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Managing fulfilment in-house can provide more control over inventory tracking and warehousing operations.
However, one of the biggest challenges that comes with in-house fulfilment is managing internal logistics. With so many moving parts involved, it can be complicated to oversee and control the entire supply chain.
That said, optimising your internal logistics comes with many benefits that will boost your company’s bottom line.
In this post, we give you a breakdown of those key benefits and show you how you can improve your internal logistics.
What are internal logistics?
Internal logistics refers to the management of inventory flow needed to keep up with fulfilment, consisting of:
- Inventory management, from warehouse receiving to returns
- Communication and the flow of information across the supply chain
- Inventory tracking, SKU management, lot management, and inventory replenishment planning
Note: Any activity that takes place externally, such as first and last-mile delivery, is typically not considered to be part of internal logistics.
7 benefits of optimised internal logistics
There are a number of ways in which optimising internal logistics can benefit your business.
From improving your supply chain operations to ensuring timely deliveries, here are the top benefits of optimising internal logistics.
1. Better supply chain management
When internal logistics is optimised, inventory flows seamlessly across the company with minimal disruptions, improving supply chain management.
Once inventory reaches the warehouse or distribution centre, it is scanned and tracked using an inventory tracking or warehouse management system (WMS) before it is put on the shelves. Once an item is picked to fulfil an order, inventory levels are updated automatically.
Especially for a multi-channel retail business, a supply chain requires a lot of coordination to run efficiently.
By implementing technology, processes and systems to help the flow of inventory, you can support your operations team throughout the ecommerce supply chain by ensuring they have access to timely information they need to carry out their respective tasks effectively.
2. Ensure the timely delivery of products to customers
Optimised internal logistics help the flow of fulfilment activities in your warehouse, which subsequently contributes to improved delivery speeds. Though you can’t control shipments once they are in the courier’s hands, you can control how quickly orders get shipped.
An order management system automatically processes orders to get them ready for fulfilment faster and accurately.
By automating the order management process, picking lists are generated, which makes it easy for a warehouse team to identify and locate items in the warehouse quickly.
From there, the right items are picked and prepared for shipment. This means that orders can get out the door faster, allowing you to deliver them in a timely manner.
3. Help enhance a business’s reputation and increase customer loyalty
When your internal logistics are optimised, your ecommerce operations functions seamlessly, which ultimately impacts the customer experience.
From the moment orders are placed, optimised internal logistics ensure that the fulfilment process begins immediately and is done accurately. Additionally, inventory information is updated in real time, so you can reduce risk of backorders.
With better inventory tracking and insight into logistics operations, you can provide competitive shipping options and different shipping methods for your customers to choose from, such as affordable 2-day shipping.
With timely shipping, your customers will be able to enjoy a smooth delivery experience that will reflect positively on your brand reputation.
4. Reduce the risk of errors and increases productivity
With optimised internal logistics, you can ensure that inventory is stored at appropriate locations within your warehouse and accurately recorded.
This makes it easier for internal teams to locate and pick items with minimal risk of errors or delays.
When pickers are able to quickly locate the right items and send them to the appropriate stations, it significantly boosts overall productivity and more importantly — order accuracy rate.
5. Help with inventory management
Issues with your internal logistics may make it challenging to keep track of and manage your inventory effectively.
For example, failing to update your inventory data in real time may lead to inaccurate inventory records, which will subsequently have an impact on your business, from not being able to fulfil orders on time to cutting into profit.
6. Help to minimise the cost of operations
Delays, stockouts, and a high level of returns can be expensive for an ecommerce business.
For instance, the cost of paying your workers to free up fulfilment backlogs can quickly add up if it happens on a regular basis.
When internal logistics is optimised, however, the cost of operations is significantly minimised since everything is working as it should and all your activities are carried out in a timely manner.
You’re essentially eliminating issues that could add to your operational costs. In other words, you’re not paying more than you should to keep your business running.
You can further minimise operational costs if you choose to work with a third-party logistics provider to tackle your internal logistics challenges.
7. Opportunity to scale operations
When your internal operations are running smoothly, you can create an opportunity to scale your operations.
With the increased efficiency and cost savings gained from optimised internal logistics, you can free up time and revenue to focus on growth.
You may be able to invest in opportunities to scale such as adding new items to your product line, expanding your warehouse, marketing to a new audience, and hiring and training new staff.
Benefits of using a 3PL provider to improve internal logistics
Yes, you can manage operations internally. But as your business grows, it will be hard to stay competitive.
To optimise internal logistics and ensure your customers are given the best experience, there are big benefits to partnering with a 3PL like ShipBob.
Third-parties like ShipBob can help create a hybrid fulfilment model, so some operations can still be done in house. Or, you’re also given the option to outsource fulfilment entirely,
Here is an overview.
A 3PL provider has years of industry expertise that would allow them to manage internal logistics in an efficient and professional manner.
For example, your business might be great at fulfiling orders for local customers, but what about if orders come in internationally?
3PLs like ShipBob can help you launch into new markets with ease with international fulfilment and/or affordable international shipping.
With a 3PL partner, you can be strategic on where your inventory is stored to reach your customers faster and more affordably.
Technology and infrastructure
3PLs like ShipBob offer advanced fulfilment technology to automate time-consuming tasks and helps the flow of information throughout your supply chain.
Some of the technology even comes with automation capabilities to save time and increase accuracy. In the case of hybrid fulfilment, some 3PLs even offer software that you can use separately for managing your logistics in-house.
For example, ShipBob offers a WMS solution that ecommerce businesses can use for managing their in-house fulfilment. This way, you can implement a smart warehousing operation without the big investment.
One of the major benefits of partnering with a 3PL is the ability to scale. Since you’re outsourcing some of the most complex and time-consuming aspects of your fulfilment process, you’ll free up enough time and resources to focus on scaling your business.
Working with a 3PL partner enables online businesses to compete with major brands and marketplaces like Amazon.
For example, ShipBob offers a network of fulfilment centres across the globe. This makes it easy to take your brand global without operating multiple warehouses in-house.
ShipBob’s network is powered by an advanced fulfilment platform that makes it easy to track inventory, manage SKUs, strategize inventory distribution, and more.
You can get started with ShipBob by implementing ShipBob’s WMS into your own fulfilment operations and decide to distribute inventory later. Or, you can take your brand global by distributing inventory in multiple locations across the world.
No matter how you want to scale, ShipBob provides technology and infrastructure solutions that make it easy to grow.
Sometimes, leaving complex and time-consuming tasks to the professionals is the easiest way to save time and money.
Managing fulfilment without technology or managing a growing business without the support can be costly. It can take your team away from other revenue-building initiatives including customer support and product development.
With ShipBob, you can automate many of the time-consuming tasks and lean on ShipBob’s team to take care of logistics operations. For instance, ShipBob provides discounted shipping rates and partners with major shipping couriers to save you and your customers money.
How ShipBob helped Pit Viper optimise its internal logistics
Pit Viper, makers of ski sunglasses, has always handled fulfilment in-house even as the business grew. When the brand moved its operations into a larger warehouse in 2021, everything was being managed by a fulfilment team consisting of 20 people.
The team was only using label management software, which was only capable of generating labels and could hardly help address inefficiencies within the warehouse.
As a result, the team was struggling to keep up with shipping deadlines. That’s when Pit Viper turned to ShipBob’s WMS solution for their in-house fulfilment.
Additionally, Pit Viper was able to store inventory in ShipBob’s Canada and Australia fulfilment locations to take care of international orders.
“The WMS makes it really hard to send out the wrong product. It still happens on rare occasions – but it happens a lot less than before. Before we implemented ShipBob’s WMS, our order accuracy rate was around 92%. Now we’re at 99.7% for order accuracy, which equates to 2,100 less mispicks a year on average.”Jourdan Davis, Operations Manager at Pit Viper
Moreover, ShipBob has also helped the brand to improve picking efficiency by creating the most efficient picking routes. This helped them to save heaps of time and improve the overall efficiency of their fulfilment operations.
“Running a warehouse is unpredictable. But ShipBob has definitely helped with that. Thanks to ShipBob’s WMS, we have access to more data. Now we know how many orders an employee can complete in an hour so we can forecast for labour a lot better than we did before.”Jourdan Davis, Operations Manager at Pit Viper
Internal logistics FAQs
Below are answers to the most common questions about internal logistics.
What is internal vs. external logistics?
Internal logistics refers to all the logistics processes that take place internally within a company itself. On the other hand, external logistics refers to the logistics processes that take place outside the company and may involve third parties such as suppliers and shipping couriers.
Is there a difference between internal logistics and intralogistics?
Internal logistics and intralogistics are different terms both referring to the management of information and inventory flow within an ecommerce business.
How does ShipBob handle internal logistics?
ShipBob’s fulfilment solutions include both a warehouse management system (WMS) for in-house fulfilment, as well as fulfilment services for brands that don’t want to run their own warehouse.
What software can improve internal logistics?
A warehouse management system with real-time inventory tracking is ideal for improving internal logistics.