Inbound and outbound logistics are sometimes considered interchangeable terms, but they are actually two different concepts that serve different purposes. In this article, we'll explore the differences between inbound and outbound logistics, their impact on your supply chain, and how you can calculate which method is more effective for your business model.
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- What is inbound logistics?
Inbound logistics is a supply chain management strategy that involves the flow of goods or materials into a business or organization. Inbound logistics is the opposite of outbound logistics. Inbound logistics is often associated with the process of receiving goods or materials into a warehouse or other storage facility.
– Source HubSpot
In contrast, Inbound logistics is the movement of goods or materials out of a business or organization. Inbound logistics is the opposite of outbound logistics. For example, if a manufacturer needs basic raw materials such as cotton or iron, it may send these materials out to other manufacturers to purchase raw materials on the spot. This is an inbound logistics process. Conversely, if consumers want these products locally, a manufacturer may send this raw material out directly to be manufactured. This is an inbound logistics process.
These two processes are in opposition to each other in many ways. Goods and materials may be sent in one direction or the other depending on what the supplier desires (e.g. raw materials versus finished products). Furthermore, the services involved differ as well. Raw materials may be transported by truck, railroad, barge, or another mode; while finished products may be sent by freight carrier or air transportation.
Coordinated inbound and outbound logistics are essential in supply chain management to ensure accurate timing, timely shipment, and continuous control of inventory.
Before we begin drill-down analysis, let’s zoom in on what it really means to have a coordinated inbound and outbound logistics strategy. Inbound logistics focuses on the movement of goods or materials directly from source to destination. Outbound logistics focuses on receiving shipments from source to destination.
In today’s scenario, imagine Mary wants to buy cotton from manufacturer XYZ. Mary enters XYZ’s warehouse facility, physically checks out all of her cotton, then immediately meetings with the manufacturer to pay for and package her cotton.
Imagine now that Mary’s cotton has been received and inspected by the manufacturer. Mary then decides to ship her cotton to retailer RAX.
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- What is outbound logistics?
Outbound logistics, also known as supply chain management, is the process of sourcing goods, shipping them to another location, and selling them to a customer. It’s the process of taking inventory, putting it on a truck, and sending it to another location.
Outbound logistics is the process of ordering goods from suppliers. Orders’ materials and components are assembled into products that are designed, manufactured, packaged, and sent to a customer in one or two days.
In most supply chains, the buyer and the supplier coordinate during the all-important final stage of inbound logistics. This is when the buyer gives a final nod for the goods to suit their needs, receives a delivery estimate to the warehouse, and makes the final payment before their goods leave the premises.
After the goods have been received and cleared for shipment, the buyer places an order with the shipper for the cargo quantity required. In other words, the buyer pays to obtain the goods in advance.
When the order is received from the shipper’s carrier, the freight is loaded onto trucks and sent on its way to a final destination.
In the inbound phase, you strategically plan the route your goods will take and the trucking companies that will transport them.
You identify key points on the route where both truck drivers and loaders work. These origins and destinations are essential in calculating the shipping costs. Generally, motor carriers charge higher rates around these points, meaning that the price of your order will also include an extra fee.
Inbound logistics is important due to its predictability and efficiency. Moving goods between origin and destination is a time and cost-consuming task that consumes precious time and resources. By coordinating with the shipper to purchase the appropriate quantities of goods on the cheapest and hassle-free route, you save time and add value to your customer.
The all-important final stage of inbound logistics is packing your goods for shipment to your delivery destination.
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- What are the differences between inbound and outbound logistics?
Inbound logistics involves moving goods from suppliers to your warehouse or distribution center. This is usually done by a logistics company that specializes in inbound logistics. Inbound logistics involves moving goods from suppliers to your warehouse or distribution center. This is usually done by a logistics company that specializes in inbound logistics.
An inbound-type logistics provider typically provides deep integration with the e-commerce platform that a retailer wishes to use for inbound logistics. These companies also receive information from the backend of the e-commerce application (via APIs) about customer locations and product inventories based on a given order. These inbound logistics providers don’t have to move their own goods; they can simply pass the order along to a specialized moving company that’s in ‘forward’ mode, where it’s awaiting a designated pickup location and is ready to be handled once it arrives. Once it arrives at the requested pickup point, the moving company routes the order through an inbound logistics provider, such as a larger regional company or a leading global player, where it’s packaged and loaded on a scheduled vehicle to a destination warehouse.
In contrast, an outbound-type logistics provider doesn’t receive orders directly from the e-commerce site; it contracts with a moving company to handle the order once it arrives at its final destination. In this case, the moving company simply forwards the order to a partner, such as a distributor in the destination country, that’s in ‘return’ mode. This means that the shipment never leaves your location; if your own logistics provider is unable to remove it from its final destination, the shipping company involved will do it for you.
Inbound and outbound logistics are not compatible. They cannot be used interchangeably, nor are they considered equivalent in terms of performance.
Inbound and outbound logistics are often confused with each other, especially by entrepreneurs who’ve never truly understood the intricacies of logistics. The gap between these two concepts and the roles played by each are easily overlooked. Inbound and outbound logistics are interchangeable terms, but they are not the same.
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- How can you use inbound and outbound logistics to improve your business model?
Inbound logistics is when a business has a product they need to ship to customers (for example, an e-commerce store). Outbound logistics is when a business needs to ship a product to a manufacturer (for example, a manufacturer that sells to e-commerce stores). A business can use inbound and outbound logistics to sell products to customers or to other businesses.If you use inbound logistics, such as selling products to customers, you generally determine how you will receive products by packaging and storing the products inside a warehouse. These products will then be picked by your logistics provider and sorted by your manufacturer, where your products are manufactured. If this is inbound logistics, you’re considered an inbound logistics provider.
If you use outbound logistics, such as shipping products to customer’s locations, directly buying products from manufacturers, you’re considered an outbound logistics provider. However, as an outbound logistics provider, you more strictly follow directions from your manufacturer or your preferred shipper. This may require more tracking information from your shipping provider to ensure timely delivery of products to your customers.
Inbound logistics can take many forms, including reverse logistics, where your supplier sends you products that have been manufactured at one of your partner’s factories and you shortly assemble and ship them to your customer.
Packing is the process of wrapping a product with packaging materials for transport or delivery. However, packing may refer to the entire supply chain from raw material to packing materials.
Reverse logistics refers to the process of sending products from one point in the supply chain to the next, such as from manufacture to packaging.
If you use inbound logistics, such as selling products to customers, you typically receive your inventory from your primary supplier. These products are separated into stock (produced and ready for sale), shelf (stock that is kept for future orders), and backstock (stock that is not able to be sold at the current price due to insufficient demand).
Conclusion: Inbound and outbound logistics play important roles within your supply chain, but it's important to understand how each method can benefit your business. If you're confused about the terms, don't worry! This article will help you understand how they work together to improve your supply chain.
Distribution is responsible for the movement of goods, services, or information from a supplier to the customer. This occurs in four main forms: inbound, outbound, cross-docking, and reverse logistics.
These movements can be categorized as either inbound or outbound. Inbound logistics involves the movement of goods from a producer to a consumer. In contrast, outbound logistics involves the movement of goods from consumers to producers.
Manufacturers maintain inbound factories for both inbound and outbound logistics. Inbound production is when a manufacturer produces goods for the market, while outbound production is when certain goods are produced for sale. In this study, we're focusing on inbound logistics.
Inbound logistics involves coordinating the movement of product from a producer to a consumer or vice versa. In contrast, outbound logistics involves coordinating the movement of goods from consumers to producers.
Since inbound logistics involves coordinating the movement of manufactured goods, it’s usually the manufacturer’s job to perform this task.
Once the manufacturer takes the product from the producer to the market, the manufacturer then has to coordinate the shipment of the manufactured goods to its final destination.
Manufacturers getting goods to the final destination involves coordinating both the movement of the producer’s goods and the movement of the final destination’s goods.
Inbound manufacturing in contrast involves coordinating the movement of the goods that are produced for sale in the same way.
This task involves the manufacturer getting suppliers’ goods from the market (for example, merchants or stores) to the final destination and coordinating the movement of these products to their final destinations.
Once the goods have arrived at their final destination, manufacturers have to coordinate the recycling and disposal of the goods alongside the onward and returned shipping of the products to their intended customers.
Outbound manufacturing on the other hand involves coordination of the movement of the final destination’s goods to the consumer.