In general, logistics is the management of the flow of goods from the point of origin to the location of consumption to meet the requirements of customers or companies. Basically, logistics involve two types of activities; Inbound Logistics or Outbound Logistics. Inbound Logistics refers to the sourcing, transport, expediting, storage, and receiving of goods coming into a business. On the other hand, Outbound Logistics refers to warehousing, packaging and transporting of goods going out of the business.
Inbound Logistics is more related to Material Management and Procurement where the incoming delivery of raw materials and spare parts, from the suppliers to the manufacturing plant is called inbound logistics. It focuses on the movement of raw materials within and to the manufacturing plant. The interaction involves a supplier or vendor and the firm.
In easy terms, Inbound Logistics is the primary activity, which focuses on purchasing and scheduling the inflow of materials, machines and final goods, from suppliers to the production unit, warehouse or retail store.
Inbound logistics includes all those activities, which are necessary to make the goods available for operational processes, at the time of their requirement. It includes materials handling, transport, stock control, and inspection etc. to facilitate, the production or market distribution.
Initiates with sourcing the list of items needed for the manufacturing plant then a purchase order is created against those items for a choice of the vendor. Once the selection of supplier, negotiation on price and the delivery date is fixed; the next step is to progress with the transportation of those items to the local warehouse and collect them.
Outbound Logistics is related to Customer Service and Distribution Channels. The outward movement of final or finished goods, from the company to the end user, is known as Outbound Logistics. It concentrates on the transportation of finished goods or product from the company to the final consumer. The interaction is usually between the firm and the customers.
Unlike Inbound Logistics that fundamentally focuses on purchasing and directing the inbound movement of products, parts, materials and finished inventory from suppliers to warehouses or manufacturing plants, Outbound Logistics is a whole other separate set of processes. This part of logistics relies profoundly on transportation and storage of finished goods. Typically, it is centred on two concepts, that is, warehousing and transportation.
The finished products are stored in the warehouse and on the receiving of customer order or delivery order dispatch process is initiated. Then the transportation selection is made based on the volume of the goods, urgency, and the location the delivery is made to the end user.
Logistics is an integral part of the Supply Chain Management (SCM), which results in the timely delivery of the goods and materials to the final destination. It strives to provide the right goods, at the right time, in the right quantity, at the correct location and best price.
Inbound Logistics includes all the activities that are involved with order placing to the suppliers. On the other hand, Outbound Logistics covers all those actions that involve dealing or trading in products manufactured by the company.