All you need to know about Inbound Logistics.

1. INBOUND LOGISTICS
By – Atul Sharma (2K20/BMBA/10)
MBA – Business Analytics
USME – DTU
LOGISTICS PLANNING & STRATEGY

2. LOGISTICS
Logistics
Inbound Logistics
Outbound
Logistics
Logistics is the management of flow of things between point of origin to the point
of consumption in order to meet requirements of customers or corporations/
organizations/ companies.

3. INBOUND LOGISTICS
• Inbound logistics is the way materials and other goods are brought into a company.
• This process includes the steps to order, receive, store, transport and manage incoming
supplies.
• Inbound logistics focuses on the supply part of the supply-demand equation.
Sourcing
Order Placement
Vendor Supplier
Transportation
Receiving

4. INBOUND LOGISTICS ACTIVITIES
Sourcing and procurement: Identifying and evaluating potential suppliers, obtaining price quotes, negotiating with and managing suppliers.
Ordering/purchasing: Buying the goods and materials the company needs so the right quantity arrives at the right time.
Transportation: Deciding whether to use a truck, airplane, train or another method to move goods. This activity also involves selecting delivery
speed for incoming supplies, contracting with third-party carriers and working with vendors on price and route.
Receiving: Handling the arrival of new materials, unloading trucks and ensuring they match the order.
Material handling: Moving the received goods short distances within the facility and staging them for later use.
Put away: Moving goods from the receiving dock to storage. Staff puts everything away in assigned locations.
Storing and warehousing: Managing the materials before they go to manufacturing or customer fulfilment. This department is responsible for making sure
items are placed in logical locations for fulfilment and the right storage conditions are met.
Inventory management: Deciding the type and amount of raw materials/items you should store and where to locate them.
Expediting: Managing the progress of and schedule for materials as they make their way to your facility.
Distribution: Sending supplies to their destination inside the business.
Tracking: Checking on details about incoming orders, such as their location and documents like receipts.
Reverse logistics: Bringing goods back from customers for reasons such as returns, defects, delivery problems, repair and refurbishment. Also,
recycling and salvage firms that work with used materials obtain their supply through reverse logistics.

5. LET’S TAKE AN EXAMPLE
• Let us suppose that there is a company named “Delhi Designs” a fashion
company. Delhi Designs identifies how much fabric, thread, buttons, zippers and
other supplies it needs to make its upcoming fall fashion line to meet forecasted
sales volume.
Purchasing and sourcing:
The procurement team
works with the designers to
find vendors for each
component that meet Delhi
Designs’ needs for price,
colour, style, quantity and
delivery date. The
purchasing manager
negotiates contracts with
each vendor.
Recording and receipts:
A procurement clerk
generates purchase orders,
sends these to suppliers,
logs the purchase orders
and matches them with
invoices and receipts.
Notification:
The vendors send
electronic order
acknowledgments along
with shipment and tracking
information.
Load Arrival:
Trucks carrying the supplies
arrive at Delhi Designs’
facility.
Receiving:
Delhi Designs’ receiving
staff unloads the incoming
materials, scanning
barcodes or RFID tags to
count and identify the
products.
They verify the quantity
and condition against the
purchase order. The
materials move to the
warehouse, where they are
ready to be manufactured
into clothing.
The receiving team also handles the return of unsold clothing from retailers. Their contracts dictate that stores send
back leftover inventory and receive partial credit toward purchases of new season merchandise. Last-season apparel
goes to a staging area for use by the team that fulfils orders from discount stores and liquidators.

6. IMPORTANCE OF INBOUND LOGISTICS
Predictable raw material costs
Higher product quality
On-time deliveries
Steady production rates
Lower costs for shipping and receiving
Better inventory management
Ability to spot supply chain problems
Foundation for sales success
Stronger vendor relationships
Companies can take advantage of many benefits from inbound logistics,
including more reliable sources of supplies and lower costs for raw
materials.

7. CHALLENGES OF INBOUND LOGISTICS
Inbound shipping inefficiencies:
• Some companies spend too much of their budget on shipping. To cut costs, you need to negotiate preferred rates with fewer carriers and consolidate inbound shipments to make full truckloads. You can
also set vendor inbound compliance standards (VICS) on price and service. Analytics can help you identify any waste of time or money.
Information vacuum:
• One frequent challenge is not knowing the exact location of a shipment, when it will arrive and how much it will cost. This lack of knowledge causes some companies to carry extra inventory, make
purchases too early and suffer delays in production and customer deliveries. Real-time information systems allow a company to track and trace shipments and communicate with suppliers to make sure
accurate data is captured when entering materials.
Surges in deliveries and receiving:
• Without proper planning, businesses can end up juggling too many deliveries simultaneously. As a result, their yards become clogged with trucks, causing confusion among drivers about which dock to
use. Peaks and lulls in deliveries makes it hard to effectively staff receiving personnel, as well. A weak receiving process leads to errors and a backup of materials.
• Solutions include scheduling arrivals, routing deliveries to specific docks and maintaining a consistent pace throughout the day. Warehouse management software (WMS) can help with logistics.
• Another technique is cross-docking, where the receiving department matches incoming inventory to open orders. When workers unload products, they move them directly to another dock to load onto
an outbound truck, without ever storing them.

8. CHALLENGES OF INBOUND LOGISTICS
Processing returns:
•Returns processing is an afterthought for some companies, leading to lost sales when stock is not put back into inventory quickly. Inaccurate inventory counts and
reduced customer satisfaction are additional problems. Create clear, efficient processes for returns and communicate the importance of returns management to staff to
combat this issue.
Supplier reliability:
•A company needs dependable suppliers that offer competitive pricing and quality. However, reliable suppliers can be difficult to find and keep.
Balancing supply and demand:
•Ensuring there are enough incoming supplies to meet customer demand can be difficult due to seasonality, competitive influences, economic conditions, pricing
volatility in raw materials, fluctuations in selling cycles and more. The best way to balance supply and demand is through data. Software can compare incoming
inventory to your order pipeline. It can also monitor the status and location of inbound deliveries, predict demand based on historical patterns, find opportunities to
consolidate purchases and more.

9. IMPROVING INBOUND LOGISTICS
Model your current process and measure
performance.
•Look for inefficiencies related to cost, waste, quality loss, duplicate work, information gaps and delays. The presence of
invisible or intangible costs in inbound logistics, such as inventory carrying costs and the impact of poor customer
service, can complicate matters. Compare your operation to industry benchmarks and competitors.
Analyse your choices.
•Understand how your decisions affect cost and efficiency. The major cost drivers for inbound logistics are purchasing,
supplier management, transportation, receiving, warehousing, material handling and inventory management.
Develop strategies to address
inefficiencies system-wide.
•Account for trade-offs among activities. Investing in automation and analytics will enable more data-driven decision-
making.
Build strong relationships with suppliers
•Strong supplier partnerships can yield benefits such as better terms, reduced lead time, cost savings and a sense of
security during market fluctuations.
•Prioritizing this relationship helps your supplier understand your business better. A supplier compliance plan explains
your requirements and penalties for mistakes such as late delivery or not following route guidelines. Such a program can
reduce freight and warehouse costs, improve speed and accuracy, and increase customer satisfaction.
Use a transportation management system
(TMS)
•This software automates, manages and optimizes freight operations. A TMS compares shipping quotes and service levels
among carriers, schedules the shipment and tracks it through delivery. These details help a company reduce costs,
increase efficiency and gain full visibility into its supply chain.
Use a warehouse management system
(WMS)
•WMS software optimizes warehouse operations by streamlining receiving, putaway, inventory management, picking and
more.
Combine deliveries
•Less-than-truckload (LTL) shipments have higher shipping costs and longer receiving times. Sometimes there are barriers
to consolidating shipments, such as different handling needs (some goods need refrigeration, for example). If a business
struggles to make full truckloads, a third-party logistics provider (3PL) can combine its partial loads with those of other
customers.

10. HAVE A NICE DAY!