Inbound Logistics: Definition, Process, and Optimization
July 27, 2023
The logistic process regarding inbound and outbound of goods is one of the essential aspects of any business as it needs consistent planning, organizing, and managing of goods/services. In summary, logistics include the complete process from acquiring raw materials, the assembly, and the distribution of final goods to customers. A strong logistics system is important in implementing your business especially in dealing with and managing physical goods. Logistics in its core is commonly divided into two categories: the inbound and the outbound process which shares the concept of the transportation of goods/products across various distribution channels.
Then a question emerged that if they share this mutual concept, how can you tell apart the process of inbound and outbound in business logistics? In general, even though these two are similar in nature, Inbound logistics is usually concerned with supply chain while outbound logistics is mainly concerned with demand such as demand planning. Although the main topic that we will be discussing in this article is specifically the Inbound process of logistics to provide a more focused discussion.
If you want to learn more regarding the Outbound Process of Logistics, you can access the following article below: Definitive Guide of Outbound Logistics.
The definition of Inbound can be understood as the process of receiving and storing raw materials and components required for production. This procedure covers the steps involved in ordering, receiving, storing, transporting, and managing incoming supplies. So, in general Inbound logistics refers to the process of transporting raw materials, inventory, or supplies from a supplier to a business's warehouse, distribution center, fulfillment center, or retail shop. That is why Inbound is said to be more concerned with the supply side of the supply-demand relationship.
Inbound logistics entails a variety of tasks aimed at efficiently receiving and storing raw materials and components required for production. The following are some of the important and common activities involved in inbound logistics:
The first process is similar to the first stage in the process of supply chain in that it determines what resources or inventory your organization requires and how to obtain them. Sourcing is the process of investigating resources or products and deciding which manufacturer, supplier, or dealer to buy them from.
After determining the source of your production material, the next step is normally to place an order for the supplies or inventory that you require for your business. Negotiating purchase agreements with suppliers, including pricing, delivery dates, and payment terms, may also be included in this process. You and your supplier or manufacturer should preserve a record of the transaction, as well as the materials and/or items ordered by your company.
Following the confirmation of your order, the supplier or manufacturer is responsible for freight shipping the items to the right location or distribution channel (often through ocean, air, ground, or a combination of different vehicles). Goods can be delivered to a company's retail locations, warehouses, fulfillment centers, or other distribution facilities. This activity typically entails determining the delivery pace for incoming products, engaging with third-party carriers, and negotiating the best price and route with vendors.
When the goods arrive at the store, warehouse, or fulfillment center, the receiving team at that location is in charge of receiving the inventory. The team will accept the cargo, document it, and count the contents to ensure that the shipment is exactly what was ordered. So, receiving supplies include dealing with the arrival of fresh materials, unloading vehicles, and checking that they match the order. This stage also includes transporting received products within the facility and transporting commodities from the receiving dock to storage.
This involves the management and monitoring the transportation of materials and ensuring that adequate quantities are available to meet manufacturing requirements. This step also includes Implementing inventory control systems, establishing reorder points, and monitoring inventory levels to avoid shortages or excesses.
What refers to reverse logistics is the processing of consumer returns and exchanges due to defects, delivery problems, repair and refurbishment.This technically is included as inbound since goods are coming into the warehouse. Thai also includes restocking unopened/good condition products to the available inventory and even recycling or salvaging part of the goods to salvage the materials.
In optimizing your current inbound logistics, of course research must be done in making a faster, more cost-efficient, more effective and more agile inbound system while being able to identify weaknesses to see the area needed towards improvements. Using basic research for example like measuring the current inbound logistic performance, analyzing purchases and managements of the purchased goods are some of the ways for you to easily locate weaknesses or flaws in your inbound system and to help develop a suitable strategy to address inefficiencies.
In developing your inbound process to its maximum potential, there are also some recommended practices that you can implement in your business logistics. These practices includes:
It is always important to look for improvements in your existing systems to develop your business more effectively and efficiently.
