Outbound logistics is the process of storing, transporting and distributing goods to customers. The outbound logistics process starts with a customer sales order, moves on to warehouse packing and ends with product delivery. To make outbound logistics run smoothly, businesses must pick the right distribution channels, maintain a sensible inventory stocking system and optimize delivery options.
A business goes through several stages in the outbound logistics process. The sales department first receives a purchase order from the client. The sales department checks inventory availability to ensure they can fulfill the order.
The sales department then sends the customer order to the warehouse for picking and packing. The order is shipped and a warehouse clerk updates inventory levels. The business bills the client and eventually collects cash for the order.
Channels of Distribution
In lieu of working directly with the consumer, many businesses use channels of distribution. The channels of distribution are the companies and individuals that deliver a product or service to the final user. For example, a company that manufactures prepackaged meals may have a variety of supermarkets and grocery stores in its channels of distribution.
The channel of distribution stores the product, promotes the product and arranges for its sale. Part of outbound logistics is choosing channels that will maximize revenue. This means choosing distributors that promote the product in line with branding, have good logistics systems themselves and cater to the right type of customer.
In order to make the outbound process run smoothly, businesses have to have a functioning inventory system. If a business overstocks inventory, products may become antiquated or obsolete. If a business doesn't stock enough inventory, it runs the risk of losing customers.
Companies can use past data to project future demand and stay in touch with distributors about future needs. Businesses can use a "just in time" inventory system in which they manufacture and order materials and products just in time for delivery to customers.
An important component of outbound logistics is optimizing shipping and delivery. A system of barcode scanning and inventory tracking allows the business to continually update the customer on the status of the order. The business usually has a variety of shipping options to choose from, including how to deliver the product itself. Businesses must choose the shipping option that is cost efficient, ensures the goods aren't damaged in transit and can deliver within the allotted time frame.
Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.