Logistics is the management of flow of goods between its origin point and consumption point. It includes a wide range of tasks such as how raw material will be transported, how inventory will be stored, and how inventory will be transported. Logistics plays a crucial role in the supply chain and has a direct impact on the success of any organization.
What are inbound logistics?
To understand inbound logistics meaning one must know that the main focus of inbound logistics is on transportation and storage of incoming goods. These goods can be raw material, finished goods, tools for processing the goods, machines, and equipment, or any other commodity which is bought or sold. In other words, inbound logistics is the sourcing, expediting, and receiving of goods. Well managed inbound logistics increase the efficiency of an organization.
Role of inbound logistics
Inbound logistics is the first stage in the value chain, if something goes wrong at this stage it can impact all processes. Organizations can even be forced to stop production and operations until they find the solution. Though inbound logistics is very important for organizations but some companies overlook this process. This leads to subpar product quality, customer dissatisfaction, revenue loss, and can be a disaster for the brand image of the organization.
Well managed inbound logistics helps in providing the right item in the right quantity at the right time at the right place. That is why it is important to invest in inbound logistics to achieve maximum customer satisfaction and productivity.
An effective inbound logistics process helps in producing higher-quality goods, improving cost-effectiveness, sales, and customer satisfaction and reducing overheads and material wastage.
Inbound and outbound logistics
Understanding the correlation and difference between inbound and outbound logistic can help businesses to develop a comprehensive management strategy. Inbound means transport, storage, and delivery of goods coming into the business while outbound means goods are going out of the business.
On the inbound side, the company needs to deal with suppliers while outbound side deals with how the customers receiving the finished goods.
Inbound logistics covers anything which the company is getting from its suppliers whether it is raw material, tools, equipment, or machinery while outbound logistics cover the products which the company produces. Outbound logistics is all about warehousing, packaging, and transporting goods which are going out of the organization.
Inbound logistics process
To know how inbound logistics affects the efficiency of the overall supply chain, it is important to understand the process of inbound logistics. Process of inbound logistics:
- Record keeping: Recording and receipts help the organizations in ensuring that every step in the process is completed and communicated with accuracy. Basic information which is required on receipts is item name, quantity, unit of measurement, etc. Elements that need to be tracked throughout the inbound process are lot number, manufacturing date, expiry date, serial number, etc.
- Nowadays supply chain companies are using pre-receipt notification service which speeds up the inbound process by reducing the amount of information entered manually.
- Load arrival: Once the pre-receipts are loaded in the system, receiving process starts. Modern systems can make receipts, load appointments, reserves docks and staging area in minutes. This makes the process more efficient.
- Receiving real-time information: Bar-coded receipt which has specific instructions handed to coordinators who can start the receiving process and real-time reporting. Automated system ensures that the warehouse associates are at the correct dock door and unloading correct shipment based on the information available on the receipt.
- Once the process of inbound receipt and load arrival is completed the warehouse associate can start detailed receiving.
- License plate tracking: It is also important to have control over the goods during storage and warehousing. Now it is possible to track the license plate number through modern systems. It is an important step in managing the entire inbound logistic process.
- Receipt close: Closing the receipt is the final step. It is updated in real-time that the carrier is emptied.
- The process of inbound logistics speeds up when the information is sent and updated in real-time. It also increases the efficiency of the process.
How to improve inbound logistics in your organization
Below are some steps which can be used to improve the inbound logistics process:
- Find the actual cost: It is important to know the freight cost for each product you order from suppliers.
- Negotiate with your carriers: Build a long term relationship with your carrier to get the best rates. Do not forget to explore potential points of negotiation. There are various areas in your shipping agreement where you can negotiate.
- Streamlining the process: It is always better to create a predictable inbound shipping process. Collect freight data regarding volume, frequency, and cost of shipment. Analyze this data, make rules for vendors, and look at ways to minimize the number of deliveries.
- Adopt technology: One of the top reasons for higher inbound freight spend is failure to track the performance of suppliers and vendors. By implementing the latest technology you can automate the process of tracking performance.
These steps will not only help you in improving inbound logistics process in your organization but also simplify and streamline procurement-related operations.