Whether they work with non-food products such as toys or food products such as cereals, all traders face the same inbound logistical problems and difficulties.
When looking at the trade cycle, inbound logistic must understand the mode of transport and storage of goods in a truck, ship or aircraft.
The key to creating a successful trade is the efficiency of logistics (inbound and outbound) and the path that leads to the end customer.
Generally speaking, logistics is an essential part of supply chain management, movement of goods, information and other resources to meet customers and the organization's requirements.
The logistics category includes various business functions such as fleet management, warehousing, materials management and transportation to the final destination.
The concept of logistics can generally be divided into logistics activities that include inbound and outbound logistics.
Inbound logistics is a part of micro logistics that coordinates all movements and conditions of materials and goods, from the procurement market to production and sales.
On the other hand, outbound logistics (consumers) mainly refers to storing, packaging, transporting and distributing goods to customers.
What is inbound logistics?
Inbound logistics is the movement of materials from suppliers to companies. It is the process of bringing purchased goods into a company.
It refers to a network that brings goods or materials to your business and includes transportation, storage, receiving and procuring goods for, for example, office needs or a production unit.
Except for production and sales, procurement is the most crucial business function in industrial and commercial enterprises. In the narrowest sense, procurement is the purchase of an item at a specific price.
In a broader sense, it includes activities such as purchasing, planning, procurement policy, selection of procurement sources, monitoring the delivery, takeover of materials, control of delivered materials, development of appropriate procurement techniques, methods, as well as the cooperation and coordination with actors in the logistics process.
Your inbound logistics network includes everything you need to transport, store and deliver to your company from other suppliers. Inbound logistics provides everything your business needs to create a finished product (output) that you will eventually sell.
Inbound logistics' main task is to ensure goods' availability, maintain and develop the supply capacity, continuously supply companies with the necessary resources for work (in manufacturing companies) or resale (in commercial companies).
The result of a well-done logistics process is the timely delivery and supply of the correct goods and materials in the required quantity to the final destination, with the greatest possible economy.
Procurement fulfills its tasks by getting to know the supply capacities in the current markets and using marketing instruments to influence the suppliers who deliver the required products.
For example, you have a situation where you need to boost production. In that case, you need more workforce in assembly, production, receipt of goods and distribution.
You will probably also need more storage space for everything, which may require additional equipment that can handle larger quantities of goods.
To procure materials or necessary goods to meet demand, you need to work closely with suppliers to establish regular deliveries.
Inbound logistic includes the following services:
Identifying needs for materials, raw materials, products and services
Procurement market monitoring and research
Selection of suppliers
Negotiating prices and payment terms with suppliers
Continuous monitoring of whether suppliers comply with the agreed conditions
Customs brokerage and customs warehousing
Inbound transport management
Storage and inventory management
Air, sea and road transport
What is outbound logistics?
Outbound logistics is the process of transporting goods from a manufacturing company to customers or other companies.
Outbound logistics refers to the transportation, warehousing and delivery systems that bring your products to customers. While some transportation industry entities specialize in inbound logistics, others specialize in product distribution and delivery.
Although inbound logistics bring raw materials into your business, outbound logistics deliver your finished products to their destinations. Directing products to your customers very often requires moving the goods to the distribution center, a place for storing goods.
Outbound logistics is a set of logistics activities during the transport of goods, representing the movement of materials from the company to the external user.
These activities mainly include transport management, handling of specific loads, integration of tasks and others.
Outbound logistics service includes:
Transportation and documentation management
Storage and distribution of goods
Shipment insurance during transport
Real-time transport tracking
Customer service management
Packing, shipping and shipment tracking
Key differences between inbound and outbound logistics
Inbound and outbound logistics processes are equally crucial for the overall supply chain management strategy.
Although inbound logistics can include everything from raw materials to tools, outbound logistics primarily deals with end products that are ready for end consumers.
Understanding the difference between inbound and outbound logistics is necessary to achieve a complete insight into the logistics network.
There are several main differences between inbound and outbound logistics:
Inbound logistics is oriented towards the transport and storage of incoming goods. Inbound logistics refers to the purchase, storage and distribution of incoming goods in the production unit.
In contrast, outbound logistics involves the transfer, selection, packaging and transport of finished products to consumers.
When it comes to inbound logistics, everything revolves around finding and receiving materials and managing them in the organization. On the other side, outbound logistics deals with distribution channels and customer services.
Unlike inbound logistics, in which interaction occurs between the supplier and the company, the interaction in outbound logistics occurs between the company and the end consumer.
How to increase profitability by optimizing inbound logistics processes?
The largest part of the company's expenses is supply chain management. Often the supply chain and logistics processes within a company are not strategically designed. They develop over time and are very rarely controlled.
Although the terms logistics and supply chain management are often used interchangeably, they are not synonymous.
Inbound and outbound logistics have different purposes and logistics processes optimized to fulfill each logistics network's role.
Optimizing your inbound logistics network can significantly simplify your business. To understand how to optimize your inbound logistics network, you need to have a complete picture of each moving part of the network and understand how the network works.
For your inbound logistics network to work effectively, you need to understand and optimize everything from receiving products from suppliers to transporting those products to your facilities and distributing them.
The procurement activities imply a broader aspect than the act of purchase, i.e., receipt of materials, raw materials, semi-finished and finished products and services.
Appropriate management of procurement activities, forecasting methods and inventory management often require specialist knowledge.
Procurement logistics should ensure several key activities:
a continuous flow of goods, i.e., raw materials, goods and services needed for the company operations
minimize investments and losses related to inventories
maintain appropriate quality standards
find or develop suitable suppliers, procure the necessary items and services at the lowest final price
improve the competitiveness of the company
collaborate with other departments in the company and achieve procurement objectives with the lowest level of administrative costs.
The inbound logistics process is considered by experts to be the "final limit" for companies that want to reduce transportation costs.
Rationalizing this process is a complex task that requires a lot of effort, both by the supply chain manager and the warehouse operator.
Improving inbound and outbound logistics is an integral part of efficient supply chain management of any company.
A strong inbound logistics process ensures companies to work and collaborate with the best suppliers, while an efficient exit process encourages customers to buy more.
To increase efficiency, you need to develop standard operating procedures and make the most of different technology opportunities to achieve visibility throughout your supply chain.
Regardless of the company's size, the priority you give to supply chain management will help you select and customize strategies and techniques that suit your business needs.
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Hubbig is designed to connect all freight participants in one place, digitize the entire logistics process and reduce the cost and time required to deliver the order.
The Hubbig digital platform will optimize all your mandatory logistics business processes and simplify document handling.
You can choose the transport option by comparing different offers according to price, carrier, and transport duration. At the same time, you can track the shipment movement in real-time, from the departure port to the final destination.
By simply registering on the website, you can get an informative offer for transport, customs clearance and delivery of your shipment. If the offer suits you, you can order transport in just a few simple clicks.
Hubbig is focused on increasing the efficiency, reliability and transparency of your logistics. Speed up your business, reduce costs, save your time and become part of the Hubbig digital platform today!