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Logistics & Supply Chain

What is outbound logistics and why is it so important to modern business?

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What is outbound logistics and why is it so important to modern business? Image: Pixabay
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What is Outbound Logistics? 

Outbound logistics is a term for the processes of storing, moving and distributing goods. It includes all systems that help prepare an order and get it to the end customer. 

The different stages are warehousing and storage, distribution, transportation, and last-mile delivery.

Let’s take a more in-depth look at the individual areas of outbound logistics:

1. Warehousing and storage

To meet demand as you make continued sales, you need to keep a surplus of products in storage. In January 2020, US companies had, on average, a ratio of 1.39 inventory to monthly sales.

The goal of warehousing is to keep products safe and readily available while awaiting purchase. You can store products in your own warehouse or one that is owned by a third-party logistics provider. 

2. Inventory management 

Inventory management involves picking, packing, and storing your goods in the right place. Many warehouses have inventory management systems to help with this.

3. Transportation

Next, is the process of shipping products to distribution centers/partners. At this stage, transportation is typically done by big trucks/planes/freights. The long distances and large volumes can be a challenge.

4. Last mile delivery

Last mile delivery is the most important step, and is also the most expensive. This is when your order goes from the distribution center to your customer’s door. This task is typically handled by a large fleet of smaller trucks or vans.

If you sell direct to consumer, for example, from an e-commerce store or catalog, you need to cover these four stages effectively.

From managing the product in your warehouse to preparing the parcel and passing it on to a freight service, and delivering the final goods, every stage impacts whether the order gets to the customer’s door on time. 

Just think of everything that happens behind the scenes so Amazon can offer same-day delivery from online sales. 

What Is the Difference Between Inbound and Outbound Logistics? 

The key difference between inbound and outbound logistics is simple: Inbound logistics refers to all processes related to getting your products from your suppliers and manufacturers — products coming in. It includes sourcing, buying, storing, and distributing goods and supplier returns.

On the other hand, outbound logistics is all about delivering products to customers — orders going out. It includes inventory management, order management, packing, distribution, and more.

An Example of the Outbound Logistics Process

In this section, we will cover an example of an outbound logistics order process.

Let’s examine every stage for an e-commerce company that sells consumer products.

1. Customer places order

The customer places an order for a specific product on your e-commerce site or through your catalog.

2. Order is confirmed, and products picked in the warehouse

The warehouse confirms the ordered products, the workers pick the relevant inventory. If in place, the WMS system adjusts product counts based on the product id or stock-keeping unit (SKU).

3. Order is packed at warehouse

Workers in the warehouse pack the products and prepare them for shipping by moving them to the loading dock.

4. Trucks pick up daily orders

Freight trucks pick up the orders bound for the relevant distribution centers every day.

5. Trucks drive to distribution centers

The trucks drop off the ordered inventory at the closest distribution center to the customer.

6. Delivery drivers pick up orders at distribution centers

Delivery drivers pick up individual orders at distribution centers for their delivery area.

7. The package is delivered to the customer 

The package arrives at the doorstep of the customer, completing the logistics process.

Channels of Distribution

Businesses that don’t sell straight to consumers, don’t handle the entire outbound logistics chain.

If your main distribution channel is a wholesaler or online retailer that fulfills orders, like Amazon FBA, it’s a different story. Your main concern isn’t optimizing each stage of the process. You need to pick reliable wholesalers, distributors, or retailers and develop strong relationships with them.

Work closely with supply-chain partners

The tail end of supply-chain management is a critical part of your outbound logistics. So if you don’t handle everything yourself, make sure you work closely with retailers or third-party distributors.

An excellent example of collaboration is P&G and Walmart’s supply-chain partnership. They share data and coordinate real-time adjustments to meet the changing demands of the consumer goods market.

A good way to kickstart a partnership can be to coordinate advertising efforts. If you show an interest in improving the bottom line for your retailers or wholesalers, they’ll be more interested in your products.

Outbound Logistics and Delivery Directly Impacts the Customer Experience

It doesn’t matter if you sell consumer products or customized solutions for businesses. Outbound logistics plays a big part in customer satisfaction for manufacturers or online retailers.

And 81% of companies single out customer experience as a competitive advantage.

Below, we’ve listed the top three criteria for meeting customer expectations and keeping them happy.

These three areas are essential to meeting and exceeding customer expectations and ensuring return business in the long term.

1. On-time delivery is essential

It’s 2020. With Amazon leading the pack with same-day delivery, you can no longer afford delayed shipments and packages. 

Every hour your package is delayed is another burden on the customer relationship. To succeed in e-commerce, it’s not enough to promise fast delivery, you must keep that promise.

2. Delivering to the wrong address is unacceptable

What’s worse than getting a package late? Not getting the package at all because it was mishandled and sent to the wrong place.

3. The product must arrive in an acceptable condition

If the product is delivered on time, but it’s in an unusable or severely damaged condition, your customer won’t be happy. It’s an even worse experience than a delayed delivery.

If you use a third-party logistics provider, you must pick a trustworthy one.

This article originally appeared on optimoroute.com

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Logistics & Supply Chain

Warehouse management: Can you afford downtime?

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Warehouse management: Can you afford downtime? Image: Unsplash
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We aren’t talking about personal downtime here. We are talking about those times where you have hundreds of thousands of dollars worth of products stored. If these products melted, grew mold, or were otherwise damaged – that responsibility falls to you to cover. Your warehouse plays a pivotal and essential role in the supply chain, and if you aren’t ensuring you have taken every precaution possible, you might just find yourself losing out in the long run.

Of course, the first thing that you have is insurance. This will keep you covered for most eventualities. But the real dark horse when it comes to your back-up plan will be your CI Group generator. 

Planning and Preparation

No one wants to think about the disaster moment of the power going out. But there is a relief in knowing you have an industrial generator that can help you handle the situation with ease. The chances of a total power failure from natural disasters or a human-made issue aren’t as small as you might thing. The proactive step to take is to have a back-up generator and knowing how to use it long in advance of anything happening.

Power Outages

It has been reported that blackouts and power outages have been increasing since 2003. In simple terms, this means you are more likely to experience a power outage than ever before. 

Snow, ice, storm hurricanes have caused most of these outages, and other severe weather issues are some of the critical causes of power outages and general power issues. These disturbances will knock the power out to your warehouse. What comes next? The waiting game. How long before you will be back up and running? How long before you are at risk of stock issues?

Basic Generator Tips

You will have to make sure that you choose a generator that is large enough to keep your critical systems running. It is a good idea to work with a provider and let them know what you need so that you can be sure you have a generator that will suit your needs. 

Fuel is going to be a crucial part of the whole operation, and if you hadn’t already thought about now is undoubtedly the time. And in the case of a flood, have you ensured that your generator is built to keep running or at least protected.

Before you call any companies, find out all of your energy usage numbers and the equipment that would be the minimum that you need to have running. This will give them a clear understanding of your power needs. 

The very bottom line is that all businesses are going to be heavily reliant on gas and electricity to keep themselves up and running. These things are even more essential if you have extensive storage facilities that supply pharmaceuticals, hospitals, and food businesses.

And it is impossible to say that your business won’t suffer from a blackout or a power outage, so getting a generator is part of a plan that can keep your business running even in the face of disaster. 

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Logistics & Supply Chain

Cost-effective logistics strategies for businesses generating more online sales

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Cost-effective logistics strategies for businesses generating more online sales. Image: Pixabay
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The Covid-19 crisis has triggered an increase in online sales. With more and more businesses all over the world offering a home delivery service, it pays to focus on cost-effective logistics strategies. While boosting orders and adapting to a new way of selling is beneficial for businesses aiming to pull through the crisis, it’s critical to ensure added shipping costs are accounted for. Here are some steps to balance the books. 

Plan in advance

The vast majority of businesses were caught off-guard by the outbreak of Covid-19 at the beginning of 2020. Now that we have a better understanding of what it means for global trade and consumer buying habits, companies can adjust and adapt and start to make plans in advance. One of the most important considerations when offering online shopping is crunching the numbers related to logistics. Will you be paying for warehousing and distribution? How many packages are you expecting to send or ship per day? Are you dealing with customers locally, nationally or internationally? Where possible, it pays to plan ahead. If you’re expecting a surge in orders, make sure you have the arrangements in place to deal with an influx and ensure you’re operating cost-effectively. Explore different options, get quotes and make sure you’re ready to offer new services. You don’t want to lose customers the first time they place an order because you can’t deliver on promises. 

Exploring funding streams and efficiency savings

There is no doubt that the Coronavirus crisis has wreaked havoc on organizations and companies across almost every sector. With the future uncertain, it’s beneficial for business owners to explore funding streams, to keep a close eye on the books and to look into efficiency savings. Altering staffing structures, adapting to embrace and capitalize on new buying trends and automating processes can save time and money. When it comes to funding plans for growing your business and catering to an online market, businesses can consider personal investment through options like buying and selling stocks, trading share CFDs or selling real estate, external investment or borrowing. Weigh up the options open to you, compare the pros and cons and make sure you understand the risks or implications of borrowing, putting your money into an investment opportunity or giving away part of the business in return for a cash boost.

Saving on shipping

Many businesses that usually rely on in-store sales are exploring new opportunities. If you start accepting online orders, it’s hugely beneficial to look for ways to save on shipping. Consider different options, for example, free standard delivery or express services for a fee, and figure out how the costs add up and what works best for your business. Try to ensure that orders are packaged together to prevent delivering a series of separate items. You can outline order deadlines or time limits to ensure that customers have an accurate idea of when their goods will arrive, for example, offering next-day delivery on orders placed before 3 pm. It’s also essential to build strong relationships with the agents or companies you use to ship your products and to make sure you’re getting the best deal. Your performance and reputation could be affected by the delivery process. 

Online sales have soared in recent months, and many consumers are happier to place orders online than leaving the house. If you’re on a mission to balance the books, it’s crucial to employ cost-effective logistics strategies.  

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Logistics & Supply Chain

4 ways to save money on shipping costs

Shipping is what makes the world go around

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4 ways to save money on shipping costs. Image: Unsplash
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For many people, shipping is what makes the world go around. It has never been easier to get a product within a few days thanks to the likes of Express Shipping and the range of freights that soar and sail throughout the day. It’s fantastic for the customers, but on the other end, companies need to make sure that their shipping is both consistent and affordable, which is why you need to understand four ways to save money on shipping costs.

Know the Perfect Time to Ship Goods 

While you might want to fulfill orders as soon as they come through, there’s a risk that this policy could affect your budget. If you are paying high fees for express delivery, it’s important that you reevaluate this policy and see whether it will positively impact your business. 

You need to pass this information onto your staff, so they understand when to ship, also. In some cases, you may not have a choice to ship via air, even if it is more expensive. However, you may be able to get away with sea or even land shipping in some cases, which will ensure you can save some money throughout the year. 

Establish Charge-Back Policies

Most businesses will happily pay for shipment. However, sometimes this doesn’t work as it is not convenient for your company. Rather than surprise customers with an additional delivery fee on top of the product price, you must establish when you will pay, and when the burden of payment falls onto them. 

For standard, three-day deliveries, you can take on the cost yourself. However, if the customer requires the product as soon as possible, you are justified in charging them for the privilege. Again, it’s important to inform your staff of these policies to prevent any upsets once the product arrives. 

Consolidate Orders 

Sending out several orders within a few hours of one another means you’re paying the base cost for each item. This may seem insignificant at first, but the cost will soon add up if you do it every day. 

Instead, try to consolidate your orders as much as possible, even if it means some products will not arrive as quickly as you are used to. If this is a problem, you can adjust delivery estimates, but make sure your customers know about it beforehand. Consolidating orders also reduces the carbon footprint, which can boost your reputation as an environmentally conscious company. 

Track Performance 

You should not consider the product to be out of your hands as soon as it leaves the depot. Tracking the performance of your dropship suppliers will enable you to identify potential issues that could affect the overall cost or cause delays. 

By recognizing where these delays occur, you will be able to take the correct measures to streamline the process, which will help save plenty on your shipping costs. 

Shipping Success 

The success for many businesses hinges on the dependability and quality of the shipment. If you want your business to hit new heights and maintain the reputation you have worked so hard for, quality shipping combined with affordable costs is a must.

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