A Guide to Inbound and Outbound Logistics Processes
August 14, 2020
Push vs. pull.
Enter vs. exit.
Supply vs. demand.
In vs. out.
You know these opposites all too well (except when you try pushing when there’s a ‘Pull’ sign).
While the words ‘inbound’ and ‘outbound’ refer to different terminology in different industries, in the logistics world they come down to the difference between receiving and sending.
Every business dealing with physical goods needs both inbound and outbound logistics processes, whether they manage it directly themselves or not.
With a sound inbound logistics process, a business can restock their best sellers in time for the holidays, introduce new products for sale, and even process returns. On the outbound side, you can ship packages to customers and other stakeholders on time.
Any supply chain management strategy requires inbound and outbound logistics working in harmony for the completion and delivery of goods. Below we dive into how to achieve just that.
What is inbound and outbound logistics?
Inbound and outbound logistics refer to two of the most common processes to move goods throughout the retail supply chain. While they are similar in nature and both involve the transportation of products across various distribution channels, inbound logistics deals with supply and outbound logistics fulfills demand.
Inbound logistics processes include the movement of raw materials, finished goods, and supplies from a manufacturer or other distribution channel to a fulfillment center, warehouse, or retail store depending on the business model.
Outbound logistics processes are related to the movement of end products to the end user, often originating in a distribution or fulfillment center and then delivered to its final destination.
What is the difference between inbound and outbound logistics?
The main difference between inbound and outbound logistics is to whom the products and goods are delivered. In the context of a warehouse that’s fulfilling direct-to-consumer orders, inbound logistics involves receiving goods from the manufacturing plant or product creator, whereas outbound logistics focus on getting products sent to end customers.
The comparison table below breaks out the differences between inbound and outbound logistics processes.
|Inbound logistics||Outbound logistics|
|Definition||Inbound logistics is the receiving of raw materials or products from a supplier to a warehouse||Outbound logistics are the actions required to get the final goods delivered to the end user|
|Processes||Materials management and sourcing, warehouse receiving||Shipping orders to end users, customer service involving deliveries|
|Touchpoints||Supplier, manufacturer, distributor, or product holder > Company, brand, retailer, or third-party logistics company||Company, brand, retailer, or third-party logistics company > Customers|
The inbound and outbound logistics processes
Inbound and outbound logistics both focus on the transportation of goods from one distribution network to another. Knowing how each process works is crucial to optimizing the supply chain, reducing logistics costs, and better managing customer expectations.
Inbound logistics processes
Here are a few common inbound logistics examples.
Inbound logistics includes the sourcing or buying of raw materials and products. You and your supplier or manufacturer should record the materials and goods your business has ordered and have proper freight shipping tracking in place.
Once the goods arrive at a warehouse, the receiving team accepts, logs, and stows the inventory in the appropriate inventory storage location. You’ll need a good system for inventory tracking to help you track when and how much inventory has arrived at the warehouse.
Another aspect of inbound logistics is reverse logistics, which includes the processing of customer returns and exchanges when new shipments arrive back at the warehouse and need to be examined and restocked into available inventory.
Outbound logistics processes
Here are a few common outbound logistics examples.
Once an order is received, it is sent to the warehouse management system (WMS) and pushed into the queue to be processed.
Product picking and packing
The products are picked from their assigned inventory location, and inventory counts are updated to ensure stock levels are accurate. Products are then packaged, labeled, and sorted by carrier and service.
Shipping out finished goods
Carriers pick up the packages, and the finished products are shipped out.
How to optimize your inbound and outbound logistics
There are many ways to improve logistics systems with both technology and improved processes. Here are some ways you can optimize inbound and outbound logistics.
1. Build strong relationships — with everyone from suppliers to carriers
Whether suppliers provide raw materials or finished goods, having strong relationships with them allows your business to reduce lead times, save money, have more favorable terms, and be top of mind with them. The easiest way to do this is by upping your reorder quantity over time, paying them, and being respectful. It can be that simple!
Similarly, having good relationships with carriers, fulfillment logistics providers, freight partners, and last-mile providers can bode well for your business. Between volume discounts and expansion opportunities, to long-term partnerships, you can be rewarded for your growth and commitment.
“A lot of entrepreneurs and companies underestimate the cost-savings and power of choosing your entire supply chain and partner network wisely. These choices will make or break your business.”
Courtney Lee, founder of Prymal
2. Reduce your inventory costs
Inventory storage costs can quickly ramp up as a business or SKU count grows. The more warehousing space or larger the warehouse(s) you need comes with a higher price tag, especially if you invest in the infrastructure yourself.
You need a steady supply of inventory to match your demand, but if you order too much inventory, you will face high inventory carrying costs. You want to hold inventory that you’re actually ready to sell and have a high inventory turnover rate.
3. Utilize the right warehouse management system
A WMS for your warehouse can help to automate and improve warehouse management and operations. It should enable you to track inventory, set reorder points, and understand your inbound and outbound logistics tasks at a glance.
4. Partner with a 3PL that has the technology to keep you updated
If you didn’t get in business to oversee logistics and operations, the good news is you can outsource fulfillment. Supply chain partners like ShipBob can help ecommerce businesses with many inbound and outbound logistics processes.
This includes third-party logistics (3PL) services like receiving inventory from manufacturers, ecommerce warehousing, managing relationships with shipping carriers, preparing packages for delivery, and even processing ecommerce returns.
“ShipBob has been a great partner as we’ve grown. They help us offer new products to our customers with hardly any extra effort on our part. Our focus is to grow our business, and that will not be achieved by packing up orders, sending out boxes, and dealing with enormous carriers like FedEx and UPS ourselves. That’s what ShipBob has mastered.”
Pablo Gabatto, Business Operations Manager at Ample Foods
Leading 3PLs like ShipBob have technology that makes inbound and outbound logistics much easier. For example, ShipBob’s dashboard integrates with leading ecommerce platforms, inventory management systems, and other tools, and can be used to send inventory, track stock levels, set reorder points, and view order status for any of the shipments they fulfill and ship to your customers.
Supply chain efficiencies rely on an efficient inbound and outbound logistics network. Finished goods require several movements throughout the supply chain until they reach your end customers.
With ineffective ecommerce logistics processes, companies have a tough time sourcing products and getting products delivered to customers. Though filled with complexities, inbound and outbound logistics are two key components of a healthy supply chain.
If you’re interested in learning how a professional fulfillment and logistics service provider can help ease the burden of managing inbound and outbound logistics yourself, click the button below to get in touch with ShipBob.
Inbound vs. outbound logistics FAQs
The inbound and outbound logistics processes of running an ecommerce business are confusing, time-consuming, and challenging to master. Here are some of the frequently asked questions about inbound and outbound logistics.
What is the difference between inbound and outbound logistics?
What is the meaning of inbound and outbound logistics?
What is an inbound logistics example?