Supply chain management is a crucial element of any modern business. Organisations investing in their supply chains achieve superior growth than their industry's standard. By investing in your supply chains you can create cost savings, boost productivity, improve your brand's reputation and decarbonise.
With that said, optimising your businesses supply chain can be a complex process. Businesses dealing with physical goods have both inbound and outbound logistics processes. It's essential to understand the difference between Inbound and Outbound logistics as well as how you can optimise each.
The Difference Between Inbound And Outbound Logistics
The primary difference between inbound and outbound supply chains, or logistics, is who the goods are delivered to.
For inbound logistics, goods are sent from a supplier to your business's warehouse. In this scenario, you are usually the customer, purchasing the products.
By comparison, you outbound logistics is when the products are sold and sent to the end customer.
Your inbound supply chain concerns the receiving raw materials and tools, which you may need to manufacture or consolidate. Outbound logistics is about delivering the final product to customers.
Both inbound and outbound logistics processes are fundamental to a successful business and quality supply chain management. Learning to optimise each will set up your business for success and growth.
We have a helpful article on the difference between logistics and supply chain management here. But put simply, supply chain management is the big picture, where as logistics is the day-to-day movements of items.
How to optimise your inbound logistics
Experts will call inbound logistics "the final frontier" of reducing transportation costs. Streamlining this process is usually easier said than done. It requires effort and coordination between warehouse operators and supply chain managers. That said, here are some of the ways you can work to optimise your inbound logistics process:
Build strong relationships with your suppliers
By developing strong supplier partnerships you can open up new opportunities. This can include reduced lead times, better terms, a sense of security, loyalty discounts and overall cost savings.
You should start by investigating your optimal supply route. Then work with your suppliers to create a mutually beneficial implementation. You can also establish an inbound routing guide. The guide should include relevant information such as carriers. This can help your partnership progress smoothly.
By prioritising this relationship, you help your supplier understand your business better. This can allow them to put in place plans that suit your needs. Which they will be keen to do for a loyal customer.
Develop vendor inbound compliance standards (VICS)
Issues such as damaged products, late deliveries, and a lack of proper notifications can cause a lot of complications. This can make it difficult for you to upkeep your business. You can help prevent this by developing Vendor Inbound Compliance Standards (VICS). By having your suppliers agree to them before they begin working with you, you can help to avert these issues before they arise.
It's important not to install VICS to "punish" your supplier. You don't want to damage your relationship. Instead, have all the goal-posts in your VICS program be straightforward and measurable. This way, at the start of the contract, everyone involved is keenly aware of the expectations. This streamlines the process for all involved parties.
Consolidate inbound freight deliveries
If you are moving your goods via sea make sure you are utilising your container, don’t ship with empty space. If you cannot fill a container, look to use a provider that has a consolidation service, otherwise known as LCL (Less-than Container Load), whereby your goods will be consolidated at a warehouse and you only pay for the space you are using.
If you are moving your cargo via road then a Less-than-Truckload (LTL) is when you only pay for the part of the truck trailer while other cargo fills the unoccupied space. While this can seem appealing, LTL shipments can lead to extra costs as well as increased delays. This is because all the goods have their own compliance information, and if one batch of goods gets held then they all do. Companies that send 10 or more LTL shipments will spend five times as much as sending a single truckload, but the increased flexibility can help and saves on inventory space.
Some complications can come with consolidating shipments. Availability of the driver, delivery times, and handling requirements can all be issues. There are also more complex issues, such as refrigeration for food products.
Third-party logistics providers like WTA can help, acting as your international freight expert. With experience transporting goods across the world with a network of global partners. WTA can give you a completely personalised experience. Helping you to streamline your supply chain and reduce overall costs.
How to optimise your outbound logistics
Optimising inbound logistics has many strands to it, but it's primarily about having a solid relationship with your suppliers. Similarly, optimising your outbound logistics is about improving the relationship with your customers. This process can seem more straightforward than inbound logistics at first glance. Key elements such as processing orders and managing inventory must be considered. When looking to optimise outbound supply chain, here are some of the things you should consider:
Lower your inventory costs
Your outbound logistics is primarily about getting products to customers on time. Because of this, ensuring that you can quickly respond as demand fluctuates is one of the best ways to optimise the process. Many companies will attempt to do this by ordering some extra stock to be kept on hand for future use. However, this can increase costs as you need to rent more space and hire employees to inspect and count inventory.
Instead, it would be best to focus on having a steady supply of inventory that matches your demand. You want only to hold stock that you're ready to sell. Work on attaining a high inventory turnover rate.
Build and improve partner relationships.
Try working closely with your customers and freight providers. You may be able to get valuable insights into their complex supply chains. Then you can integrate them with your outbound logistics.
With the right customer relationship, they might be able to share data on how your products are selling. This can allow you to adapt your production process and supply chain to better meet their needs.
Through collaboration your supply chains can work more efficiently.
Cross-docking can be an effective way of limiting the time that goods spend in your warehouse. Employees sort through incoming goods and then transfer them to an outbound truck. These trucks then distribute them directly to the customer. This can make the need for handling or storage time minimal.
You should first consider if cross-docking is best for your business before implementation. But it can be a highly effective method of minimising costs. Additionally, cross-docking can reduce the number of returns and improve customer satisfaction.
If you need help deciding if cross-docking is correct for your company, WTA can help. At WTA, we're international freight experts. We develop solutions that fit your individual needs regardless of your supply chain's complexity.
Further optimisations for your entire supply chain
By using an end-to-end visibility/tracking tool, you can continually analyse all the movements across your supply chain. They give you access to endless financial and timing data, so you can see what parts of your logistics are flowing smoothly and costing the least.
With this information you can make informed decisions on optimisation, such as changing route, or shipping line. Perhaps there is a certain product type which has a much higher cost per kilo. It's all revealed in the data allowing for endless supply chain optimisations.
We've written a separate article all about the importance of visibility, which you can check out below:
Supply chain expert consultation
4PL logistics providers have supply chain experts across a host of sectors and transportation options. They deal with the unique supply chains of so many businesses daily. That means they can take the learnings from multiple supply lines and apply them across all the others.
These are the experts who can find profitability-boosting optimisations where others can't see them. At WTA we have many supply line experts across the company. Specialising in unique sectors and particular trade lanes, they're able to continually find the most efficient and cost-effective shipping solutions, whilst pairing that with first-class service.
Understanding the differences between your inbound and outbound supply chain processes is essential. Inbound and outbound are both a key part of a successful businesses. Reach out to our supply chain expert Justin Hope today for guidance on optimising your supply chain.