Without a doubt, logistics remains one of the most crucial aspects of supply chain management that cannot be underestimated. Managing customers’ expectations in real-time and cost-effective deliveries can be directly impacted by your inbound logistics. Supply chain management logistics isn’t a hassle-free task and comes with increased uncertainty on cost and timing. Now more than ever, it is essential to manage your shipments and place more attention on tracking activities and processes.
Have you ever heard of inbound and outbound logistics? Whether you’ve heard little or nothing about these terms, this post is exclusively for you. We’ll reveal some key considerations about managing your inbound logistics with Oracle NetSuite.
What Exactly Is Inbound Logistics?
Simply put, inbound logistics deals with how raw materials, supplies, and other goods are delivered to a company. The business processes that impact inbound logistics include purchasing, transportation, receiving, and managing incoming supplies. There are many moving elements as companies struggle to manage their supply. Suppliers are impacted by their supply chain, leading to raw material shortages and delayed receipt of the finished goods.
When your inbound logistics are effectively and efficiently managed, it increases your chances of receiving adequate supply to service your customers. At the very least, you will have the information needed to communicate shifting times and costs while setting proper expectations with your customers.
What are the Activities that Constitute Inbound Logistics?
Here are some of the activities and processes that constitute the inbound logistics sector of a company:
- Product Sourcing and Procurement: The sourcing and procurement of raw materials and items begin with identifying and evaluating potential suppliers. It then extends to obtaining price quotes for these materials and negotiating and managing the supplies.
- Ordering/Purchasing: This involves the purchase of goods, items, and materials that your organization needs. Therefore, this aspect of inbound logistics ensures that the right products are supplied or delivered at the right time.
- Transportation: Transportation is the stage where the preferred mode of delivery of the goods and items is determined. It could be through the different transportation methods such as road, rail, water, or air using trucks, airplanes, or ships. Transportation similarly covers the delivery schedule of items purchased, selecting third-party carriers, and negotiating with vendors regarding the price, delivery schedule, and delivery routes.
- Receiving: As the name implies, this examines how the new items or materials are handled upon delivery. It also ensures that the correct goods are delivered, thus matching the order.
- Material Handling: This stage involves transporting the delivered supplies from one location to another within your company’s facility or sorting the supplies for later use.
- Storage and Warehousing: This typically involves the management of the orders before they are transferred to where they’ll be manufactured or fulfilled. The warehousing department is saddled with the responsibility of ensuring that items are safe and secured in the right location for fulfillment, following the standard storage conditions recommended by the manufacturers.
- Inventory Management: This activity deals with deciding the specific type and amount of raw items to be stored and the right place to locate them after storage.
- Expedition of Orders: Simply put, expedition involves the management of the progress and delivery schedule of items and materials throughout the delivery cycle.
- Distribution: This involves how supplies are delivered to their various destinations.
- Tracking: When orders are placed, they need to be tracked. This phase involves getting detailed and comprehensive information regarding incoming orders, such as the location, documents, and other details.
- Reverse Logistics: In the supply chain industry, reverse logistics describes the return of goods or items from customers for several reasons. These include defects, delivery issues, returns, refurbishment, and repairs. Similarly, the materials or items used in recycling or waste renewal forks are obtained through reverse logistics.
Now that we’ve revealed the activities that constitute inbound logistics, it is also essential to understand how to optimize your inbound logistics for the greater good. But before then, we’ll take you through the common challenges often faced by the company’s inbound logistics.
What Are the Challenges of Inbound Logistics?
Like other types of logistics, inbound logistics also has its challenges, problems, and bottlenecks. High costs, unpredictable delivery schedules, and uncertainty in lead times are the top challenges. When you take a critical look at these primary bottlenecks, you’ll discover that these challenges make it extremely difficult for businesses to maintain ideal inventory levels and optimize their warehouse for improved efficiency, effectiveness, and productivity.
Let’s take a look at some other problems in detail.
Shipping Inefficiencies
Usually, some companies are forced to go beyond their allocated budget to ship their items or materials. There’s a need to review the preferred rates with carriers to cut costs and maintain the budget. Apart from that, the inbound shipments also need to be consolidated to make complete truckloads. You set up inbound compliance standards on the shipment price and service and track the process with analysis. This will help you significantly identify any waste of money or time and cut costs.
Information Vacuum
Your inability to state the exact location of a particular shipment, the delivery date, and the shipping cost is a huge challenge for your business. The lack of knowledge about important information forces some companies to execute an additional inventory, make purchases too early, or suffer production delays. When you have unhindered access to real-time information systems, it becomes easy for your company to track and trace shipments. You’ll also maintain smooth communication with suppliers to ensure that accurate data is captured when making orders for the items or materials.
Surges in Deliveries and Receiving
Proper planning, they say, prevents poor performance. Without proper planning, businesses can be forced to juggle numerous deliveries simultaneously. This ultimately results in truck-logged yards, leaving drivers in utmost confusion regarding choosing the particular dock. Surges in deliveries make it extremely difficult to manage the deliveries and receiving personnel effectively. Similarly, a weak receiving process also leads to errors and backup of items. How do you solve this? That’s where Warehouse Management Software (WMS) comes in. Oracle NetSuite Warehouse Management Software helps schedule product arrivals, execute routine deliveries to specified docks, and maintain consistency in deliveries and receiving.
Processing Returns
Returns processing seems like an afterthought for numerous organizations. When a stock isn’t returned to the inventory as quickly as possible, it results in a considerable loss of sales. Other problems associated with processing returns include inaccurate inventory counts and minimized customer satisfaction. In solving this, you need to create clear, well-defined, and accurate processes for returns. Similarly, it would help if you were committed to training your staff on the importance of returns management and the best ways to solve them.
Supplier Reliability
For inbound logistics to function effectively, you need reliable, trusted, and dependable suppliers that offer quality and competitive pricing. However, it might not be easy to discover and keep reliable suppliers. To make things easier, here are some tips.
- Maintain an effective long-term relationship with your suppliers.
- Commit to adequate and prompt payment of suppliers.
- Make the necessary negotiations and ensure that the contract meets the goals and objectives of your business.
- Evaluate supplier’s quality certification.
- Assess the associated contract risk such as weather, political climate, global epidemics, labor laws, etc.
- Forecast your growth patterns and choose a supplier that aligns with those objectives.
- Lead time and one-time delivery attributes of suppliers are also important factors to consider.
- Evaluate their customer service and feedback.
- Consistently look out for and evaluate alternative suppliers.
Balancing Demand and Supply
It could be challenging to ensure that demand and supply are at equilibrium in inbound logistics. This could be due to competitive influences, volatility in raw materials prices, seasonality, economic situations, fluctuations in selling cycles, etc. How do you ensure that the incoming supplies meet the demands? That’s where accurate data comes in. With the use of warehouse Management Software like Oracle NetSuite, you can easily compare incoming inventories and monitor the location and status of inbound deliveries in real-time. NetSuite also plays a huge role in predicting demands using historical patterns, discovering opportunities to consolidate purchases, etc.
How to Optimize Your Organization’s Inbound Logistics
An optimized inbound logistics process is faster, leaner, cost-effective, efficient, and agile inbound logistics. To achieve this, it’s best to assess the processes, identify strengths, weaknesses, opportunities, and threats, and then make the necessary improvements.
Here are some of the tips to optimize your inbound logistics:
- Model Your Current Prices and Measure Your Improvement: There are inefficiencies in costs, quality, duplicate work, delays, information loopholes, etc. Look for them. When there are invisible costs like inventory carrying costs in your inbound logistics systems, matters could get complicated. Ensure that your operations meet the industry’s benchmark and compare with competitors.
- Analyze Your Choices: This is where you understand the relationship between your costs and efficiency. For instance, if your procurement department purchases in large quantities to get some discounts and save costs, will the cost saved be offset by the holding expense? Remember that transportation, warehousing, items handling and management, and supply management are the top contenders of your costs.
- Develop Strategic Plan to Address the Loopholes: Among other activities, you should put the necessary strategic plan in place to account for trade-offs. That’s where your investment in automation and analytics comes into play, as it enables you to make more data-driven decisions.
Other actions to optimize your inbound logistics include:
- Building a robust relationship with suppliers.
- Combining deliveries.
- Use of warehouse management system.
Optimizing Your Inbound Logistics – NetSuite to the Rescue
Do you know that making changes that promote your inbound logistics management can significantly impact your company?
With NetSuite and its fully integrated 3rd Party Apps, managing your inventory, order fulfillment, and shipping costs can be contained. If you want to take your warehousing to the next level, Withum is an expert you can count on to increase your agility, visibility, and labor efficiency with NetSuite ERP Implementation.
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