Understanding The Key Aspects of Inbound Logistics

shipsy

Before we delve deep into inbound logistics management and all that it entails, let’s quickly understand how the significance of supply chain and logistics grew multifold over the years. The products we use in our everyday lives and the raw materials needed to make these products were all at some point in time in containers. It crossed seas, some flew across air, and some traveled by road before reaching a supermarket near your home or your home, to be precise. But this has been going on for decades now. What is new is how growing customer expectations, increasing online delivery volumes, and intensifying cross-border trade operations are posing new challenges for the logistics industry.

There is a need to deliver faster, deliver smarter and deliver high levels of customer delight. To ensure that the right product is delivered to the right customer at the right time is no cakewalk. A fundamental mistake that weighed down supply chains for decades was treating logistics processes in silos. For instance, if goods and raw materials do not reach a production unit on time, it triggers a series of inefficiencies that ultimately impacts the end customers. This is where inbound logistics becomes highly critical.

Here, you can read everything about inbound logistics and outbound logistics management.

So, what is inbound logistics in supply chain management?

Inbound logistics meaning/definition- Bringing raw material or supplies from the supplier and delivering it to the production units falls under the inbound logistics umbrella. It takes care of the procurement and delivery of the parts or material that is needed to build the final product. Efficient management of inbound logistics ensures that a business can make a smooth supply and adequate stock of its best-selling or most-demanded items. On the contrary, outbound logistics is about warehousing, packaging, transportation, and delivery of goods from the manufacturing facility to the end customer.

Inbound vs Outbound Logistics- Key Differences

Inbound outbound logistics are entirely different in terms of processes/activities, meaning, and parties involved. Let’s take a closer look.

Inbound logistics

  • Includes receiving of raw material or supplies from a supplier to an inbound warehouse
  • Focuses on supply
  • The flow of material is from suppliers, manufacturers, or distributors to a retailer, brand, or 3PL provider
  • Activities involved are material sourcing, material management, and warehouse receiving
  • Involves interaction between supplier and the company

Outbound Logistics

  • Includes delivery of finished products to end-customer
  • Focuses on demand
  • The flow of material/goods is from a company, brand, or retailer to end-customers
  • Processes involved are shipping, delivery, and customer service
  • Involves communication between the company and end-customers

inbound logistics

The Significance of Inbound Logistics

Both inbound and outbound logistics are crucial for efficient logistics management. An efficient inbound logistics can make a business manufacture high-quality products, save big on the various costs, and drive sales. It also contributes to minimizing the wastage of material and ensuring the right production. Remember, any inefficiency in this first stage of the value chain will impact all the logistics processes. In fact, you may even have to stop production or cease your manufacturing operations. ­­

Advantages of Inbound Logistics

Efficient management of inbound logistics can render a plethora of benefits to businesses. Here are some of them-

  • Predictable raw material cost
  • Superior product quality
  • Timely and cost-controlled deliveries
  • Lower shipping and receiving costs
  • Improved inventory management
  • Stronger vendor relationships

Processes Involved in Inbound Logistics Services

Inbound logistics activities include-

  • Sourcing and procurement – Finding out potential suppliers, getting price quotes, and managing suppliers
  • Purchasing or ordering – Placing an order of the goods or raw material the company requires
  • Transportation – Deciding the mode of transport and discussing price and route with the third-party carrier
  • Receiving – Unloading trucks and receiving the ordered material, and ensuring its quantity and quality
  • Material management – Moving the received material within the facility
  • Storing and warehousing – Storing the material in the right conditions before transporting it to the manufacturer
  • Inventory management – Keep track of the inventory
  • Distribution and tracking – Sending material or goods to the distributors and tracking them in real-time
  • Reverse logistics – Bringing the raw material or goods back to the facility in case of defects, delivery issues, repair, and other problems

What are the challenges of inbound logistics?

Like any other type of logistics, inbound logistics also come up with a set of challenges-


Shipping Inefficiencies

Shipping inefficiencies can consist of multiple things. Non-availability of drivers, unprecedented delays due to natural calamities, vehicle breakdowns, route diversions, and more, to name a few.

Lack of Information on Shipments

This challenge can be directly attributed to the poor visibility of inbound logistics operations. It increases transportation risks, results in diminishing on-time delivery volumes, increases operational costs, and more. We will talk at length about this particular problem soon. 

Improper Management of Unloading Activities

It frequently happens that manufacturing plants see long queues of inbound trucks waiting outside gates and even boom barriers. This causes delays in unloading and even impacts the operations of outbound delivery vehicles. 

Inability to Process Returns Efficiently

A combination of manual processes and lack of visibility further complicates the already complex returns management process. Accurately identifying the defects and damages and efficiently chalking out a plan to send it back to its origin or source is a daunting task. 

Communication Gaps

Logistics is a summation of multiple moving parts and hence numerous stakeholders. This triggers significant issues when it comes to keeping all logistics stakeholders updated on delivery progress, status, delays, costs, and more.

High Inbound Transportation Costs

Rising fuel prices, unprecedented delays, and vehicle idling, among other such factors, significantly contribute to the growing cost of inbound transportation operations.

Fluctuations in Supply and Demand

This is perhaps one of the most critical challenges not just in inbound logistics but overall supply chain networks, and it became a shocking reality post the pandemic. The sheer increase in demand for online delivery of both essential and non-essential items and the lack of supply pushes businesses to their edge. Leveraging advanced technologies to understand demand patterns better and ensure logistics resiliency in times of crisis are two critical areas supply chain stakeholders should focus on.

How to optimize inbound logistics operations?

Since inbound logistics comes up with its own set of challenges, it is crucial to find and fix them for the smooth movement of raw material. Inbound logistics problems can be overcome by optimization. All you have to keep in mind is-

  • Identify your current processes and evaluate your requirements
  • Maintain a strong relationship with suppliers
  • Build strategies to address inefficiencies
  • Use a transport management system

Significance of Visibility in Inbound Logistics

So, let’s imagine a typical inbound logistics scenario. A manufacturing plant is waiting for raw materials to arrive to begin the production of wires. Suppose they have known for the last ten days that the required material will be delivered on the 10th of the month.

They have an aligned workforce and their shifts accordingly. They have invested extra dollars to onboard separate yet highly skilled workers to ensure that the production is done on time and their go-to-market is not impacted. But on the 10th, in the late evening, they learned that the delivery of raw materials got delayed by two days. Here begins a nightmare of inefficiencies.

Close to the cost of three days worth of person-hours gets squandered. The entire production process is halted, and the go-to-market deadline gets missed by miles. Even worse, stores that sell these wires are now running low on stock. Thousands of dollars get wasted in the guise of productivity losses, opportunity losses, and unnecessary operational expenses. By just having visibility into the delay and having access to an accurate ETA would have solved this costly problem.

Lack or poor visibility of inbound logistics operations is a crucial problem that has been plaguing the supply chain industry for a long time now. It increases transportation risks like theft and pilferage, causes SLA breaches, impact on-time in-full delivery metrics, increases chances of unnecessary diversions and delays, triggers cost inefficiencies, and more. But thanks to the rapid evolution of logistics management technologies, manufacturers and logistics service providers can now efficiently address this challenge.

Smart logistics management platforms enable businesses to gain real-time visibility into inbound logistics operations. This helps them immediately arrest route diversions and get alerts in case an inbound vehicle makes unplanned stoppages or halts for more than a predetermined duration. Unnecessary stoppages may also point out to a potential incident of theft. In which case, local authorities can be immediately informed to take action. Cargo theft is massive problem businesses are grappling with even today. Rest and parking areas tend to be the soft target for such activities.

Gaining high levels of visibility helps businesses better benchmark the performance of logistics service providers and unearth insights into the core capabilities of individual 3PLs. These data points captured by the system can drastically improve logistics planning when it comes to assigning the right goods to the right logistics service provider. 

How to manage inbound logistics effortlessly?

Having trouble with inbound logistics management can directly impact your business productivity and profitability. Therefore, it is imperative to build effective logistics management strategies to combat inbound logistics woes. Doing this manually is a time-consuming task. It is advised to invest in logistics management software or logistics management solutions that offer end-to-end management of inbound and outbound logistics operations. Such software can not only shrink the inbound logistics costs but also provide you with insights and analytics that demonstrate the impact of different scenarios on business profits and customer satisfaction. It would be no mistake to say that logistics software can help you render an unmatched customer experience, which will ultimately contribute to the success and growth of your business.

Deploying A Smart Logistics Management Platform

Businesses can seamlessly manage multiple logistics service providers on a single dashboard using a smart logistics management platform. It allows logistics stakeholders to gain real-time insights on the shipment status and proactively know about delays, emergencies, and exceptions. Using historical data, businesses can mitigate risks and reduce the chances of theft and pilferage. By gaining 100% visibility of 3PL movement, logistics managers can accurately benchmark KPIs, gain greater control over driver behavior, eliminate chances of route diversions and ensure high levels of SLA adherence. 

Unlocking Cost Efficiencies in Inbound Logistics Operations

A key advantage of leveraging smart logistics management solutions is cost efficiencies. Businesses can automatically and intelligently allocate shipments to logistics service providers using such solutions. The allocation is done based on multiple configurable factors to boost productivity, delivery efficiency, and optimize costs. Some of these factors include delivery location, type of goods, the historical performance of a particular 3PL provider, SLAs, tonnage, and more.

Smart logistics management tools automate core delivery operations like router planning, task allocation, delivery scheduling, route optimization, and inbound logistics provider selection. This drastically eliminates investigation in manual labor, increases the accuracy of logistics planning, and significantly boosts productivity. By automating routing, businesses can chalk out the most efficient route to travel from point A to point B and optimize fuel consumption. By ensuring real-time visibility of logistics operations, such solutions help businesses eliminate costs associated with unnecessary miles traveled, empty miles, vehicle idling, theft and pilferage, and poor delivery productivity.

Using AI To Enhance Complex Inbound Logistics Operations

According to a report by Accenture as much as 36% of organizations have already adopted AI in some way or the other to optimize logistics and supply chain operations. The report also highlighted that 28% of businesses are on the brink of deploying AI to improve logistics processes.

Artificial intelligence optimizes processes to reduce costs and manual labor and increase the overall operational efficiency of inbound logistics. When deployed, AI influences almost all critical logistics components such as resources (vehicle, driver), routes, third-party integrations, customer experience, and so on.

For instance, AI-powered route planners chart out the most cost, fuel, and time-efficient route to the destination. It considers historical data and real-time traffic conditions to avoid delays, congestions, roadblocks and reroutes until the nth minute to improve and expedite logistics. Shipment stakeholders are immediately alerted if the driver deviates from the planned route, to minimize the risk of thefts and delays. The technology also helps with vehicle capacity optimization allowing optimum utilization of fleet capacity without affecting vehicle life. Thus, the technology comes in handy in reducing the distance traveled, eliminating empty miles, boosting overall logistics productivity, and driving sustainable logistics operations.

Inbound logistics, or say the logistics industry at large struggles with driver shortages. The long haul segment is the worst hit with painfully long driving hours, compliance complexities, and comparatively bleak remunerations. The American Trucking Association capped driver shortages at 80,000 last year. If this continues, the industry would need 160,000 more drivers by 2030. Driver shortage causes major bottlenecks in deliveries. To fix this, AI helps with efficient driver management allowing manufacturers to quickly post driver requirements and onboard freelance or ad hoc drivers if their dedicated drivers are occupied. Moreover, the technology captures driver KPIs to ensure stringent SLA adherence and fair payouts, so the drivers are not under or overserved in terms of remuneration.

Another critical area, where AI is helping logistics is seamless delivery scalability. The technology allows manufacturers to partner with one or more 3PLs at a time. It considers various parameters such as cost, service region, specialization, historical data, etc. to choose the best logistics partner for the task.

Another big advantage of deploying AI in inbound logistics is that it improves customer experiences by extending end-to-end visibility over shipment status. The customer wants to know where the order is, who will be delivering it, and at what time. Predictive analytics allow warehouse managers to know the exact ETA of goods arrival and the location of goods in real-time. This helps them to plan manufacturing in a better way.

Benefits of Shipsy’s Logistics Management Platform

Shipsy’s AI-powered smart logistics management solution empowers businesses across the globe to optimize, automate and track end-to-end logistics operations. It provides companies with high levels of visibility, cost efficiency, agility, and data-driven decision-making. Here are some key benefits our customers are reaping using our platform. 

  • 37% decrease in ETA SLA breach
  • 65% reduction in manual ERP data entry
  • 64% increase in customer satisfaction
  • 12% reduction in transportation costs
  • 4% savings in route planning and optimization
  • 26% increase in delivery Net Promoter Score

Inbound and outbound logistics both play a crucial part in logistics management. The former deals with the inward flow of goods, while the latter is associated with the outward movement of goods. Every business that offers transportation and delivery of goods should have considerable knowledge of inbound logistics, inbound freight, inbound warehouse, and all the inbound operations. It helps in driving sales and profit and improving customer experience.

Share

Related Posts

How to optimize inbound and outbound logistics?

As the whole world combats with coronavirus outbreak, efficient management of supply chain operations has become crucial for every organization. But what’s more important is...

shipsy

Improve Business Profitability with Outbound Logistics Optimization

The process of storing, transporting, and delivering finished goods to the final location (distributors, retailers, or end customers) is known as Outbound Logistics.

shipsy