What is Outbound logistics?
What is Outbound Logistics?
After a product or good has been manufactured they have to be delivered to the end-user or the final consumer. This process of delivering products to the final consumer is called outbound logistics.
Outbound logistics refers to the process of storing and transporting goods or products from the retailer’s warehouse or store to the final customer and include steps like order fulfillment, packing, shipping, delivery, reverse logistics and post-delivery customer service.
What are some of the activities associated with outbound logistics?
Activities associated with outbound logistics are:
Warehouse and storage management: Warehouse or storage management is an important part of outbound logistics as it helps to keep the products safe and available when required to be sold. Warehouse management can be done either by using your own warehouse or storage facility or via a third-party logistics provider.
Inventory management: Inventory management involves picking, packaging and storing goods and inventory in the right place so that it is readily available when needed.
Transportation: Transportation involves shipping goods or products to distribution or fulfilment centres. It is usually done using trucks/planes/freights.
Last-mile delivery: this is the last activity of outbound logistics. This involves transporting goods or products from the distribution centre to the customer’s doorstep.
What is the difference between outbound logistics and inbound logistics?
Both inbound and outbound logistics are the movement of goods and products for the fulfilment of orders. Inbound logistics involves processes that are related to transporting goods or raw materials to the business or retailer. Whereas Outbound logistics involves transporting and distributing goods and products to the end-users or customers. Inbound and outbound logistics in their entirety comprise the overall supply chain management strategy.
What are the processes involved in outbound logistics?
There are several steps in the process of outbound logistics:
Order placement: The customer places an order for the product through the established channel.
Order processing: The order is received by the business, validated and processed.
Picking and packaging: The order is picked up from the storage. The product is then packaged, labelled and sorted by carrier and service.
Shipping: The packaged product is then finally shipped to the warehouse or distribution centres.
Last-mile delivery: Finally the product is transported from the distribution centre to the customer.
What are the challenges of outbound logistics?
Outbound logistics is an important part of supply chain management and is integral to making profits and ensuring customer satisfaction. Some of the common challenges of outbound logistics are:
Coordinating operations: Outbound logistics consists of several processes such as production, storage, distribution and delivery that are required to be monitored and coordinated in order to ensure optimal movement of goods. Software and automation can help close the information loop by connecting production to storage capacity and demand.
Managing inventory costs: Managing inventory requires careful planning as it is necessary to keep enough inventory to meet fluctuating customer preferences and market trends without incurring unnecessary storage costs. It is also important to monitor inventory levels and sell-through rate, inventory turnover rate and other metrics.
Transportation or delivery costs: Managing transportation costs or delivery charges is another important factor for outbound logistics. It is important to monitor and analyze transportation costs to spot inefficiencies and explore different strategies.
Rising customer expectations: Rising consumer demands for faster and cheaper delivery along with real-time visibility and order tracking is a huge challenge for outbound logistics.
How can you optimize outbound logistics?
In order to be more competitive and ensure customer satisfaction, it is important to optimize outbound logistics and the processes related to it. Some of the ways to optimize outbound logistics are:
- Build and improve relationships: It is important to build, maintain and improve relationships with everyone involved in the outbound logistics process including your customers and freight providers.
- Adapt to better inventory management strategies and reduce your inventory costs.
- Utilize the right warehouse management systems.
- Partner with 3PLs to outsource outbound logistics processes.
