WHAT IS INBOUND LOGISTICS?
Inbound logistics refers to the process of managing and coordinating the movement of goods,
materials, and resources from suppliers and vendors to a company's operations or manufacturing
facilities. This includes activities as sourcing, purchasing, transportation and storage.
STAGES OF INBOUND LOGISTICS
Inbound logistics is the stage in the supply chain that happens before and when the flow of goods,
information and finances enter the organization. This begins with identifying and establishing a
strategy for the inbound logistics.
1. Planning: Establish a strategy and set goals for the inbound logistics process. Identify what
type of materials that needs to be sourced and how to execute the strategy most effectively.
This can include having multiple sourcing strategies for key components to avoid risks.
2. Sourcing: Identify and evaluate potential suppliers, negotiate the terms and conditions, rates,
capacity. Set up contracts with the suppliers that meet the preferences. Maintain and
improve relations for a long-term partnership.
3. Purchasing: Prepare and issue purchase orders, monitor progress and ensure agreed
conditions are being fulfilled. Review invoices and make sure they are correct. Process
payments.
4. Transportation: Negotiate transport agreements with logistics providers. Monitor the flow of
good. Maintain relations and work with improvements.
5. Receiving & storing: Receiving and controlling the material on arrival. Arrange for storage
and correct data in the necessary IT-systems.
6. Inventory management: Managing the inventory, stocktaking and set up standards to avoid
stock-outs.
The inbound logistics process is crucial for a business to run smooth operations and meet customer
demands. Managing an effective inbound logistics flow can reduce cost, improve visibility in the
supply chain and increase the business competitiveness in the market.
INBOUND LOGISTICS CHALLENGES
As all aspects of supply chains inbound logistics have their challenges.
1. Transport delays: delays in shipping can cause production shutdowns, increased costs, and
loss of customers due to shortages.
2. Lack of visibility: Communication between different stakeholders in the supply chain can
impact cost and cause delays in the chain.
3. Supply and demand: Balancing the supply and demand requires close collaboration with
production sites, sales, and marketing.
4. Capacity shortage: Lack of capacity from suppliers of certain products can impact multiple
production activities and cause further delays and increased cost.
5. Quality issues: Defects from the supplier or damages occurring during transport.
Managing the above challenges is important for the success of an inbound flow. Usually these can be
controller with clauses in agreement, supplier assessments and IT-tools.
HOW TO OPTIMIZE INBOUND LOGISTICS
There are different strategies that can be used to optimize inbound logistics processes. Some
frequently used actions are:
1. Planning tools: There are several different planning tools that can be used to track
movement of goods, demand, and forecasting.
2. Supplier relations: Building long-term and reliable relationships with well established
processes.
3. TMS & WMS tools: Transport management systems & warehouse management systems help
making transport & warehousing effective.
4. Improving transport and storage: Finding a reliable transporter or logistics provider help
minimizing the risk of delays and increased cost. Warehouse processes can be looked at
outsourcing to different partners.
5. Quality assurance: Regular quality assessments at suppliers of key materials and
components.
Working with KPI’s for tracking the inbound logistics flows and supplier deviations can help optimize
the activities and find bottlenecks in the supply chain.
IMPORTANCE OF INBOUND LOGISTICS
To summarize inbound logistics is an important process for any business. A bottleneck in the inbound
supply chain will cause increased cost and consequences for the entire supply chain. A well-
functioning inbound logistics process have the possibility to
1. Reduce costs: A good inbound logistics process will reduce cost by having well-thought
sourcing strategies leading to more efficient flow of goods.
2. Improve efficiency: Higher efficiency in the workforce and more effective planning can be
results of an effective inbound process.
3. Increase competitiveness: Reliable customer service and a higher customer satisfaction
thanks to less delays and reliable information can lead to future wins.
4. Increase visibility in the supply chain: Increased visibility and flow of information help the
entire supply chain be more efficient. A reliable inbound flow will make production planning
and outbound logistics more efficient.
5. Improve quality: Having the right processes in the inbound logistics chain will reduce quality
errors and quality cost.
With this newsletter we hope you gained some insight in inbound logistics. If you have any requests
for topics or other questions we are pleased to assist. Feel free to contact us at the below address:
[email protected]
Best regards,
Supply chain Academy
Your partner for education and competence
in supply chain management & logistics
