Logistics activities can be divided into two main categories: inbound and outbound logistics. The first category is mostly related to the transport, storage, and delivery of goods coming into a business while the latter focuses on the same for goods going out of business.
The inbound logistics process refers to the inflow of raw materials from suppliers to manufacturing plant. This is the first phase of the value chain. It involves various activities, such as the storage and delivery of raw materials and parts that are going to be used in production. It also includes sourcing the materials, tracking inventory and optimizing the movement of products from suppliers to the store, warehouse or manufacturing unit.
Outbound logistics involves the flow of finished products from a company to its end customers. These activities are mainly concerned with the distribution channels and customer service. Outbound logistics, as the name indicate, is the collection, storage, and distribution of the final goods and related information flows, from the manufacturing plant to the end user. It covers all those activities (i.e. selecting, packaging, transporting, etc.) which are involved in the outflow of merchandise from seller to the buyer.
Differences between Inbound and Outbound Logistics
- Inbound Logistics refers to the buying, storage, and dispersal, of the incoming goods, to the manufacturing unit. On the other side, outbound logistics implies the transmission, selection, packaging, and distribution of final goods to the end users.
- The inbound logistics is aligned towards the usage of resources and raw materials, within the manufacturing or assembly plant. On the contrary, outbound logistics focused on the outflow of final goods or product from the firm to the end customers.
- Inbound logistics, is all about sourcing and receiving of raw material and its management, in the organization. Conversely, outbound logistics is mainly deal with customer service and distribution channels.
- In inbound logistics, the relationship is between the supplier and the company. Unlike outbound logistics, in which the relationship is between the company and the ultimate customer.
Inbound and outbound logistics combine within the field of supply chain management, as managers seek to increase the reliability and efficiency of distribution networks while minimizing transport and storage costs. Understanding the differences and interconnection between inbound and outbound logistics can provide insight for developing a comprehensive supply-chain management strategy.