1) Overview of Inbound & Outbound Logistics in eCommerce
The logistics industry is a complicated world comprised of goods moving in and out of enterprises. It involves moving raw materials, semi-finished and finished goods in all directions. In order to understand these complexities, we need to understand the concept of inbound and outbound logistics.
Fundamentally, inbound and outbound logistics are simply the flow of unfinished goods (or raw materials) into an enterprise and the flow of finished products out of the enterprise, respectively. The concepts are differentiated by the inward and outward movement of goods and represent the initial and final stages of the production process.
In this article, we dive deeper into the world of inbound and outbound ecommerce logistics and understand the requirements of these processes.
2) What is Inbound Logistics
Inbound logistics are the movement of goods into an organization. It generally involves the inward movement of raw materials, goods from suppliers, or unfinished products. Inbound logistics involve companies dealing with suppliers that provide the necessary components to produce a particular product. Inbound logistics often involve the movement of raw materials from places such as mines, refineries, foundries and such.
The logistics company brings these raw materials to a facility where the company would manufacture commodities out of them. Notably, the term inbound logistics is also used to refer to the movement of unfinished goods into a company. Where a business is involved in kitting, assembling or bundling a product, inbound logistics are used to bring parts, constituents, or units of a commodity into the facility. There the company produces the final product by performing the necessary actions.
Further, where a company utilizes the service of a third party to provide a particular service that adds value to a product; and where the product has to be sent back to the original producer after such addition, inbound logistics are involved. The event when the third-party receives the products, and the instance when the original producer receives the product back will use inbound logistics.
3) What is the Need for Inbound Logistics
Since logistics companies need to source materials from various suppliers which may be located in different geographies, inbound logistics help consolidate the materials that are required to produce a particular product.
Consolidation of materials is important to ensure that the product is produced with maximum efficiency. It is also virtually impossible to produce the same product at several locations depending on the resource required. A business needs to get the resources accumulated at the instance of the production of a commodity to be able to ensure lower ecommerce logistics costs and better quality.
Where a product needs to be kit, bundled or assembled, inbound logistics allow the required components to be delivered to the location the necessary actions are to take place. This makes the entire process more fluent, making operations between multiple procedures run smoothly.
To summarize the role of inbound logistics in a business environment, it essentially falls on the supply side of the economy and is responsible for frictionless operations between a company and its suppliers, distributors, and/or vendors.
4) What is Outbound Logistics
Outbound logistics, as opposed to inbound logistics, is the movement of goods out of a company. Generally, the goods that are sent out are finished products that are ready to be shipped directly to the end consumer. The process usually involves a series of steps designed to get the product from its origin to its final ultimate destination.
The term outbound logistics encompasses a variety of logistical operations including order fulfillment, shipping, last-mile delivery and more. It is this process that helps customers in a market receive products that they desire. The process is complicated and has little to no room for error, as even a minor mistake can cause the consignment to become misplaced or damaged.
Outbound logistics involve processes such as warehousing services which provide a space for products to be stored in order to process and dispatch them, transportation of those goods to locations from where they can be further distributed to designated locations, and their last-mile movement to deliver them to people who would ultimately consume or use those products.
A typical and rudimentary outbound logistics process would include the company receiving an order, at which point the desired would be identified, processed and dispatched from a warehouse. The item would then be shipped to the destination from where the order was placed and, finally, be delivered to the doorstep of the purchaser.
5) What is the Need for Outbound Logistics
Outbound logistics are important for the survival, and perhaps even the existence of any organization. It ensures that the product that a business is developing is reaching a place where it can be consumed. Thus, it could be argued that outbound logistics provide purpose to the commodities in a market by allowing them to reach a point where they could be utilized.
The process of outbound logistics allows consumers to fulfill their demands with convenience. Therefore, the process not only ships items out of an enterprise but is also responsible for connecting consumers with businesses. Through the outward movement of goods, businesses are, thus, able to deliver finished goods which in turn generates revenues for the business. Hence, revenues are practically non-existent without outbound logistics for a company that produces goods.
Since outbound logistics bring goods to markets and consumers, they connect the economy. This creates a cohesive network of distributors, wholesalers and retailers in economy-boosting incomes and, ultimately, sustaining the financial ecosystem.
6) What is the Major Difference Between Inbound and Outbound Logistics in eCommerce?
Though inbound and outbound logistics can involve very similar steps, the two are fairly different processes. While one is responsible for the inward movement of goods, the other helps moving goods out of a company. The two processes combined are the backbone of the logistics industry.
Key differences between the two are witnessed in the audience they target. Where inbound logistics are focused on the business itself helping connect suppliers and vendors to a business, outbound logistics are more concerned with the experience of the final consumer.
Since inbound logistics refer to inward movement, it directly affects the process of production of goods in a company. Outbound logistics on the other hand refer to the outward movement of commodities that are finished and prepared by a company and are therefore concerned with the consumption of the goods produced.
Final thoughts
Logistics is a complicated subject involving a multitude of processes and complexities that connect various parts of an economy. Inbound and outbound logistics are a part of a larger process that ensures that a consumer-driven economy is sustained. It is through these processes combined that a company and consumer are able to find ground where they can connect and exchange currency for commodities. While the processes might be comprised of opposite movement of goods in different stages of production, both aim to achieve the same outcome.
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