Improve Business Profitability with Outbound Logistics Optimization

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Updated on September 29th, 2021

The process of storing, transporting, and delivering finished goods to the final location (distributors, retailers, or end customers) is known as Outbound Logistics. Like the inbound logistics, it also needs to be managed efficiently to ensure immense savings and an unmatched customer experience. Inbound logistics plays a significant role in the manufacturing of products, whereas outbound logistics comes into action once the product is manufactured. In simple terms, outbound logistics meaning is the outflow of goods from the manufacturing facility to its last location, which is mostly customers’ doorsteps. Technology can help to ensure seamless and effortless outbound logistics optimization. Let’s dig deeper into it-

How does outbound logistics work?

A systematic outbound logistics process flow or outbound logistics process starts when a customer places an order. Once the business verifies and accepts the order and initiates its packaging and pickup from the warehouse. The reserve inventory is updated and triggers the production of products if needed. The order is then sent to the distribution centers or order fulfillment centers from where it is delivered to the end customer.

The Importance of Outbound Logistics

Outbound logistics deals with the movement of goods from the manufacturing plant to closer to the customer for the final purchase decision. This helps in the timely disbursement and replenishment of goods at the point of sale. Here’s what kind of movement we can expect from outbound logistics. 

Manufacturing unit to warehouse: Here the goods are moved from the production plant to the warehouse for storage.

Warehouse to retail outlets: This type of movement ensures the availability of the product near the end customers. This phase is critical as the non-availability of the product may be detrimental to the customer experience and brand loyalty. A streamlined process at this stage is important to ensure overall delivery efficiencies.

outbound logistics management

Outbound Logistics Activities

Key activities involved in outbound logistics management are-

Warehouse management

A company maintains a certain amount of stock at hand to meet demand. Outbound logistics processes deal with storing and organizing these goods in the right conditions. Inbound and outbound logistics may overlap during warehouse management. For a company that deals with sourcing finished products and selling them to the end customer, the former part comes under inbound while the latter is about outbound logistics. Simply put, inbound logistics involves product acquisition and outbound logistics covers order fulfillment or sending the product straight to the customer or distributing them to retail outlets.

Inventory management

The core purpose of inventory management is to store goods in such a way and condition to maintain their quality and prevent spoilage and damage. It also includes determining the right place or outbound warehouse for goods storage for the effortless order picking and packing.

Transportation

It includes determining modes and methods of transporting finished goods considering their type. For instance, frozen or perishable items need special kinds of vehicles for outbound transportation.

Order fulfillment

Processes like receiving orders from customers, selecting delivery vehicles, assigning drivers, and deciding delivery routes fall under order fulfillment.

Shipping

Delivering the outbound shipment to customers at the specified time is the final step of the outbound logistics.

What are the different distribution channels in outbound logistics?

Depending on the logistics complexity, budget, speed, and other factors, a business can choose from different outbound distribution channels. It could be direct or indirect. Direct distribution requires a business to have the infrastructure and resources to sell and deliver products to customers directly. However, an indirect channel is when you sell through a third party, like a wholesaler or retailer. Some of the popular distribution channels include-

  • Value-added resellers
  • Dealers
  • Omnichannel
  • Dual distribution
  • Dropshipping

Major Differences Between Outbound and Inbound Logistics

Both outbound and inbound logistics play a crucial role in ensuring successful logistics management and business profitability. Here are some of the differences between them-

outbound vs. inbound logistics

You may like to read- Understanding The Key Aspects of Inbound Logistics

Outbound Logistics Challenges

Like any other logistics and supply chain management process, outbound logistics also come up with a unique set of challenges. Here are some of the most common ones-

  • Monitoring various processes and ensuring they all are synchronized
  • Ensuring the right product reaches the right customer at the right time at the right location and the right cost
  • Maintaining sufficient inventory to balance demand and supply
  • Controlling the cost of transportation by spotting inefficiencies
  • Offering end-customer real-time visibility and the ability to track and trace orders

How to get rid of the outbound logistics challenge?

For efficient outbound logistics optimization, paying attention to your relationships with all the stakeholders is imperative. What’s more important is to adopt tech-enabled platforms such as outbound logistics software or outbound logistics apps into your business processes. Technology adoption is necessary as it can help digitize delivery route planning and select delivery networks. Moreover, it can also automate arranging and maintaining delivery schedules, and most importantly, reduce delivery costs. Besides, there are some of the points that you can consider for outbound logistics management and optimization-

  • Streamline and sync processes like product staging, sorting, packaging, and picking
  • Choose the right inventory management method and strategy
  • Maintain good relationships with stakeholders and open two-way communication
  • Use outbound logistics management software for automating various operations or processes involved

Outbound Logistics Services

Those who don’t want to manage outbound logistics may choose to outsource it. Outbound logistics services providers manage receiving, storage, and packing of products. The 3PL then initiates freight shipping through various modes of transportation. Once the product reaches the last destination, the next step is to do the final delivery at the customer’s doorsteps.

Logistics, indeed, is one of the significant parts of the entire supply chain management process. It is responsible for the timely and cost-controlled delivery of goods from one place to another. For efficient logistics management, it is categorized into inbound and outbound logistics. The former is concerned with sourcing and procurement of raw materials for the production of goods. On the other hand, the latter deals with trading in those finished goods.

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