Carriers play an essential role in the supply and demand of goods. As a third party involved in the process of getting finished goods to customers, you might be wondering, “What is inbound logistics?”
Inbound logistics help ensure the timely delivery of materials and goods to a business. But it includes many crucial steps in the process, such as ordering, receiving, storing, transporting and managing supplies.
Carriers are often tasked with ensuring efficiency for inbound logistics and ensuring on-time deliveries. Want to learn more about inbound transportation? This article provides a full overview of key things you should know about.
How Does Inbound Logistics Work?
Inbound logistics involve many important activities to keep the supply chain running. But for carriers, the steps you’ll be the most involved in include:
- Transporting: Selecting the best mode of transportation for the goods based on required speed, final destination, handling, price, etc.
- Receiving: Delivering goods on time is essential to powering the supply chain effectively. Late deliveries can mean that raw materials don’t arrive on time to complete customer orders. Or that the unloading docks are full with other deliveries, clogging up the process.
- Expediting: Moving goods efficiently from one destination to another for timely delivery.
- Tracking: By offering transparency for shippers into where the goods are at any given time. This helps with planning for other steps in the inbound logistics process, such as having a team on hand to handle and put away the materials while updating inventory.
- Analyzing: Carriers can also be involved in bringing back goods customers are returning due to defects or needs for repairs or refurbishments.
While your company might not be directly involved in other aspects of inbound logistics, you do need to know about the entire process to see how your operations fit into the full logistics process.
If you work closely with a shipper, you’ll start to see trends in inventory needs to be ready for loads and better capable of meeting their needs quickly and efficiently.
What Departments Are Affected by Inbound Logistics?
Inbound logistics impact nearly every department within a transportation company. Your role is so essential to the supply chain, getting it right and offering your customers transparency into the process impacts every aspect of your business.
- Sales: Your sales team will need to understand what resources are available for them to sell based on customer needs and timelines. Providing insights into trucks, drivers, and asset locations and use will tell your sales team what loads they can take on, when, and where.
- Operations: Ensuring that everything moves through the logistics process smoothly is essential. The operations team will be monitoring things from assigning trucks and drivers to a load to planning routes and timelines.
- Customer Service: Ultimately, if the customer isn’t happy, you haven’t done your job right. Answering questions, adjusting timelines accordingly, and providing insights into where loads are at throughout the process helps customers feel involved and heard.
- Accounting and Finance: The more efficiently you move goods, the better your bottom line will be. Most loads are contracted for a flat fee or per-mile transported. Poor logistics planning can lead to unnecessary expenses that impact your accounting and finance team.
- Research: The research team will constantly be looking for ways to improve inbound logistics and better serve customers.
- Procurement: What resources do you need to complete the work that you’ve made a commitment to? Maybe it’s a new truck or trailer or the hiring of a contractor trucker to meet growing needs for your business. Procurement can ensure you’re ready to meet the inbound logistics requirements of your customers and fulfill your promises.
What Is the Importance of Inbound Logistics?
The inbound logistics definition is bringing materials and goods to a company. Without goods, companies have nothing to sell. But quality logistics practices will impact many aspects of a business, such as:
- Higher quality products
- Cost savings
- Increased sales
- Improved customer satisfaction
- Reduced overhead and wasted materials
Challenges of Inbound Logistics
Inbound logistics presents many challenges, especially concerning cost control, delivery timelines and unpredictable aspects of the supply chain. Building an effective inbound logistics strategy requires understanding the largest challenges you’ll face.
Lack of Shipment Information
Shipments can be somewhat unpredictable. You might not know the exact location of a shipment. And while you’ll have a general timeline for when it will arrive, this is often not an exact timeframe.
Estimating the cost of carrying goods is challenging because a lot can happen between when you pick up the goods and when you deliver them. In some cases, this means you don’t charge enough and lose money.
Deliveries and Receiving
The transportation of goods requires careful planning to schedule arrivals, indicate the dock drivers should pull up to and communicate with all parties so they know what is happening. Poor planning or communication about deliveries and receiving could lead to a driver arriving and not knowing where to dock.
Or truck congestion could slow down the process, which can result in a decrease in income and potentially wasted time. Delays with one load can impact the next load that you’ve committed that driver and truck to. Small changes can have big impacts on the transportation industry.
Processing Returns
Efficient return processing is essential to power operations. You can lose sales if you don’t place the stock back into inventory quickly and accurately for customers to see and purchase. But the goods also have to make their return journey to the warehouse to allow the process to run smoothly.
Balancing Supply and Demand
Supply and demand present extreme challenges due to seasonal changes, competitive influences, economic conditions, pricing volatility regarding raw materials, fluctuations in selling cycles, and so many other factors. The best way to deal with supply and demand is to monitor demand carefully and then make projections based on historical data. That way, you can be ready to meet the needs of your customers at any given time.
Supplier Reliability
If any one aspect of inbound logistics is disrupted, it impacts all the other steps down the line. However, a major aspect that you won’t be able to control is the reliability of the supplier.
You trust that the supplier will do their job and meet the commitments they’ve made to you. But if they don’t or they change their prices suddenly, it will impact your ability to fulfill other steps in the logistics process. Or if a supplier changes the quality of their products, you might need to pivot quickly to avoid customer complaints.
How to Optimize Inbound Logistics
Optimizing inbound logistics will help you operate more efficiently while improving your bottom line. But you’ll also be more agile to adjust and meet customer demands. Here’s how to focus on improving your processes on a daily basis.
Build Relationships With Shippers
The stronger your relationship with shippers is, the better you’ll understand their business, needs, volume, and the costs of completing loads. This will help you negotiate great rates that compensate you fairly.
As you complete deliveries, you’ll have data and insights into what to expect so you can adjust processes to best meet the shipper’s needs with the greatest efficiency.
Find Inefficiencies
Once you’ve built great shipper relationships and get repeat loads, you’ll be able to look deeper into inefficiencies. Some examples of inefficiencies include cost, waste, quality loss, duplicate work, information gaps and delays.
Improving inefficiencies will help you improve your bottom line while also providing outstanding customer service. This is good because it can help you attract and retain your customers.
Use a Transportation Management System (TMS)
A transportation management system helps you automate, manage and optimize freight operations. These systems aid in planning and decision-making, executing efficient loads, following up and measuring how you’re doing.
That way, you can focus on efficiency by using historical data and load-specific insights. Plus, you can better prioritize your work based on timelines, budgets and routes.
Use a Warehouse Management System (WMS)
Once you’ve transported goods, you need a strong process for warehouse operations. A warehouse management system streamlines the receiving, putaway, and inventory management processes.
For the most effective warehouse logistics, you should connect your warehouse management system to your transportation management system. This will provide you with insight into the entire process.
From there, you’ll be equipped with the best planning processes and customer service transparency. Using barcodes, you can track inventory to see where it is at all times and know when to order more as a way of keeping your supply chain running efficiently.
Combine Deliveries
The larger your deliveries are, the more cost-effective they will be. Less-than-truckload deliveries are more expensive and have longer receiving times than a full truckload. By using a third-party logistics provider, you can combine shipments with other customers who are shipping and delivering to similar locations in order to improve efficiency.
Inbound vs Outbound Logistics
Inbound and outbound logistics are both essential elements in running a successful business. However, each presents unique opportunities and challenges.
Inbound logistics is the art of bringing in supplies and materials to a warehouse or facility to prepare for customers. In contrast, outbound logistics is getting the goods to the customer.
While both require the transportation of goods, they have different demands and requirements. Inbound is about receiving while outbound is about delivery.
Efficient Inbound Logistics that Meet Supply and Demand
Improving inbound logistics is a task that is never complete. As the transportation industry changes and the needs of the shippers you serve adjust, you’ll need to pivot to adjust alongside them. But with the right strategy and tools in place, you can optimize your inbound logistics for efficiency and accuracy.