track and foster continuous improvement.
• Inventory Costs: Keeping enough inventory to meet fluctuating customerdemand without creating unnecessary holding costs requires careful planning. Keeping aclose eye on inventory planning metrics such as sell-through rate and inventory turnoverand tracking numbers like safety stock and shifts in demand is important. See thecomprehensive list of inventory managementmetrics for a list of key formulas.
• Transportation Costs: A major cost for outbound logistics istransportation. Companies can control costs by analyzing past spending to spotinefficiencies. Try exploring different strategies such as dynamic pricing, volumediscounts with carriers, opening up bidding for your products/services and looking atfreight marketplaces.
• Rising Customer Expectations: Consumer demands continue to climb, andfree, fast delivery is now the expectation. Same-day and even two-hour delivery are thenorms in some regions and industries. Customers want real-time visibility into thestatus of their orders and to be able to track them on a map. To meet this trend,logistics teams need to understand the role of delivery as a competitive differentiatorand the lasting effect of a poor customer delivery experience.

How to Optimize Your Outbound Logistics

To optimize outbound logistics, put effort into relationships and negotiations. Usetechnology to figure out delivery networks, plan routes, organize schedules and, ultimately,keep costs down.

1. Understand when fast delivery starts.
   To meet carrierrequirements for fast shipping, you may need to set up product staging atdistribution centers, sort shipments according to distribution center guidelines andtailor packaging to meet their requirements. In some industries, like wholesale foodsupply, a distribution center may employ a lumper service, which uses third-partyworkers to load or unload trailers. The aim is to speed up turnaround and let thetruck driver rest and depart faster. You need to know whether the distributioncenter will use lumping so you can account for these extra costs.

2. Adapt to current inventory strategies.
   Just-in-time(JIT)inventory and other rapid replenishment methods mean that large ordersdelivered tocustomers at widely spaced intervals are no longer the norm. Most customers usingJIT will not have room to store a lot of excess product, so you need to adapt youroutbound logistics to mesh with these inventory trends. You may need to account formore LTL orders.

3. Build and improve partner relationships.
   Work closely with keypartners in outbound logistics, including your customers and freight providers.Depending on your industry, you may sell to major retailers that have deep insightsinto their complex supply chains. With the right relationship, they may share dataon how your product is selling so you can fine-tune your production, order fulfillmentand shipping. By working closely with freight carriers, you can learn if dividingyour business among just a few shippers gives you more control over price andservice level agreements.

4. Use smart route planning.
   Automated routeplanning can reduce waiting and travel time for deliveries. The time savingscan cut fuel costs and boost customer satisfaction.

5. Investigate 3PL as an alternative.
   For many companies, the costand complexity of outbound logistics can make outsourcing to a 3PL a smart move. Thesize of 3PLs gives them volume discounts and negotiating leverage, which can lead tocost savings for you. 3PLs bring expertise, specialization and the opportunity toquickly scale your operation up or down depending on business needs.

Inbound and Outbound Logistics as Part of Supply Chain Management (SCM)

Logistics is just one piece of supply chain management. Supply chain management manages allthe links among suppliers, producers, distributors and customers.

Other elements of supply chain management include manufacturing and delivery-related customerservice. Logistics helps synchronize the supply chain by controlling the flow of goods fromthe point of origin to the point of consumption. Participants in the supply chain, likesuppliers and buyers, find partnerships helpful. Two firms work together for their mutualbenefit. These partnerships are often open-ended, unlike strategic alliances or projectpartnerships.

Supply chain partnerships require:

1. Frequent and open two-way communication
2. Cooperation on accurate, efficient order execution
3. Coordinated decision-making
4. Sharing of resources
5. Information and knowledge exchange

The most important partnerships include suppliers and vendors on the supply side. On thedemand side, the critical ties are among logistics providers, retailers, wholesalers,distributors and end customers.

Suppliers may collaborate closely with important customers on product formulation, productsize, product mix, SKUs, inventory levels, supply forecasts, risk management, cost control,waste reduction and ordering systems. The customer may want to work together with logisticsproviders on pacing, packaging, scheduling and route efficiency.

Damage Liability in Logistics

Damage liability for goods lost and damaged while in transit or storage is one area ofdisputes in logistics. Inventory represents a big cost for businesses, and buyers wantprotection against losses while goods are in the supplier’s control. Suppliers alsowant tolimit liability.

As a result, the contracts often state how to store and transport materials. Details covertemperature, length of storage, shipping labels and other conditions. Contracts spell outneeds for special handling, such as protective packaging or having a particular end standingup. They also address if it is acceptable to stack boxes or store goods underneath heavyitems.

To prevent losses, the customer will ask the supplier to track the location of the goods andconfirm the correct quantity. If it’s feasible, the customer may want to double-checkbyvisiting the supplier’s warehouse and perform inbound quality inspection if ithasn’t beeninspected before it leaves the vendor. Some materials may not need to be inspected, such aslow-cost and , but the quality departmentshould provide the warehouse with instructions for sampling, inspecting and rejecting failedmaterials.

The two sides use formulas for damage compensation based on actual value or a set amount perpound. The supplier or customer may get insurance to cover this risk, and both parties mayboth agree to share the risk by each obtaining partial insurance coverage.

Supply Chain Management vs. Logistics

Supply chain management looks collectively at multiple business activities to achieve acompetitive advantage. Logistics focuses on the flow of goods to meet customer needs.

Step-by-Step Inbound and Outbound Logistics Processes

Inbound and outbound logistics break down into many specific steps. Together, the steps helpensure the smooth movement of goods and materials into and out of a business.

Steps in Inbound Logistics (Receiving)

1. Purchasing and Sourcing
   The company finds vendors that providethe goods it needs, negotiates a price and buys the materials.

2. Recording and Receipts
   The company records the purchase orderand receives a receipt once it makes payment.

3. Notification
   When the supplier ships the materials, itelectronically notifies the company and provides tracking information for theshipment.

4. Load Arrival
   The goods arrive at the company’s facility,pullinginto the dock assigned by the business.

5. Receiving
   Workers unload the incoming supplies, scan barcodes tocount and identify the product. They verify the quantity and condition against thepurchase order and confirm acceptance. Goods then move to their nextlocation—manufacturing inventory at a factory, putaway at a warehouse or a staging point forcross-docking.

6. Reverse Logistics
   The receiving team handles products sent backfrom customers for returns and repair.

Steps in Outbound Logistics (Shipping)

1. Customer Order
   A customer places an order through one of thechannels where a company sells its offerings.

2. Order Processing
   The company validates the order, receives therequested quantity and products from inventory and produces documentation.

3. Replenishment
   Reserve inventory moves to primary storage,replacing the purchased product. This process may trigger the production of moregoods or ordering of raw materials from suppliers to maintain adequate inventorylevels.

4. Picking
   Warehouse workers pick products from storage to fulfillthe order.

5. Packing, Staging and Loading
   Staff packages, labels anddocuments the order according to internal and customer needs. Workers sort ordersaccording to shipping mode, delivery speed or destination. The team loads the ordersonto outgoing trucks.

6. Shipping and Documenting
   The order leaves the warehouse fordistribution centers or partners. The company’s system logs the shipment andsendsthe customer tracking details.

7. Last Mile Delivery
   The order is delivered from the distributioncenter to the customer. This can be the most expensive—and mostimportant—step.

Examples of Inbound and Outbound Logistics

Every business that makes a product or provides a service has to figure out how to managelogistics. For example, a company that turns silicon into computer chips or a farmer whogrows wheat from seeds both use logistics to get goods to their customers.

Inbound Logistics Example

A company’s inbound and outbound logistics depend on what it is selling and itsbusinessmodel. An example can show how these processes work. Here is how logistics work for anapparel manufacturer called Sorina Designs.

1. Purchasing and sourcing: Sorina Designs identifies how much fabric,thread, buttons, zippers and other supplies it needs to make its upcoming fallfashion line to meet forecasted salesvolume. The procurement team works with the designers to find vendors foreach component that meet Sorina’s needs for price, color, style, quantity anddelivery date. The purchasing manager negotiates contracts with each vendor.

2. Recording and receipts: A procurement clerk generates purchaseorders, sends these to suppliers, logs the purchase orders and matches them withinvoices and receipts.

3. Notification: The vendors send electronic order acknowledgmentsalong with shipment and tracking information.

4. Load Arrival: Trucks carrying the supplies arrive at SorinaDesigns’facility.

5. Receiving: Sorina’s receiving staff unloads the incomingmaterials,scanning barcodes or RFID tags to count and identify the products. They verify thequantity and condition against the purchase order. The materials move to thewarehouse, where they are ready to be manufactured into clothing.

6. Reverse logistics: The receiving team also handles the return ofunsold clothing from retailers. Their contracts dictate that stores send backleftover inventory and receive partial credit toward purchases of new seasonmerchandise. Last-season apparel goes to a staging area for use by the team thatfulfills orders from discount stores and liquidators.

Outbound Logistics Example

1. Customer order: A national boutique chain, Picture Perfect, has 37stores. The company orders a collection of women’s pants, blazers, skirts,blouses,dresses and scarves in various quantities in women’s sizes 0 to 18 onSorina’swebsite. Picture Perfect uses internal data about shopper preferences, past salesand trend forecasts to decide the quantities of each product and size to purchase.

   Sorina’s staff needs to pay close attention to the order’s detailsbecause of thevariations in patterns (paisley and chevron), colors (burgundy and blue) and sizes.Sending the wrong item or quantity can result customer complaints and lost sales forproducts that did not arrive in time for seasonal shopping.

2. Order processing: Sorina’s order processing team checksPicturePerfect’s order by confirming Sorina has the right number, sizes, garmenttypes andcolors available. They send an order confirmation to Picture Perfect. Sorina’sinventory management system allocates these items so the clothes are no longeravailable for sale to anyone else. The system sends an order manifest and pickingtickets to the warehouse.

3. Replenishment: Workers move clothing from remote storage to theshipping warehouse to replace purchased product as necessary. Sorina’splanners notethat a particular blazer is selling faster than expected and ask the garment makersto sew more.

4. Picking: Warehouse staff uses a zone strategy to pick garments formultiple orders. Workers hang Picture Perfect’s blouses, for example, onelectricgarment racks along with blouses that are part of orders from two other retailers.They use barcodes to distinguish the orders.

5. Packing, staging and loading: All the clothing items in PicturePerfect’s order come together at the packing station. A staff member scansbarcodeson the hangers to confirm the order is correct. Packers box the order with tissue,so the garments do not wrinkle. They put boxes together on pallets, shrink wrap thepallets and affix destination and manifest labels.

   The packers split Picture Perfect’s order into two batches, one for itsdistributioncenter in the West and the other for its distribution center in the East. Each onejoins other orders heading in the same direction with similar service levels.Picture Perfect’s order will travel by ground shipping since they’re notrushshipments. Workers load the pallets onto outgoing trucks.

6. Shipping and documenting: The order departs. Sorina’s systemlogsthe shipment and sends tracking information to Picture Perfect’s purchasingdepartment. Sorina’s system also sends arrival information to thechain’sdistribution centers.

Importance of Inbound and Outbound Logistics

Inbound and outbound logistics are important because they help a business run smoothly. Theyalso have a direct and substantial impact on sales, costs, profits and customersatisfaction.

Below are some of the ways that logistics play a crucial role for companies:

• Control the flow of goods in and out of the business
• Maximize production and sales revenue
• Contribute to customer satisfaction, brand reputation and loyalty
• Influence profitability and ROI
• Help the company make the best use of its money and time
• Provide a competitive advantage when done well
• Contribute to inventory management and can reduce inventory costs
• Reduce wasted raw materials, damage and product returns
• Aid in warehouse management
• Increase order accuracy and delivery speed

Benefits of Inbound Logistics

Companies can take advantage of many benefits from inbound logistics, including more reliablesources of supplies and lower costs for raw materials.

The following are more benefits of efficient inbound logistics:

• Predictable raw material costs
• Higher product quality
• On-time deliveries
• Steady production rates
• Lower costs for shipping and receiving
• Better inventory management
• Ability to spot supply chain problems
• Foundation for sales success
• Stronger vendor relationships

Benefits of Outbound Logistics

Outbound logistics help companies please customers. The process confirms nothing is missing,broken or defective.

Among the specific benefits of well-run outbound logistics are:

• Faster deliveries
• Fewer order cancellations
• More on-time deliveries
• Reduced delivery failures or mistakes
• Less damage and loss in transit
• Lower costs for your company and the customer
• Decreased returns
• Higher customer satisfaction and loyalty
• Stronger company reputation
• Better business planning

Managing Inbound and Outbound Logistics With Software

Inbound and outbound logistics help you meet customer needs by delivering quality, serviceand timeliness. Software systems put you in control with manufacturing, inventory andwarehouse management solutions.

With both inbound and outbound logistics managementsoftware running on the ERP platform managing core financial processes,product-based businesses have visibility into all aspects of operations and can quickly andeasily run reports that demonstrate the impact of different scenarios on profits, customersatisfaction and more.

Both inbound and outbound logistics can be a major cost center, but that also means theyrepresent an opportunity for major time and cost savings. That’s why companies shouldtake aclose look at these aspects of their operations and see if there are more efficient,cost-effective ways to complete these steps. It’s a key part of optimizing supplychainmanagement as a whole and providing the exceptional customer experience that will help yourbusiness excel.

Inbound and Outbound Logistics FAQs

Keep expanding your knowledge of inbound and outbound logistics as the field continuouslyevolves. Here are some of the most common questions.

What is inbound logistics and manufacturing?

In manufacturing, inbound logistics is how raw materials come into the factory. Productionneeds to be steady to meet output, cost and quality targets.

If there are supply problems, a company might have to stop production. Factories cannoteasily change machines to work with various raw materials, so security and certainty ofsupplies are critical.

What is inbound logistics in a value chain?

The value chain includes activities such as operations, marketing, sales and service. Inboundlogistics affect the early part of the value chain by bringing raw materials into thebusiness—the company adds value by turning the raw material into a useful product.

How to calculate inbound logistics?

There are many metrics to measure the performance of inbound logistics, including error,defect and on-time delivery rates for shipments.

Some calculations to consider are:

• Freight cost for a pound of raw material
• Freight cost as a share of total production costs
• Time and expense to receive incoming shipments
• Number of times staff handle goods

What is outbound logistics in a value chain and value chain analysis?

In the value chain model, outbound logistics occur afterproduction. Logistics gets the product to the customer.

Value chain analysis looks at a company’s activities. The analysis sees where the firmcanachieve competitive advantages, such as lower costs or a more appealing product. The goal isto create more value without raising costs.

What are outbound logistics services?

Outbound logistics services handle a company’s deliveries to its customers. Doing thiswellcan be costly and complex. Some companies use outside providers, known as 3PLs. Logisticsservices typically handle warehousing tasks, such as:

• Receiving products
• Storing goods
• Packing orders
• Freight shipping for bigorders and large items on trucks, trains and ships
• Courier shipping for packages and small loads moving quickly to individual addresses