To begin with, logistics is simply the efficient management of the flow of products including storage in a supply chain. Outbound logistics refers to the processes involved in the movement and storage of products and how related information flows from the end of the production line to the firm’s customer.
Unlike inbound logistics that primarily focuses on purchasing and arranging the inbound movement of products, parts, materials and finished inventory from suppliers to warehouses or manufacturing plants, outbound logistics is a whole separate process. This portion of logistics relies profoundly on transportation and storage of finished goods.
Outbound Logistics Basics
For the most part, outbound logistics is an easy concept. Essentially, it is centered on two concepts, that is, storage and transportation.
The storage section of the field utilizes warehousing technique to keep the finished goods safe and accessible. Since the products may need to be moved out to a customer at any moment, proper organization is crucial. While this section of the field primarily concentrates on storage, having as little product stored as possible can generally be more advantageous since stored materials are not making any money.
The transportation section is by far the most occupied and complex part of outbound logistics. Without transport, there simply is no logistics. Therefore, it is essential to move the product from one location to another in the most convenient and efficient way possible.
Since transportation is a variable that fluctuates with time, some factors such as a reliable transport team, delays, and change in fuel costs need to be taken into account in order to cover all possible scenarios that could otherwise jeopardize efficient movement of goods. For instance delaying one shipment can cost your company thousands of dollars, however if that means combining that one shipment with a larger shipment, that may end up being more efficient in the long run.
The Outbound Process
Businesses or organizations go through numerous stages in the outbound logistics process. For instance, the sales section first obtains a purchase order from the customer. The sales section confirms its inventory records to ensure that they can complete the order. The order is then sent to the warehouse for picking and packing after which it's shipped to the client. The customer is then billed and eventually, the cash for the order is collected.
Channels of Distribution
In place of working directly with the client, most companies consider using channels of distribution. These individuals or distributors convey the product or service to the end user. For instance, a company that manufactures stretch film may have a variety of dealers in its channels of distribution. These channels promote the product, stores, transports and arranges for its sale. Part of outbound logistics is choosing distributors that will promote the product, have a good logistics network, and cater to every customer.
In a bid to ensure that the outbound process is efficient, stretch film packaging firms must make sure that they have a working inventory system. If a firm overstocks its inventory, products may become obsolete. Similarly, if a company does not stock enough inventory, the odds are that it might lose its customers. To balance this, companies can use their past inventory entries to forecast future demand and stay in touch with their distributors.
Optimization of shipping and delivery is another very vital component of outbound logistics. The use of system barcode scanning can come in handy when it comes to inventory tracking, helping update the client on the status of the order.