Inbound vs. Outbound Logistics – An Overviewfastdirectblog
In supply-chain management logistics implementation is paramount to be executed in a business. There exist two major categories in which logistics can be split into. They include; outbound and inbound logistics. Inbound Logistics is associated with the transportation, storage, and delivery of raw materials coming into the business plant, on the other hand, outbound logistics is related to the delivery of finished products out of the business plant to the customers.
In supply-chain management, logistics is an important aspect to the managers, since it helps them understand how they can maximize profits while minimizing the cost of operation. Making profits is one of the main goals in business. Therefore, managers need to understand the correlation and differences in inbound and outbound logistics, so as to create an extremely functional supply-chain strategy to aid in running the business effectively.
Inbound Logistics is the process in which raw materials is acquired from the suppliers and delivered to the business’ manufacturing plant. It’s also referred to as the value chain the first phase, in which the acquired supplies are stored and delivered for the manufacturing process in the plant. Additionally, in inbound logistics managers are required to track the inventory of the received goods, ensure it’s well stored, and delivered to its rightful place (manufacturing plant).
Outbound logistics on the other hand, involves the collection of finished products, its storage, and the distribution of the finished products to the customers. The process in which the finished products flow from the manufacturer to the buyer is mostly focused on. Managers, therefore, are involved in identifying the distribution channels, and how the buyer will access the products.
Apart from the main difference observed in the two types of logistics, there are other factors that need to be considered when goods flow from the supplier to the plant and from the company to the customer such as the following.
- Partners in the Supply-Chain – Different partners are involved in the supply and transportation of raw materials and the finished products. With inbound logistics, the company partners with organizations that provide them with the needed raw materials and tools. Whereas in outbound logistics, companies partner with distributors to get their products in the market. Third-party partners can also be used in either of the two logistic processes.
- Liability and Damages – Liability of products and damages are an important part of logistics. It’s crucial that partners both in the inbound and outbound side of business agree on liability and damages cost in case it occurs. In most instances, businesses use ‘Free on Board’ terms of shipping, in which the business partner who is to receive the goods is responsible for any damages that occur.
Logistics is an important entity in the supply-chain management of any business. This is because it aids in the acquiring of raw materials for a plant and the delivery of the manufactured product in a timely manner to its intended customers. With inbound logistics, all the activities involved with the placement of order to the suppliers are encompassed in it, while outbound logistics ensure the manufactured products are released from the plant and traded to bring profit to the company.