Inbound and Outbound Logistics Processes 101

As a business owner, it probably seems like you have to constantly deal with logistics. If you have ever found yourself confused or falling behind, you’re not alone! After all, as a business owner, you’re often expected to be a jack of all trades, so should you have to add “logistics specialist” to that list too? 

While it helps to understand the basics of these processes, you definitely don't have to do it alone. That’s why we are here to help you understand the basics of inbound and outbound logistics processes! 

What Does the Inbound Logistics Process Entail?

Inbound logistics involves the way that materials and other goods are brought into the company, including but not limited to ordering, receiving, storing, transporting, and managing incoming supplies. 

Here are some of the different processes involved in inbound logistics:

• Sourcing and procurement: You have to get your raw materials somewhere! You should always check out multiple different suppliers to get price quotes, evaluate their capabilities, and end up negotiating an agreement. 
  
  
• Ordering and purchasing: Once you have a supplier, you still need to order your supplies in the right amounts and at the right times. This can be challenging if you have a seasonal business that experiences busy times and slow times -- so always be sure to anticipate these changes the best you can so that you can actually get the supplies you need in a timely manner. 
  
  
• Transport: There are several different ways to transport goods -- each one varying in time and shipping cost. For example, you could use a truck to move things relatively quickly if you have multiple warehouse locations around the country. On the other hand, if you only have one warehouse location, you may want to consider using a plane to ensure that your items arrive in a timely manner. 
  
  
• Receiving and handling: Your items have arrived; now what? Someone has to be there to receive them, move them inside, and put them in the right location. Remaining organized within this step is vitally important to make sure that you get all the items you need and store them in the right location where they can be easily accessed. 
  
  
• Storing and warehousing: If your items aren’t going to be immediately sent out for manufacturing or fulfillment, you will need to store them in a warehouse under the right conditions to prevent damage, spoilage, and obsolescence. 
  
  
• Distribution and tracking: Sometimes, items that arrive in one place will need to be sent to another location, so they will need to be properly distributed. Additionally, these actions will need to be tracked thoroughly to ensure that you’re operating as efficiently as possible. 
  
  
• Reverse logistics: Finally, there’s reverse logistics that include receiving items that are sent back from customers either due to returns, defects, repair, etc. You may also want a USPS Certificate of Mailing as a proof that you sent out a package on a certain date at a certain time, from a certain location.

What Does the Outbound Logistics Process Entail?

Outbound logistics involves the storing and moving of goods to the customer, including but not limited to order fulfillment, packing, shipping and handling, delivery, and customer service. 

Here are some of the different processes involved in outbound logistics: 

• Warehouse management: It’s important for any company to maintain goods on hand so that they can quickly and easily be shipped out if an order comes in. This involves renting out warehouse space where your products can be housed before being shipped out. 
  
  The geographical placement of your warehouses is an important part of the equation. You should either find a middle-ground warehouse site or invest in multiple warehouses in different regions so that you can efficiently ship out orders, save on or calculate shipping costs, and end up with more satisfied customers as a result. 

• Inventory management: When an order comes in, the inventory management process takes over to ensure that the right warehouse is chosen for shipping, the right items are picked from the shelves, and the items are packaged properly before being shipped to the specified location. It’s important to maintain accurate inventory information to avoid overstocking, understocking, damage, obsolescence, and spoilage of perishable products. 
  
  
• Delivery: Your role in the outbound process doesn’t end when an order leaves your hands! In fact, the outbound logistics process also involves the delivery process. It’s important not to underestimate the importance of this step, as consumers have come to expect very fast delivery times. As a result, it can be hard for smaller businesses to compete with these fast delivery times that often require a ton of resources or money to pull off. 
  
  However, if you’re looking to go above and beyond in terms of delivery, you can offer “free” shipping by increasing the actual prices of your items to include a shipping allowance. That way, the customer believes that they are getting fast and free shipping, and you don’t have to lose money -- it’s really a win-win. On the other hand, you may want high priority shipping in order to deliver it very quickly, which comes at a cost.

• Customer service: Believe it or not, but customer service is actually an important component of outbound logistics. Customers are going to want information about their orders after they place them, and it’s up to you to provide that information. This involves updating them along the way when their order is processed, shipped, and delivered. Finally, you should always include a customer satisfaction survey once an item is delivered to gather valuable feedback that you can use to improve your processes. 

Challenges Posed by Inbound and Outbound Logistics Processes

Clearly, all these different steps leave a lot of room for error to pop up along the way. And we aren’t going to lie -- you will run into challenges! The key is to be able to anticipate these challenges and then effectively handle them. So here are some challenges posed by inbound and outbound logistics processes that you may run into:

• Balancing supply and demand: Supply and demand are some of the most basic business concepts in theory, but they can be extremely difficult to figure out in practice! Inbound and outbound logistics involves having enough supply on hand to meet the demand from your customers. While you can’t always predict the future, you should always keep a close eye on your data to pick up on trends so that you can be as proactive as possible. 
  
  
• Coordinating between locations, employees, and processes: Clearly, there are a lot of different factors involved here, so it’s important that everyone remains on the same page. Communication is key to ensuring proper coordination within each process. Be sure to always keep your information up-to-date to avoid mistakes. 
  
  
• Managing costs: In an ideal world, you could simply go with the easiest and most efficient supply and fulfillment options to make the entire process function seamlessly. However, in reality, you’re going to have to think about costs. Sometimes, you may have to put a little extra work in to save some money as a result. Just be sure to always do your research before you make any decisions that could impact you financially. 
  
  
• Meeting customer expectations: As a business, your overall goal should be to satisfy your customers. Obviously, this is easier said than done -- especially in the world of instant gratification and high expectations that we live in today. At the end of the day, always focus heavily on customer service to set yourself apart from competitors who tend to deliver and then ignore. 

How to Optimize the Inbound and Outbound Logistics Processes?

So how can you overcome these challenges? You will need to optimize and automate. Here are some different steps that you can take to do so: 

• Build relationships with partners: One way that you can improve these processes is to focus on your relationships with your partners. Use their expertise to your advantage! By fostering a sense of respect and understanding between all sides, you can rest assured that you’re doing all you can for an efficient process. 
  
  
• Invest in tools: With so many moving parts, it can be very difficult for you to manually manage all of this on your own. That’s why software and tools with artificial intelligence and automation are essential if you’re looking to grow a successful and efficient business. 
  
  
• Use a third-party logistics (3PL) company: Even with the right tools, managing all your logistics for a rapidly growing business can really take its toll. Thankfully, there are companies that specialize in this so that you can outsource all of these processes, and rest assured that they are being completed as efficiently as possible. 

Final Thoughts on Inbound and Outbound Logistics Processes

Managing inbound and outbound logistics processes can be overwhelming if you try to do it on your own. However, with the right thought, efforts, and tools, you can effectively execute each step in these processes from start to finish. 

Sources:

1. 9 Ways to Provide Excellent Customer Service | Indeed
2. On a Knife Edge: Balancing Supply And Demand In A Changing World | Forbes
3. Top 3 Reasons Why You Should Invest in Business Software Now | Entrepreneur