An Ultimate Guide for Inbound & Outbound Logistics
Originally Published: 12 June 2024
Last Updated: 25 July 2024
In the eCommerce industry, inbound and outbound logistics refer to the process of receiving and sending goods respectively. If you own or work for an eCommerce company, you’ll have likely heard these terms thrown around quite a bit, and have somewhat of an understanding of how important they are for your business’ profitability, customer service and company health.
Today, we’re going to explain what inbound and outbound logistics actually mean, the differences between them, examples of each, and offer some tips on how you can begin or continue to optimise your inbound and outbound logistics.
Keep reading to find out more about how inbound and outbound logistics work, including how J&J Global Fulfilment can help.
Inbound logistics explained
As referred to previously, inbound logistics is the process of receiving goods. The terminology primarily applies to receiving goods into a warehouse, fulfilment centre, or shop, depot, or company site. It can also refer to the shipping of these goods from the supplier or manufacturer to the above locations.
For large operations, inbound logistics is a carefully monitored process. Optimising inbound logistics means ensuring goods are properly handled, tracked, and accounted for. This ensures that your business doesn’t lose money due to missing stock or delays, and means that your customers have access to their favourite products whenever they need them.
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Inbound logistics explained
As referred to previously, inbound logistics focuses on the process of receiving goods. The terminology primarily applies to receiving goods into a warehouse, fulfilment centre, or shop, depot, or company site. It can also refer to the shipping of these goods from the supplier or manufacturer to the above locations.
For large operations, inbound logistics is a carefully monitored process. Optimising inbound logistics involves ensuring goods are properly handled, tracked, and accounted for.
This ensures that your business doesn’t lose money due to missing stock or delays, and means that your customers have access to their favourite products whenever they need them.
3 Examples of inbound logistics processes
The inbound logistic process is actually made up of lots of different micro processes that combine to make a smooth, reliable operation. Here are some of the most important components of inbound logistics:
1. Ordering from the supplier
Purchasing raw materials or products from suppliers is an important aspect of inbound logistics. You’ll need to have good relationships with your suppliers, while also ensuring that you order the right amount of stock for any given period of time.
Under ordering means your products might sell out, whereas over ordering could mean paying for storage costs you don’t need. Having a good understanding of inventory management can help you ensure this aspect of the inbound logistics process runs smoothly.
2. Goods in
‘Goods in’ is the process of receiving goods into a warehouse or fulfilment centre. It’s much more than simply unpacking a lorry and putting stock on the shelves.
An effective ‘goods in’ process involves quality assurance checks, tracking and recording, weighing and measuring, and placing goods in an optimal location.
All of this is essential to ensure that the fulfilment process is quick and accurate when orders are placed by the customer. Without a proper receival process in place, items will go missing, orders will be late, money will be lost, and customers won’t be too pleased.
3. Returns management
Returns management, or reverse logistics, happens later in the inbound logistics process but is no less important. To be competitive in today’s market, eCommerce businesses need to have the flexibility to offer returns that are straightforward for the customer and quick to process.
In most cases, the returns management process involves receiving the item, checking whether or not the return is valid, and ensuring the item is in perfect condition to be resold.
Once it’s been identified that a return is valid and in good condition, the item can then be quickly put back on the shelf and a refund issued to the customer. A good returns management process also keeps customers up to date on the status of their return, normally through automated emails or SMS messages.
Outbound logistics explained
Think of outbound logistics as the opposite of inbound. In the eCommerce industry, outbound logistics focuses on the preparation and shipping of goods to their destination – usually to the door of your customer.
Most of the outbound logistics process occurs at the warehouse or fulfilment centre, and when it’s in the hands of the carrier. Like inbound logistics, the outbound logistics process is highly important, and there’s a lot of work that goes into it to make sure it runs smoothly.
In fact, we’d consider it to be the most important part of the fulfilment process. Once your customer has made an order, you rely on a good outbound logistics strategy to ensure that they receive their items on time and in good condition.
2 Examples of the outbound logistics process
The outbound logistic process is similar in that it is made up of smaller processes. It’s fairly synonymous with the fulfilment process, and involves preparing goods and dispatching them to customers. Here’s an overview of some outbound logistics processes in more detail:
1. Picking and packing
When an order has been placed and recorded on the warehouse management system, picking and packing teams will begin preparing the order for dispatch. It involves carefully selecting items from the shelf to make sure the correct item is being picked.
Most 3PLs (including James and James) will have the shelves barcoded, allowing pickers to scan the shelf and check it matches the right product on the order. Once the order is picked, the packing team will select the right packaging for the job, and then place the complete order in dispatch.
2. Shipping
Good outbound logistics involves working with the best couriers to suit both the needs of your business and your customers. Having a range of options is key, from 24-hour delivery to sustainable options, economic delivery and international delivery, and much more.
It may also be important to consider where the majority of your customers are based. If, for example, you operate in the UK but sell a lot of products in the US, it could be worth looking for a fulfilment provider with an international network of fulfilment centres. This way, you can optimise the last mile delivery process and cut back on shipping costs and times.
What is the difference between inbound and outbound logistics?
Inbound and outbound logistics are two sides of the same coin.
Inbound logistics focuses on materials needed for production. These might be raw materials, parts, or components.
Inbound logistics operations often involve handling inventory and warehouse space efficiently. You should ensure that these tasks contribute to smooth production flows.
On the other hand, outbound logistics deals primarily with getting finished products to your customers. This means handling tasks like order processing, packaging, and timely delivery. Outbound logistics processes focus on fulfilling customer demand and improving customer satisfaction.
To sum it up, inbound logistics is about receiving and storing materials needed for your production, while outbound logistics ensures that your finished products are delivered to customers.
6 Benefits of inbound and outbound logistics
Inbound logistics and outbound logistics play crucial roles in supply chain management and deliver many benefits to companies.
Inbound logistics benefits
- Cost Savings: Efficient inbound logistics helps reduce costs by optimising transportation and inventory costs.
- Reliable Supplies: Ensuring a steady flow of incoming goods improves product availability and reduces production delays.
- Improved Supplier Relations: Good inbound logistics operations build stronger relationships with suppliers through consistent and accurate order processing and deliveries.
Outbound logistics benefits
- Customer Satisfaction: Meeting customer expectations with on-time deliveries leads to higher customer satisfaction.
- Optimised Warehouse Space: Effective outbound logistics can reduce warehouse space needs by moving goods out quickly and efficiently.
- Reduced Delivery Costs: Using cost-efficient transportation methods and routes helps cut down on delivery expenses.
4 Challenges of inbound and outbound logistics
Supply chain disruptions, accurate inventory management, transportation costs and data handling are significant challenges in both inbound and outbound logistics. Addressing these areas can increase efficiency and reduce costs.
1. Supply chain disruptions
Supply chain disruptions can seriously affect both inbound and outbound logistics operations. Natural disasters, political instability and unexpected production delays can halt the supply of raw materials. These interruptions can lead to delays in production and shipping, impacting timely delivery of goods to end users.
Effective communication and real-time tracking of shipments enhance visibility. This approach helps ensure timely delivery and reduces the risk of major operational stops.
2. Inventory accuracy and overstocking
Maintaining accurate inventory levels is crucial. Errors in inventory management can lead to overstocking or stockouts. Overstocking ties up capital and increases holding costs, while stockouts can lead to missed sales and decreasing customer satisfaction.
Utilising tools such as warehouse management systems (WMS) and barcode scanning can improve inventory accuracy. Real-time data allows more efficient order processing and better management of incoming goods. This helps ensure that the right products are available when needed, optimising inventory costs and enhancing warehouse efficiency.
3. Transportation costs and efficiency
Transportation costs are a significant part of logistics expenses. Fluctuating fuel prices, inefficient routing and delays can all drive up freight costs. These factors affect inbound delivery and outbound logistics processes, making it challenging to maintain cost-efficient logistics operations.
Adopting advanced transportation methods, like route optimisation software, can help reduce fuel consumption and travel time. Partnering with reliable third-party logistics (3PLs) companies can also streamline transportation operations. The goal is to ensure efficient inbound deliveries and timely shipping of finished products, improving overall logistics efficiency.
4. Technology and data management
Technology and data management play critical roles in modern logistics operations. Without proper technology, it can be hard to track inventory, monitor shipments and manage warehouses effectively. Lack of visibility into the supply chain can lead to inefficiencies and increased logistics costs.
Investing in robust systems for data management is essential. Using real-time tracking and data analytics can provide valuable insights into logistics operations. This allows for precise management of inventory and improvement in transportation efficiency, helping to reduce costs and meet customer expectations effectively.
How to improve inbound and outbound logistics?
Now we’ve discussed some of the specifics of inbound and outbound logistics operations, let’s take a look at what you can do to optimise and improve them. It’s all about building strong relationships with both suppliers and couriers, embracing the power of technology, understanding data, and considering outsourcing your operations to 3PLs that know their stuff.
Get to grips with your inventory management
As we noted earlier, good inventory management is essential to improving inbound logistics processes. A good inventory management system is the best place to start with this, as it’ll show you all the important data you need to make good decisions regarding your stock.
For example, you’ll be able to see clearly which lines are doing well in which territories across all of your channels, and, equally important, you’ll be able to note what’s not doing as well.
This can help you decide whether or not to put more resources into specific channels that are doing well, and this improves the efficiency of your outbound operations. Less focus on the things that aren’t working, and more and the things that do!
Nurture relationships with suppliers and carriers
Having good people around you is important to success in all walks of life, and the same can be said for outbound and inbound logistics. Working with reliable suppliers you can trust, that deliver goods at the promised time, makes a big difference to the smooth running of inbound logistics.
Similarly, having a reliable range of carriers across the entire supply chain – from the first mile to the last mile – will help goods move from beginning to end with as few delays as possible. Timing is key here, and having carriers that can deliver on their agreed date makes a huge difference.
Let J&J Global Fulfilment take care of your inbound and outbound logistics
J&J are a 3PL provider who specialise in helping eCommerce businesses Scale Up. With fulfilment centres in the UK, EU, Canada, Australia, and the US, our custom-built software, super-quick processing times, and industry-leading accuracy make us the ideal choice for eCommerce businesses looking to grow their business.
We focus on businesses that move lightweight, fast-moving products and have ambitions to reach the very top. Retrain full clarity and control over your inventory with our award-winning software, ControlPort™, while we take care of storing, picking, packing, and shipping your orders to your customers across the world.
Want to learn more about how we can improve your logistics and help you grow rapidly? Get in touch with our fantastic team who will talk you through everything.
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