In the eCommerce industry, inbound and outbound logistics refer to the process of receiving and sending goods respectively. If you own or work for an eCommerce company, you’ll have likely heard these terms thrown around quite a bit, and have somewhat of an understanding of how important they are for your business’ profitability, customer service, and company health.
Today, we’re going to explain what inbound and outbound logistics actually mean, the differences between them, examples of each, and offer some tips on how you can begin or continue to optimise your inbound and outbound logistics.
In this article
Inbound logistics explained
As referred to previously, inbound logistics is the process of receiving goods. The terminology primarily applies to receiving goods into a warehouse, fulfilment centre, or shop, depot, or company site. It can also refer to the shipping of these goods from the supplier or manufacturer to the above locations.
For large operations, inbound logistics is a carefully monitored process. Optimising inbound logistics means ensuring goods are properly handled, tracked, and accounted for. This ensures that your business doesn’t lose money due to missing stock or delays, and means that your customers have access to their favourite products whenever they need them.
Outbound logistics explained
Think of outbound logistics as the opposite of inbound. Outbound logistics in the eCommerce industry refers to the preparation and shipping of goods to their destination – usually to the door of your customer. Most of the outbound logistics process occurs at the warehouse or fulfilment centre, and when it’s in the hands of the carrier.
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Like inbound logistics, the outbound logistics process is highly important, and there’s a lot of work that goes into it to make sure it runs smoothly. In fact, we’d consider it to be the most important part of the fulfilment process. Once your customer has made an order, you rely on a good outbound logistics strategy to ensure that they receive their items on time and in good condition.
Examples of inbound logistics processes
The inbound logistic process is actually made up of lots of different micro processes that combine to make a smooth, reliable operation. Here are some of the most important components of inbound logistics:
Ordering from the supplier
Purchasing raw materials or products from suppliers is an important aspect of inbound logistics. You’ll need to have good relationships with your suppliers, while also ensuring that you order the right amount of stock for any given period of time.
Under ordering means your products might sell out, whereas over ordering could mean paying for storage costs you don’t need. Having a good understanding of inventory management can help you ensure this aspect of the inbound logistics process runs smoothly.
‘Goods in’ is the process of receiving goods into a warehouse or fulfilment centre. It’s much more than simply unpacking a lorry and putting stock on the shelves. An effective ‘goods in’ process involves quality assurance checks, tracking and recording, weighing and measuring, and placing goods in an optimal location.
All of this is essential to ensure that the fulfilment process is quick and accurate when orders are placed by the customer. Without a proper receival process in place, items will go missing, orders will be late, money will be lost, and customers won’t be too pleased.
Returns management, or reverse logistics, happens later in the inbound logistics process but is no less important. To be competitive in today’s market, eCommerce businesses need to have the flexibility to offer returns that are straightforward for the customer and quick to process.
In most cases, the returns management process involves receiving the item, checking whether or not the return is valid, and ensuring the item is in perfect condition to be resold. Once it’s been identified that a return is valid and in good condition, the item can then be quickly put back on the shelf and a refund issued to the customer. A good returns management process also keeps customers up to date on the status of their return, normally through automated emails or SMS messages.
Examples of the outbound logistics process
The outbound logistic process is similar in that it is made up of smaller processes. It’s fairly synonymous with the fulfilment process, and involves preparing goods and dispatching them to customers. Here’s an overview of some outbound logistics processes in more detail:
Picking and packing
When an order has been placed and recorded on the warehouse management system, picking and packing teams will begin preparing the order for dispatch. It involves carefully selecting items from the shelf to make sure the correct item is being picked. Most 3PLs (including James and James) will have the shelves barcoded, allowing pickers to scan the shelf and check it matches the right product on the order.
Once the order is picked, the packing team will select the right packaging for the job, and then place the complete order in dispatch.
A good outbound logistics process involves working with the best couriers to suit both the needs of your business and your customers. Having a range of options is key, from 24 hour delivery to sustainable options, economic delivery and international delivery, and much more.
It may also be important to consider where the majority of your customers are based. If, for example, you operate in the UK but sell a lot of products in the US, it could be worth looking for a fulfilment provider with an international network of fulfilment centres. This way, you can optimise the last mile delivery process and cut back on shipping costs and times.
How to improve inbound and outbound logistics
Now we’ve discussed some of the specifics of inbound and outbound logistics, let’s take a look at what you can do to optimise and improve them. It’s all about building strong relationships with both suppliers and couriers, embracing the power of technology, understanding data, and considering outsourcing your operations to 3PLs that know their stuff.
Get to grips with you inventory management
As we noted earlier, good inventory management is essential to improving inbound logistics processes. A good inventory management system is the best place to start with this, as it’ll show you all the important data you need to make good decisions regarding your stock.
For example, you’ll be able to see clearly which lines are doing well in which territories across all of your channels, and, equally important, you’ll be able to note what’s not doing as well. This can help you decide whether or not to put more resources into specific channels that are doing well, and this improves the efficiency of your outbound operations.
Less focus on the things that aren’t working, and more and the things that do!
Nurture relationships with suppliers and carriers
Having good people around you is important to success in all walks of life, and the same can be said for outbound and inbound logistics. Working with reliable suppliers you can trust, that deliver goods at the promised time, makes a big difference to the smooth running of inbound logistics.
Similarly, having a reliable range of carriers across the entire supply chain – from the first mile to the last mile – will help goods move from beginning to end with as few delays as possible. Timing is key here, and having carriers that can deliver on their agreed date makes a huge difference.
Let James and James take care of your inbound and outbound logistics
James and James are a 3PL provider who specialise in helping eCommerce businesses Scale Up. With fulfilment centres in the UK, EU, and US (and more coming very soon), our custom-built software, super-quick processing times, and industry leading accuracy make us the ideal choice for eCommerce businesses looking to grow their business.
We focus on businesses that move lightweight, fast-moving products and have ambitions to reach the very top. Retrain full clarity and control over your inventory with our award-winning software, ControlPort, while we take care of storing, picking, packing, and shipping your orders to your customers across the world.
Want to learn more about how we can improve your logistics and help you grow rapidly? Get in touch with our fantastic team who will talk you through everything.