What is Outbound Logistics and How Does it Work?
by TransVirtual, 10 November 2022
What is outbound logistics?
Outbound logistics is the process of storing, transporting, and delivering your goods to their end customers. In other words, it’s all about how your business moves finished inventory out of your supply chain – and fulfills customers’ orders.
Many elements go into a successful outbound logistics process for a business. These include inventory management, order management, packaging procedures, and distribution networks. Preparing each order and delivering it on-time to the appropriate location is critical for a successful sale – and with a streamlined outbound logistics process, you’ll get it done every time.
But what do businesses need to know about mastering their logistics process? And if you discovered new ways to optimize your outbound logistics, would you take advantage of them?
Inbound vs outbound logistics
The vast majority of businesses have to take both outbound logistics and inbound logistics into careful consideration. At first, they both seem pretty straightforward – you acquire materials, make your products, then people buy them.
But as anyone with a business will tell you, it’s a bit more complicated than that.
Inbound logistics is the way your business receives the goods and materials in the first place. For instance, if you are a manufacturer, inbound logistics covers the way you receive the raw materials you need to create your finished products. Inbound logistics is primarily focused on supply and your relationship to suppliers – never involving the end-user of a product. But how you receive those products (in the right quantity and quality) is a complex process that requires a lot of careful planning.
Typically, your outbound logistics network works very differently and with different partners than your inbound logistics network. During inbound transit, raw materials providers may ship their product directly to your location. During outbound transit, your finished products may be moved to a distribution warehouse that stores your goods. Then, a retailer ships them to other destinations to replenish their inventories as needed.
Because of these differences in outbound logistics vs. inbound logistics, it’s useful to separate them into these distinct categories. Of course, optimization of both their respective supply chains is crucial for the long-term success of your business.
Elements of outbound logistics
When transporting your goods, it’s important to understand each of these stages: warehousing, inventory management, transportation, and last-mile delivery. Together, they fall under the umbrella of outbound logistics and relate directly to how your business runs smoothly and efficiently.
Warehouse management is the process of keeping your products safe and ready for a potential purchase. You may store them in your own warehouse or one owned by a third-party logistics provider. One option is far more cost-effective than the other, but each has their own benefits.
▶️ Inventory Management
One of the most important considerations for any business is the way you pick, pack, and store your finished goods in the right place. Inventory management ideally integrates with software systems so you can keep track of your own inventory and prepare it for shipment at a moment’s notice.
The transportation element of outbound logistics is how you ship your products to various distribution or fulfillment centers. This is usually handled by freight trucks, planes, or even ships. In many instances, this is the make-or-break point of how well a business does in sales each year – so make sure this aspect of your supply chain operates like a well-oiled machine.
▶️ Last-Mile Delivery
Last-mile delivery is the final step of the outbound logistics process in your supply chain. This involves route planning and optimization, fleet management, vehicle tracking, and Proof of Delivery. And even with recent disruptions to global supply chains, demand for last-mile delivery is higher than ever.
Optimising your outbound logistics
Improving your outbound logistics is all about optimizing every process with the latest techniques and technology. Here are some ways your business can accomplish this:
▶️ Route Optimisation
Finding the best routes for delivery drivers is key for getting your goods to distribution centers and to your customers as quickly and efficiently as possible. However, this doesn’t always mean seeking the shortest route – most of the time, it’s about minimizing external factors. Fortunately, route optimization softwares exist that can dramatically help with this process.
▶️ Dispatch Management
Satisfying your customers’ needs by moving your products when and where they’re needed comes down to proper dispatch management. You must match customer requests and have the delivery drivers needed to complete the transportation – every time. This requires reducing your service time and labor costs by assigning the right driver at the right time to ensure timely, complete deliveries.
Benefits of optimised outbound deliveries
If you’re able to improve your outbound delivery logistics, you’ll not only increase customer satisfaction but also reduce your overall costs. And you know what that means – higher profits at the end of the day.
With an optimized route management system in place, you’ll cut costs on fuel and drive time. This means less money spent at the pump and fewer hours on the road for your drivers. Your business will keep that money, and your customers will receive their products faster.
Delivery speed is actually ranked among the highest factors in customer satisfaction. That’s why so many people opt to pay for same-day delivery from their favorite retailers. If you speed up the time it takes you to get your products to distribution centers and retailers, your customers won’t have to worry about exceedingly long wait times to get the products they want most.
In other words, with optimized outbound logistics, you’ll have less to worry about as you do business. Customers will cancel fewer orders, your packages will arrive in better condition, and end-users will be happier with the experience of purchasing your products.
Remember, loyal, happy customers spend up to 36 percent more with their brands of choice in the future.
Overcoming the challenges
Overcoming the various challenges of outbound logistics may seem daunting at first. Fortunately, lots of businesses have been in the same position and have successfully found ways of pushing through and beating any obstacles.
If you’d like to dramatically improve your outbound logistics, the team at TransVirtual are here to help. Get in touch when you’re ready or book a free demo to see how it could help you grow your business.