The quiet yet bustling ventricle system of getting things to an end customer is the heart of outbound logistics. Including warehousing, storage, distribution, transportation, and last-mile delivery, outbound logistics is a balancing act of time, space, and management to achieve outcomes that always deliver.
How Does Outbound Logistics Work?
Focusing squarely on the flow of goods from a proprietor, outbound logistics work in steps akin to the order of operations. In short, a customer’s order is processed, packaged in a warehouse, then finally delivered to the end customer.
All the while, and even before any of that can happen, companies need to properly track and house inventory, secure distribution channels, and finalize delivery options. This process involves the sales department, warehouse clerks, and billing departments working in concert to fulfill orders.
Type of Outbound Logistics Activities
Though the basics of outbound logistics are somewhat crystalline, the inner workings of the systems in place that make the operation seem well oiled can be a nightmare if not well managed.
- Warehouse and Storage Management: Before a customer can get a product, it has to be stored somewhere. Even if wares are made to order, there generally needs to be some sort of facility where the raw materials can be at the ready and safe, and that’s where warehouse management comes in.
Keeping products safe and at the ready is key to keeping customers happy and converting them to repeat customers. On average, businesses generally keep a ratio of 1.26 for inventory to sales.
- Inventory Management: With the rising popularity of drops culture scarcity may breed interest, but there is nothing more annoying than finding that the thing you want is out of stock. Inventory management is the stopgap from running out of the products you need and having an overstock of things left on the shelves.
With proper historical sales data and forecasting, inventory management is a balancing act that doesn’t have to take place on a tightrope. And for some businesses with made-to-order products, just-in-time deliveries can ease both cash flow and storage problems.
- Distribution Channels: Though direct-to-consumer transactions have the highest margins, at scale most businesses need to incorporate other channels of distribution. For example, even though Apple has Apple Stores all around the world and a flourishing website, the tech giant still uses companies like Best Buy, Target, and other big-box retailers to sell a host of their merchandise from their product line.
- Delivery Optimization: Outside of your product being perfect, the most important part of the customer experience is making sure it gets to said customer, intact and on time. With the use of the right carrier and barcodes to track shipments and deliveries, this process can run like a tight ship, becoming more and more efficient over time.
Why Are Outbound Logistics Important?
The core purpose of outbound logistics is to keep your customers happy and ease both your sales pipeline and your efficiency to get your products in the hands of your customers.
Good outbound logistics can lead to lower overhead costs, better return rates, true inventory control, an organized warehouse, and a better customer experience. Bad outbound logistics will lose you customers, money and increase waste and leave you with inventory you don’t have demand for.
Challenges Associated With Outbound Logistics
Though the pros of outbound logistics are abundant, setting out a plan of action if your ducks aren’t already in a row might not be smooth sailing, and it may weigh the many pros of using a pro-3PL outfit.
Regardless of if you’re keeping your outbound logistics in-house or hiring a third-party logistics company, there are some key things to think about.
Coordination of Operations
One of the hardest parts of outbound logistics is coordinating all of the moving parts. If you’re not controlling your inventory through data-driven insights, then the warehouse becomes inefficient.
If the warehouse is inefficient, delivery windows will be missed. Making sure your operations managers and admin services are all working in tandem is paramount to your success.
Though there are many factors in the cost breakdown of outbound logistics, the piece of the pie is eaten by transportation, at around 50%, with inventory being a not quite close second at around 20% with the operations and labor workforce jointly mirroring that.
Getting a customer is easy enough, but keeping them is the harder part. If your outbound logistics process is a mess, inventory shortages, quality control, order fulfillment or delivery consistency can all cause customers to take their business everywhere.
If you don’t deliver on time, you could lose a customer, if you deliver to the wrong address, you will lose a customer, and if the product is damaged you’ve lost inventory and have to replace the product, which will eat into your bottom line.
How to Optimize Your Outbound Logistics
There are multiple ways to optimize touchpoints in your outbound logistics. From inventory management to partnerships with carriers and distribution channels these small changes can have major impacts.
Focus on Distribution Channels
Each distribution channel has different problems, for some channels fulfillment is out of your hand, but for some, you work hand-in-hand with your own warehouse going directly to the customer. Using smart routes for delivery planning can ensure on-time deliveries with fewer man hours worked.
Create Inventory Strategies
Inventory can eat up space and cash flow, the more SKUs the more onhand product is needed, and the more warehouse space it will all take up. Always match your supply to your demand and use just-in-time deliveries if possible to have a high inventory turnover rate.
Partner With a Reputable Company
At the end of the day, you probably didn’t start your business to run a warehouse, but there are plenty of companies who have earned their stripes doing just that. Supply-chain partnerships share data to make changes in real-time to both heighten profit and cut losses.
What Is the Difference between Inbound and Outbound Logistics?
Now that you know what to look for when crafting your outbound logistics strategy when getting things to your customer, we should mention that none of this matters if your supply chain is messy on the inbound logistics side of your company.
Where outbound logistics handle what’s coming from your company to your customer, inbound logistics handles all of the incoming goods and raw materials from suppliers to your company.
Why DIY When You Can 3PL?
It’s a dirty job, but somebody has to do it, but it also doesn’t have to be dirty. The ins and outs of outbound logistics create the face of your company, these actions or inactions directly affect your customer and the way your brand looks in the marketplace.
Even though it might seem like an organizational nightmare, there are a host of great 3PL companies that can take this out of your hands and off your mind.
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