What are inbound logistics?
When a company buys raw materials or finished goods from a vendor or warehouse, inbound logistics refers to the steps it takes and the information it gathers as a result. Here are some key features of inbound logistics:
What are outbound logistics?
Any company’s outbound logistics are the steps it takes to deliver the finished product to its clients and the information gleaned from those steps. Products leaving a manufacturing or fulfillment facility are typically covered by outbound logistics, in addition to:
Outbound vs. inbound logistics
Both outbound and inbound logistics serve the same purpose by assisting businesses in determining their supply and demand requirements as well as any information related to sending or receiving materials and goods. However, the two have several key differences to consider, including:
Damage and liability
If a product is inbound or outbound, coverage and responsibility may change even though both inbound and outbound logistics cover losses and liabilities to goods. For instance, a supplier of raw materials to your business may be responsible for any damage to the products before delivery. By doing this, you can be sure that you’ll get the raw materials you ordered and that they’ll be in good shape. But if you’re sending a finished product to a storefront, you might be responsible for any damage the product sustains during shipping.
The International Chamber of Commerce, or ICC, publishes specific guidelines on liability for shipping goods internationally, whereas many nations have their own oversight bodies that decide liability domestically. For instance, the ICC issues recommendations on the free on board shipping, or FOB, principle. These regulations establish the buyer’s responsibility for shipped goods rather than the seller’s.
Capital resources and raw materials
The acquisition of raw materials and capital resources is only covered by inbound logistics. Anything that the company needs to operate, such as equipment, machinery, tools, or facilities, can be considered a capital resource. Although raw materials fall into a separate category, inbound logistics still allows you to track them. Only if your company produces raw materials for other businesses do you measure raw materials under outbound logistics. For instance, if you run a steel manufacturing business, you might create steel rods for use in industry. These are raw materials that you ship from your warehouse to a different company, so you classify them as outbound logistics.
A part of inbound logistics is storing raw materials for future use. For instance, if a company orders 10,000 coal units to be used as fuel, the company might need to keep those 10,000 units in storage for a month. When storing 10,000 units of coal, logistics takes into account the number of units you have in storage, where you keep them, how much it costs to buy each unit, and the storage costs.
Supply chain role
The function of outbound and inbound logistics in the supply chain is another significant distinction. Generally speaking, inbound and outbound logistics don’t interact with one another unless there is a merger or integration. For instance, if the same steel manufacturer buys the mines from which raw iron ore is extracted, it has successfully completed a process known as “vertical supply chain integration.” “.
This approach to integration lowers supply chain expenses, boosts productivity, and improves supply chain stability for the company. Following that, the same business could purchase a fleet of shipping vans and incorporate outbound shipping into their vertical supply chain. Businesses that don’t engage in direct customer sales may not participate in the outbound supply chain.
Interactions
Any information or procedures for bringing supplies and products into the business are referred to as inbound logistics. As a result, on the inbound side of the business, the supply chain specialists only communicate with vendors or suppliers. As an alternative, the outbound team deals with the customer who places the order for the finished good. This can require vastly different skills for each employee. For instance, an outbound supply chain manager may be better at providing excellent customer service while an inbound supply chain manager may be more adept at controlling costs and negotiating prices with vendors.
Please note that Indeed is not affiliated with any of the businesses mentioned in this article.
Inbound & Outbound Logistics | What is Inbound Logistics | Difference between Inbound & Outbound
FAQ
What is outbound logistics example?
An order placed with a retailer and fulfilled from a distribution center or another location where the necessary inventory is kept would be an example of outbound logistics. Deliveries are made to customers by delivery personnel who pick up orders from stores, distribution centers, and other locations.
What are outbound logistics?
The delivery of finished goods to customers from a warehouse or distribution facility is known as outbound logistics. It consists of the picking, packing, shipping, and delivery of a package as part of the order fulfillment process.
Is inbound or outbound logistics more important?
Inbound logistics is the movement, storage, and delivery of goods into a business, whereas outbound logistics is the movement of goods out of a business. Products are delivered to customers or distribution centers using outbound logistics.
