Inbound vs Outbound Logistics: How to Optimize Each Process

Logistics, it could be argued, is the lifeblood of industry - it ensures the products and materials you need to make your business function can both be effectively sourced and your finished products can be sent where they need to go.

Every year, more than 10.8 billion tons of freight are transported across the US by more than 7.4 million truckers, with the industry accounting for approximately 5.8% of all American full-time workers - highlighting the massive scope of logistics across the nation.

However, there's a key differentiation to be made between the two types of logistics that companies will generally undertake - inbound versus outbound - and each needs to be handled in a different way to deliver optimal efficiency.

The key differences between inbound and outbound logistic processes

Inbound logistics relates to the flow of goods and raw materials into a business, while outbound logistics concern the transport and delivery of finished products.

Both processes are essential for the smooth functioning of business operations; however, they should be viewed as distinct entities and not one and the same. As a result, companies must understand that individual attention is needed for both of these important areas of logistics, with bespoke solutions required to deliver maximum performance and savings.

3 tips to optimize your inbound logistics process

1. Vertical integration of supply chain

Dealing with a single overarching supplier, which is responsible for the management of multiple smaller suppliers, can lead to increased cost efficiency and other benefits, such as shorter lead times and synergies in production.

In many cases, vertical integration is achieved when an organization acquires the operations of parts of its supply chain. This ensures continuous access to the parts and materials needed for smoother production of the final product.

2. Increased automation

Automating the inventory and transport of items when goods first enter the warehouse can significantly boost efficiency by ensuring items get to where they need to be used faster and are effectively tracked along the way.

The use of picking robots, for example, can help reduce the amount of time spent by key warehouse staff on laborious/repetitive tasks. This can help ensure a reduction in order errors, as well as freeing up time for human staff to manage only by exception.

3. Implement VICS

By asking all suppliers to sign up to a set of Vendor Inbound Compliance Standards (VICS), you can optimize your logistics process by reinforcing positive behavior and applying negative consequences to those who create disruption in your supply chain.

Including penalties that reinforce your standards will ensure suppliers take your processes seriously and deliver a smoother running of operations. In addition, financial penalties for those who break the guidelines will also help to offset any costs associated with inefficiencies caused by poor supplier behavior.

3 tips to optimize your outbound logistics process

1. Track and trace of goods

Utilizing a system of barcode scanning and inventory tracking enables firms to keep a close eye on individual orders and the shipping of goods.

This ensures producers can be clear on items that are ready to be shipped and where they are in the delivery pipeline, while also allowing the customer to gain real-time updates on the status of their order.

2. Improve communication

Ensuring those responsible for the movement of finished products are able to communicate easily and effectively can lead to significant efficiency savings in outbound logistics.

The ability for management to speak directly with warehouse managers, delivery personnel and other members of staff can mean issues in the transport and directing of goods are ironed out more swiftly. This means incorporating the latest technologies, such as wearable devices that are updated in real-time, which can have a dramatic impact on overall levels of productivity.

3. Real-time vehicle tracking

Integrated systems that allow you to track the exact whereabouts of delivery vehicles at any time, where they are along the route of delivery once dispatched, and when items are received by the end client, all ensure additional transparency and provide peace of mind to the customer.

This also provides increased efficiency in route planning that can reduce costs, meaning drivers can report on deliveries as they’re completed, while also providing added benefits like improved time management, fuel savings and added security.

How inbound and outbound logistics can help you create a comprehensive supply chain management strategy

By optimizing and maximizing efficiency within both your inbound and outbound logistics, you can benefit from significant efficiency savings.

However, it's not enough to see both areas as distinct, and instead, there should be a focus on creating a supply chain management strategy that views both inbound and outbound logistics as a holistic whole.

This can be achieved through the creation of a comprehensive supply chain management strategy and is something that businesses keen to maximize their savings and performance should examine in detail.