Inbound & Outbound Logistics

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What is Logistics?

Logistics, or logistical planning, refers to the process that a business uses in order to
coordinate its supply chain operations. It includes a wide variety of tasks and
activities, such as managing how raw materials or inputs are acquired and
transported to the business, how inventory and inputs are stored at the business’
facilities, and how inventory is transported within the business and beyond.

Role of Logistics
Logistics play a huge role in the smooth operations of a business. However, at scale,
it is extremely difficult to run a flawless logistics division due to the sheer number
of variables and demands that such a system is subject to.

Logistics can be thought of as the business function responsible for “getting the right
item in the right quantity at the right time at the right place for the right price in the
right condition to the right customer.” Thus, it is imperative that companies invest
in their logistics divisions to ensure maximum customer satisfaction and overall
productivity.

Inbound Logistics
Inbound logistics refers to the internal logistics tasks and activities that businesses
need to complete in order to operate. Inbound logistics usually refers to the logistical
operations of companies that operate fairly upstream (B2B).

In terms of the supply chain, it involves the relationship with parties that operate
further upstream than the given business. Depending on the business, the parties that
operate upstream may vary dramatically in their respective operations.

For example, consider being a car manufacturer. The manufacturer’s inbound


logistics would entail the sourcing of raw material inputs (sheet metal, glass, wiring,
plastics, etc.), how to store the materials in preparation for and during the assembly
process, and how to manage the flow of manufactured automobiles that leave the
factory.

From the perspective of an upstream player, for example, the metal foundry that
produces the sheet metal, the inbound logistics would vary. The inbound operations
would include sourcing raw materials such as metal ores, storing and using the
materials in production, and managing the flow of completed products.

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Outbound Logistics
Outbound logistics refer to the tasks and activities involved with moving the product
to the end user. Such logistic duties usually apply to players that operate relatively
downstream, which are usually the last party in the supply chain. The duties include
the storage of manufactured inventory, the transportation of manufactured goods to
the point of sale, and sometimes, the shipping and handling involved to get certain
products to the end user.

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