Want to optimize your inbound logistics? Find out how you can achieve that with Circuit for Teams.

Are you looking to optimize your procurement process?

It can be annoying dealing with inefficient suppliers and vendors — but sometimes, things aren’t really their fault.

Perhaps their raw material supplier has delayed delivery, or maybe their boss has told them they need to work on some other urgent orders.

Either way, it’s a shame that your business and your customers continue to suffer.

So, I’ve put together this article to help you understand more about how inbound logistics work and how you can optimize it.

What are inbound logistics?

Let’s explore inbound logistics with two examples.

First, let’s consider a manufacturing plant that makes tires.

The raw materials for this company might include unprocessed rubber, steel for belting, chemicals needed to process and vulcanize rubber, and other essentials.

The task of ordering and bringing all these materials into the plant makes up the inbound logistics process.

Only when all raw materials have been received can workers start the manufacturing process and make tires.

For the second example, let’s dive into an eCommerce business.

Inbound logistics, in this case, might involve getting finished products from a manufacturer.

The business might receive and stock these products in a warehouse to eventually ship to customers who order these products online.

Inbound logistics is a key part of the shipping logistics process, which is the bigger picture of supply and demand.

Inbound logistics activities

Let’s discuss the individual activities that make up the inbound logistics process and what those activities involve.

What are the differences between inbound and outbound logistics

While inbound logistics processes focus on bringing goods and raw materials into a business, the outbound logistics process involves getting finished goods and products to end users — in other words, their final destination.

Both are important parts of the supply chain management process.

As the name suggests, outbound logistics is concerned with the outward movement of goods from your company to the customers.

Manufacturers typically get their finished goods out to wholesalers who buy them in bulk.

The wholesalers then forward them to retailers, where the end customer eventually makes their purchase.

Another outbound distribution channel involves selling directly to customers without going through a middle person like wholesalers and retailers.

Here are some of the biggest differences between inbound and outbound logistics.

What are the challenges with inbound logistics?

Let’s explore some specific hurdles businesses can face with their inbound logistics operations.

5 ways to optimize your inbound logistics

There’s always room for improvement — even in the best of situations.

Optimizing inbound logistics involves going over your current processes for weaknesses, building strategies to address them, and using effective solutions.

Here are some steps you can take.

1. Build strong relationships with suppliers

Prioritizing relationships with suppliers can translate to improved efficiency. When you build a strong, reliable relationship with your suppliers, you can count on them to take care of the supply side of things for you.

Some ways to do this include:

2. Reduce your inventory costs

Inventory logistics costs can be a drag on business resources, especially when a business is trying to scale up.

For example, when you’re trying to expand to 10 locations within your city, you might be tempted to purchase 10 times the current inventory, which will cost you.

There’s a fine line between having a steady supply of inventory to match demand and having too much of it.

Having too much inventory can increase carrying costs and lower inventory turnover rates.

How? Because inventory that exceeds demand naturally doesn’t sell in time and can take up valuable storage space in your warehouses or distribution center.

It’s important to get your reorder point exactly right to optimize stock availability.

Ever heard of the phrase “economies of scale”? This means that the more you order, the lower the cost of each supply unit.

Finally, get rid of stock that’s too old to sell by returning or donating it.

3. Combine deliveries

Consolidated shipping lets you combine and improve delivery service to save costs and time.

For example, instead of placing separate orders for products or raw materials, you might negotiate with your suppliers and shippers to combine deliveries into one shipment whenever possible.

This can help you cut down on packaging resources because multiple goods will go out at one time rather than each sale going out separately.

However, there are challenges to combining deliveries, like different handling needs for different products.

You can overcome some of these challenges by using third-party logistics providers (3PL), companies that specialize in handling logistical challenges.

Apart from cutting down on transportation costs, combining deliveries is a sustainable practice that reduces fuel consumption and carbon emissions.

4. Use the right warehouse management system

An efficient warehouse management system (WMS) — also known as an inventory management system — can help streamline your inbound logistics process.

For instance, a warehouse management system can automatically label each box based on delivery priority and mode of transportation.

You can then use these labels to sort boxes and send them on their way much quicker.

Some of the other benefits of using a WMS include:

5. Use a transportation management system

A transportation management system (TMS) can be a game changer for businesses in terms of moving incoming goods.

A TMS can determine the most efficient delivery route by factoring in the distance, fuel consumption, and delivery priority.

Why inbound logistics is essential for your business

Inbound logistics management is a complex process that involves vendors, suppliers, transporters, distributors, third-party carriers, and other partners.

Each business has specific goals — like quick customer orders or cost savings — that can affect its inbound logistics process.

Whether you’re a small retailer, major manufacturing facility, or anything in between, maintaining a smooth inbound supply chain is important.

Without a smooth inbound supply chain, you’re likely to lose a lot of money over wasted stock, storage, and transportation.

Inbound transportation of goods will continue to play an important role in profitability, competitiveness, and innovation.