Outbound logistics is the final piece of the puzzle for many companies—the processes that put products in the hands of their customers. Outbound logistics activities generate business-sustaining revenue. And, when done right, outbound logistics also generate loyal customers who buy from that same business again and again.

 

In other words, when it comes to outbound logistics, there’s a lot at stake—and plenty of incentive to get it right.

 

In this article, we’ll offer you a solid foundation in outbound logistics: what it means, what it involves, and how a company can benefit from optimizing these processes. You’ll finish with a complete understanding of this aspect of the supply chain, as well as its importance.

 

Inbound vs. Outbound vs. Reverse Logistics

Want to learn more about these critical logistics processes—and the differences between them? Check out our other articles on these topics:
  • What Is Inbound Logistics? How Does It Work?
  • What Is Reverse Logistics? How Does it Work?
  • Inbound & Outbound Logistics: What’s the Difference?

Outbound Logistics: Understanding the Basics

What Is Outbound Logistics?

Outbound logistics refers to the processes involved with moving goods to a customer. In other words, outbound logistics covers activities involved with processing, fulfilling, and delivering customer orders. To give you a sense of exactly what activities fall under the umbrella of outbound logistics, take a look at the list below:

  • Order receipt, processing, and fulfillment, including:
    • Picking and packing
    • Warehouse management, as it relates to order fulfillment
    • Managing any outsourcing partners who assist with order fulfillment, such as 3PLs
  • Shipping items to customers, including activities like:
    • Transportation management of outbound shipments
    • Last-mile delivery
  • Customer service, including order tracking and troubleshooting

What Is the Main Objective of Outbound Logistics?

The main objective of outbound logistics centers on getting items in customers’ hands.

 

A supply chain manager focused on a business’s outbound logistics would look for ways to create new efficiencies in these processes which, in turn, reduces waste and associated costs. Supply chain managers working on outbound logistics would also investigate ways to deliver high levels of customer satisfaction while controlling expenses.

 

What Is an Example of Outbound Logistics?

Every time you order an item from an online retailer, the processes they go through to fulfill your order constitute outbound logistics.

 

For example, let’s say you order a classic Dutch oven from the Le Creuset online store. Everything that happens between the point that you push the “purchase” button and your Dutch oven arrives at your doorstep falls into the category of outbound logistics.

 

That includes receiving the order, picking the product from its shelf in the warehouse, packing it into its shipping box, handing it off to the carrier (UPS, in this case), transportation of your Dutch oven via the carrier, tracking the shipment, and, finally, the last-mile delivery that gets it to your doorstep. All of those are outbound logistics activities.

The Benefits of Optimizing Outbound Logistics

Supply chain managers know that there are benefits to optimizing links all along the supply chain, not just those that fall into the category of outbound logistics. That said, improvements specifically within outbound logistics also come with specific benefits, including:

 

Savings in a Significant Cost Center

Last-mile delivery, a crucial component of outbound logistics, can be one of the most expensive legs of a product’s journey. Any efficiencies created in this area will have a big impact on a company’s bottom line.

Faster Delivery of Goods & Faster Path to Revenue

Optimized outbound logistics processes often lead to faster delivery of goods. For companies that collect payment on delivery—or collect payment after delivery—the faster goods reach the customer, the faster revenue gets collected—a definite upside.

Customer Satisfaction—and Long-Term Loyalty

Fast, error-free delivery means a happy customer base, one that’s more inclined to order again—and spread the word to their friends and colleagues. Retaining customers, and keeping them happy enough that they refer other customers, is a huge perk of optimized outbound logistics.

The Challenges of Outbound Logistics

Of course, supply chain managers optimizing outbound logistics also encounter their share of challenges, including:

 

Cost and Speed: A Balancing Act

When it comes to getting goods to customers, companies have to strike a balance between how fast the shipment moves and how much it costs. The faster it gets to your customer, the more expensive it is (usually).

If the customer is paying the cost, this decision is in their hands. However, companies who include the cost of delivery in their overall pricing have to watch these expenses carefully to protect their margins.

Rising Customer Expectations

In many industries, customer expectations regarding shipping and delivery are at an all-time high. Even Amazon has backed away from its two-day shipping guarantee, but many customers still expect their orders to arrive relatively quickly. In addition to balancing cost and speed, businesses also need to balance customer expectations with shipping realities.

Data Visibility for Further Analysis

In order to uncover new efficiencies, supply chain managers need to first get a clear picture of their company’s outbound logistics as they stand. In some cases, this can prove challenging, especially if the data is located in different systems or in areas that aren’t easily accessible.

Transportation management systems (TMS) can assist with tracking and optimizing shipping activities, both for outbound and inbound logistics. However, these systems can prove too costly for some companies, leaving supply chain managers to come up with their own creative solutions for data collection.

From “Buy Now” Through Final Delivery

Outbound logistics play a crucial role: connecting customers with the items they’ve ordered. When a company can manage its costs in this area, create efficiencies, and keep their outbound logistics running smoothly, everyone wins.

 

Looking for help with your outbound logistics? Our freight experts would be happy to help you analyze your transportation usage and budget to uncover new efficiencies. Reach out for a complimentary consultation to get started.

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