Guide to Inbound and Outbound Logistics

Efficient logistics is critical for smooth supply chain management, and for most companies, its operations can be divided into two processes –inbound and outbound logistics. For companies in the e-commerce industry, a robust inbound and outbound logistics management and transportation model enables fast and smooth deliveries, which helps  to meet increasing customer demands.

What is Inbound Logistics

Inbound logistics is the process through which goods and materials are transported from a manufacturer to a business. Some examples are raw materials purchased for production, the completed products from manufacturers, or supplies such as packaging materials. Inbound activities may include the process of receiving the goods, recording them into the inventory, and ensuring proper storage in the warehouse.

After the goods are processed by the businesses, the finished products can then be sent out to the end users through outbound logistics.

What is Outbound Logistics

Outbound logistics refer to the process of moving goods along the supply chain until they reach their final destination. There are typically four stages of outbound logistics operations: warehousing and storage, distribution, transportation, and last-mile delivery.

The outbound logistics process guides the flow of inventory across the supply chain towards the end users. Products are picked up in a warehouse or fulfilment centre and shipped to buyers, usually with the help of a delivery partner such as DHL Express.

What is the Difference Between Inbound and Outbound Logistics?

Both inbound and outbound logistics are part of the process which enables the movement of goods. The main difference is in the direction of the flow. Inbound logistics marks the inward journey of supplies and materials – incoming goods. Outbound logistics, on the other hand, deals with the outward movement of goods to the customers or end users – outgoing orders.

Inbound logistics includes the procurement and treatment of raw materials, sourcing, purchasing, storage, inbound distribution, and handling supplier returns – also known as reverse logistics. Some examples of reverse logistics include:

• Return of goods by customers

• Return of unsold goods by distributors

• Recycling of packaging

• Refurbishment of goods

• Repairs and maintenance

Outbound logistics include inventory management, order fulfilment, packing, and shipping.

Both areas play a big part in the overall supply chain management. 

Challenges of Inbound and Outbound Logistics

Knowing the characteristics of inbound and outbound logistics is not the only aspect to consider when developing a supply chain management strategy. Identifying the common challenges of the two facets allows you to effectively manage and streamline the process. Inbound and outbound logistics activities come with similar challenges:

1. Poor visibility

According to Gartner, only 21% of industry professionals have no difficulty with supply chain visibility (SCV). Not having a clear view and understanding of the logistics processes can result in revenue loss, low efficiency and drop in productivity. Since both inbound and outbound logistics involve many stakeholders, this becomes even more challenging.

From the time a procurement order for raw materials is placed to when the end product is being delivered to their end users, businesses often lose sight of the movement and status of goods.This can hamper the fulfilment or customer satisfaction rate, or result in ineffective planning.

2. Increased logistics cost

Even as the world scrambles to return to normalcy, the global pandemic continues to have a negative impact on the shipping industry. Compared to pre-COVID-19 times, this cost has increased by more than 300%, especially in Far East Asia. Coupled with poor coordination, a lack of visibility and lacklustre supply chain management within the inbound and outbound process can push up the overall logistics cost significantly.

3. Inefficient daily operations

Many businesses hire in-house personnel to handle daily logistics operations. From purchasing raw materials to packaging the final product for shipment, the success of inbound and outbound logistics hinges on these people. However, some of the common manpower issues lie in having inadequate training, inexperienced staff and a lack of accuracy. These issues can result in inefficient daily operations which will also impact the profit margin.

4. Ineffective deliveries

In order to keep up with customer expectations, businesses have to ensure that deliveries are made on time. It is common to find businesses arranging a delivery order with a third-party logistics handler only when their customers make a purchase. Once the order is confirmed, these businesses will then retrieve the goods from the warehouse, pack them, and contact a courier service to handle these deliveries. This manual process can be highly unproductive and increase overall operational costs. 

On the other hand, businesses that work with a professional delivery fleet usually enjoy fast delivery, short response times, and quick assistance. Apart from resolving common logistical challenges, doing so can also help create a positive brand image by being reliable and efficient.

5. Lack of data

Today, data plays a big part in the process of many business organisations – from making informed decisions to making predictions for the future. However, the lack of quality data is still a major obstacle for many companies around the world with them having little or no visibility beyond Tier 1 suppliers. With demand for personalisation and context-based services on the rise, leveraging big data can enhance the entire logistics value chain by creating a streamlined and fast moving process geared towards success.

Optimising Your Logistics Operations

With a wide variety of transportation solutions in the market these days, businesses are better equipped to resolve logistics challenges and streamline their inbound and outbound logistics activities. Understanding the channels of distributions and the considerations along the way can also improve the overall journey when it comes to the inbound and outbound processes.

Working with a third-party provider like DHL Express can also help in taking on the bulk of your business’s logistics operations and assisting you in your warehouse activities. MyDHL+, for example, gives businesses end-to-end visibility over the import and export processes, with solutions that range from shipment consolidations to customs clearance. All these work well together to address the challenges that come with inbound and outbound logistics as discussed above, and support your organisation in streamlining complex logistics operations. Contact DHL Express to learn how we can help streamline your logistics process.