Inbound and outbound logistics, its meanings, and differences often confuse people while going forward to take up logistical decisions. Generally, logistics include both inbound as well as outbound activities that all the professional logistics and distribution park companies offer to provide an all-round service to its clients.
Having good product is one thing and making the products as well as delivering them correctly is another thing. You must design a complete logistic network if you want to grow and scale your business in the modern market scenario. For this reason, you must first understand what is inbound and outbound logistics and what are the differences between the two.
What is Inbound Logistics?
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Inbound logistics involves activities that aids the organization in sourcing and acquiring the supplies and raw materials required to manufacture the goods that they wish to deliver to their customers. This process involves ordering the required raw materials or supplies, receiving the supplies, storage and transportation to the facility.
Inbound logistics for retailers is sourcing the finished products from suppliers, receiving the products, storing, transportation and organizing of the products. So, every product-based business works around inbound as well as outbound logistical operations. Along with the above process, the distribution of all the raw materials or supplies received to its required destination inside the organization also comes under inbound logistics.
What is Outbound Logistics?
Outbound logistics can be categorized as a complete opposite operation as compared to the inbound logistics. In outbound logistics, the products or goods are taken out of the organization and are sent to the customers. The outbound logistics process involves receiving an order from the customer, fulfilling it in the facility, collating all the products together and supplying it to the customer’s base.
Once the goods are manufactured, the outbound logistics process starts. The products are stored in the warehouse, inventory is checked and managed, understanding customer requirements, collating the products as per the requirement, transporting the products, making sure the delivery is on time, and doing all of it in a cost-effective manner.
What is Inbound and Outbound Logistics: Differences
As the differences between the inbound and outbound logistics are much cleared off in their definitions, the pointers below will clear all the differences between them and how they generate a smoother operation for the company.
- To get clarity whether a logistical operation is inbound or outbound, one can simply check the direction of the product. The direction of inbound logistics is generally inward where the products or the supplies move towards the business. Whereas the direction of outbound logistics is outward as the finished products are supplied out from the business to the customers.
- The focus of inbound logistics operation is towards the supply; i.e. ensuring that the organization has enough supplies to manufacture and further deliver the products to their customers. Whereas the focus of outbound logistics operation is to maintain and deliver as per the demand of the product in the market. Here, as per the demand, the organization’s products are produced and delivered on time.
- The main purpose of inbound logistics is to receive supplies in correct quantities, store it, organize it and distribute it inwards for easier internal operations. Whereas the main purpose of outbound logistics is to deliver the finished products promptly to the right customer, at the right time, at an optimal cost.
- The most significant difference between inbound and outbound logistics is their processes. While inbound logistics process focuses on sourcing, acquiring, material handling, procurement, cost of procurement, ensuring correct products receival, inbound distribution of products and inventory management. Outbound logistics focus on order acquisition, order fulfilment, finished product’s inventory management, organization of inventory, transportation, and delivering of the products to the customer.
- In inbound logistics, the interaction happens between the suppliers and the organization. When it comes to outbound logistics, the interaction happens between the organization and its customers.
Conclusion
Logistics is a crucial operation in a supply chain that works through the process of receiving the raw materials from the supplier to delivering it to the customer. Here’s where inbound logistics plays the part of processing the goods from suppliers and outbound logistics plays the part of delivering it to the customers. Though both are completely different operations, they together aid a business in smooth logistical operation, growing customer base and scale in the market.