Source: Financial Express, 19 June 2023
– By Nishith Rastogi
Logistics play a crucial role in the supply chain process, requiring careful focus to effectively manage the movement of goods, services, and information from the starting point to the final consumption stage. It is a complex and essential aspect that cannot be overlooked. Within this comprehensive network, every move is interconnected, and a single misstep can have far-reaching consequences, resulting in costly delays and dissatisfied customers. With the logistics industry projected to reach a staggering $14.37 trillion by 2028, navigating this complex landscape relies on skillfully managing two critical processes: inbound and outbound logistics.
Inbound logistics involves receiving, storing, and distributing raw materials and components necessary for production. It revolves around managing the flow of goods from suppliers to the company’s warehouse or manufacturing facility through the following stages:
Procurement: Inbound logistics begins with procurement, which entails sourcing and negotiating contracts with suppliers. Companies must carefully select reliable suppliers that offer competitive pricing, timely deliveries, and high-quality materials.
Transportation: The next crucial step is the transportation of the materials procured. Efficient transportation networks ensure the timely delivery of goods while lowering costs. Depending on shipment distance and urgency, companies may utilize various modes of transportation, such as trucks, trains, ships, or planes.
Warehousing: Proper warehousing is essential when materials arrive at the company’s warehouse or manufacturing facility. It involves implementing adequate storage and inventory management systems to ensure materials are readily accessible when needed, minimizing production delays, and maintaining optimal stock levels.
Understanding the dynamics of outbound logistics
On the other hand, outbound logistics focuses on moving finished products from the company’s facility to the end customer. Its primary objectives include ensuring accurate and timely product delivery, optimizing transportation and distribution efficiency, minimizing costs, and providing outstanding customer service through:
Order fulfillment: Order fulfillment encompasses order processing, picking and packing, and preparing shipments for dispatch. During this stage, it is crucial to prioritize both accuracy and speed to guarantee the delivery of the correct products to the appropriate customers.
Distribution: The distribution phase begins after the order fulfillment process. It involves managing transportation networks and strategically locating distribution centers to facilitate the efficient reach of products to the receiving party in various regions. The primary aim is to streamline the distribution process and ensure prompt delivery.
Delivery: The final step in outbound logistics is delivering products to the end customer, often referred to as the last mile. This pivotal process involves transporting goods from a distribution center to the customer’s doorstep, significantly influencing customer satisfaction and loyalty.
Fine-tuning fast mile delivery
The last mile of logistics is the decisive factor that ultimately determines the reputation of a logistics firm, given they are the first point of contact with the customer. However, complexities in the last-mile delivery process, such as traffic congestion and unforeseen logistical challenges, often lead to disappointing delays. With the demand for last-mile deliveries expected to soar by 78 per cent by 2030, businesses must revamp their logistics through the following strategies:
Route optimisation: By employing advanced routing software, companies can reduce costs, improve delivery speed, and enhance customer satisfaction.
Real-time tracking: Offering real-time tracking information to customers is integral as it increases customer loyalty and gives them a sense of control and assurance.
Collaboration and technology: Collaborating with third-party providers and adopting innovative technologies such as Warehouse Management Systems (WMS), Transportation Management Systems (TMS), Artificial Intelligence (AI), and automation can streamline and expedite logistics operations.
Customer communication: Providing timely order updates and creating opportunities for customer feedback ensures a positive delivery experience, enhancing consumer contentment.
The bottom line
While inbound and outbound logistics serve distinct purposes, they are mutually dependent and significantly impact the overall efficiency of the supply chain. By knowing about the fundamental differences between these two components, businesses can strategically implement measures to optimize the last mile of the delivery process. Also, the last mile phase of delivery represents a substantial 53 per cent of the total shipping cost, creating a favorable opportunity to enhance customer satisfaction, lower costs, and achieve a competitive edge in the market through unparalleled consumer experiences.
(Nishith Rastogi is the founder and CEO of Locus.)