Indeed, the delivery of goods is a strategy that must be well-thought-out. Hence, the type of logistics, such as inbound or outbound logistics, should not be mistaken. In this article, we will discuss the differences between them.
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Before we know what inbound and outbound logistics are, it is good to know what logistics is in the first place.
Logistics refers to the processes that companies use to adjust the supply chain. For example, the procurement of raw materials, production as a business (factory/company), storage of goods, and shipping them to the outside world (customers).
In the world of logistics and supply chains, there are multiple parties involved between the company and the customers, such as distributors and suppliers. Obviously, logistics plays an important role in the business world.
If you choose the wrong type of logistics, it will affect customer satisfaction and overall productivity.
What is Inbound Logistics?
First, inbound logistics is a logistics activity that focuses on receiving goods or materials from suppliers to businesses. Usually, the business partner is the manufacturer who produces the goods or materials supplied by the vendor.
Also, the type of material processed depends on the industry. Furthermore, the inbound logistics process can control the manufacturer’s raw materials, the supplier’s components, and the final products in the assembly line.
In other words, this process manages the operational requirements for converting materials into finished goods.
Therefore, inbound logistics usually focuses on receiving goods for those who want to do business.
After the company orders goods, the supplier issues a purchase order, an invoice, and a receipt. Then, the goods are shipped directly to the recipient.
What is Outbound Logistics?
While inbound logistics deliver goods to the company, outbound logistics focuses on delivering goods to the buyer/customer. In fact, the goods purchased are usually already finished products.
Unlike inbound logistics, the process of outbound logistics begins with the customer ordering finished goods from the company. Moreover, the company delivers the goods by issuing a sales order as an invoice to the customer.
On the process, outbound logistics networks usually involve multiple partners. Such as manufacturers, distributors, retailers, and transportation teams.
When the manufacturer has finished the product, it is delivered to the distributor or directly to the customer through the retail store.
Differences Between Inbound and Outbound Logistic
Based on the description above, we can conclude several differences between them, for instance :
1. In and Out Business Documents
When doing inbound logistics, the documents are usually presented such as purchase order, invoice, and a receipt. Meanwhile, there will be a sales order in outbound logistics.
2. Stuffs They Handled
Second, inbound logistics mostly provide delivery of raw materials. On the other hand, outbound logistics will involve finished products.
3. Party Involved
Last but not least, there will be suppliers and business parties involved in inbound logistics. For outbound logistics, the primary focus will be the business people or distributors to the customer.