Robust Inbound and Outbound logistics is fundamental to the success of a business. These processes affect production, profits and customer service. There are many challenges to achieving proper logistics, and the costs of not perfecting these processes can be enormous. Implementing the right controls can help the success of the business.
What is the difference between Inbound and Outbound Logistics?
Inbound logistics brings supplies or materials to a business, while Outbound logistics deals with the transfer of goods and products to customers. The Inbound has to do with the reception, while the Outbound focusses mainly on delivery.
| Attribute | Inbound Logistic | Outbound Logistic |
Direction | Inward | Outward |
Focus | Supply | Demand |
Key Relationships | Suppliers, vendors and their distributors | Distributors, wholesalers, retailers and end customers |
Processes | Sourcing, procurement, materials handing, putaway | Inventory management, order fulfillment, shipping |
Activity | Raw materials or goods coming in from suppliers | Finished products going out to customers |
Strategic Imperative | Obtaining goods or materials the company needs to make its products | Meeting customer demand, supporting the sales process to generate revenue |
Inbound Logistic
It is the way materials and other goods reach a company. This process includes the steps of ordering, receiving, storing, transporting and managing incoming supplies.
Activities: Sourcing and procurement | Ordering/purchasing | Transportation | Reception | Material handling | Storage | Inventory management | Streamlining | Distribution | Reverse logistics.
The main challenges of inbound logistics are high costs, uncertain delivery dates and unpredictable delivery times.
Outbound Logistic
Outbound logistics focusses on demand. The process involves the storage and shipment of goods to the end customer. The steps include order fulfilment, packaging, shipping, delivery and customer service related to delivery.
Activities: Warehouse management | Inventory management | Transportation | Delivery | Last mile delivery | Delivery optimisation.
The challenges of outbound logistics can affect profits and customer satisfaction. Inventory and shipping costs can increase rapidly, while incorrect or delayed orders will scare customers away.