By Hari Menon
There are many people who use the word ‘logistics’ while referring to a warehouse. However, if one were to check out this word and examine it closely, this is far from the fact!
An understanding of the word ‘logistics’ would help us to appreciate the terms inbound and outbound logistics better.
The word ‘logistics’ came from ‘logistique’ in French. It is originally a military term that was used to indicate the organization, movement, and accommodation of soldiers and storage of military equipment.
Since these operations were quite complex to execute, any activity or process that was complex was referred to as ‘logistics’. Soon, this term came to be used in the commercial process of acquiring, storing, and distributing goods.
Typically, these days, the word ‘logistics’ is used to refer to the coordination of functions such as dispatch, delivery, transport, and the storage of goods.
It is the process whereby documentation, transport, storage, segregation, and labelling of goods are executed efficiently and effectively.
Especially at a time when ‘customer is king’ logistics is directed more towards meeting customer requirements in a timely and economical manner.
Outbound Logistics
Outbound logistics kicks into action when you have sales orders from your customers or need to move your physical inventory from one location to another.
It mainly involves the picking of goods, its packing and labelling according to government and customer requirements, and subsequent transport of these goods to their destination after fulfilling customs formalities as required.
Outbound logistics includes load and route planning, liaising with the customers, customs, or other relevant government authorities as required, and arranging the right type of transport.
Sales Order Processing (SOP) is another function of outbound logistics. It is the receipt of customer orders and their conversion to picking lists and finally invoicing.
Preparation of customs and transport documentation, etc. requires expertise as wrong calculations or incorrect classification of goods under the Harmonized Systems (HS) code may result in payment of the wrong customs duties or subsequent penalties, etc.
Inbound Logistics
Inbound logistics is the process of receiving goods. It includes the planning, physical receipt, checking, and stacking in the right locations that help goods pickers to take out these goods based on pre-agreed picking rules.
Inbound logistics may also include the movement, transport, and customs documentation of the cargo from its origin to destination.
An efficient inbound logistics system is necessary for any organization to ensure the uninterrupted flow of goods into its warehouse.
It may be raw materials to be processed or finished goods to be dispatched to customers upon sale.
Certain organizations include forecasting and the purchase ordering process in their inbound logistics process while others look at it from a totally physical perspective of receiving and storing goods in their warehouse.
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