Flow of goods from the company to the customer
Outbound logistics deals with the transport, handling and storage of goods as they travel from the production floor to the customer. It covers everything from planning through management and staging to quality control. Outbound logistics is situated between procurement and disposal logistics in the entire process and is the link between production and the market. Other common terms include sales, distribution and marketing logistics.
Outbound logistics processes and tasks
Outbound logistics encompasses the processes involved in warehousing, transport and goods handling in the supply chain. Constituent tasks include:
- Order fulfillment
- Order picking
- Returns management
- Route planning
- Temporary storage
- Definitions of services
- Definition of minimum quantities
- Execution in-house or through service providers
- Establishment of distribution networks
- Site selection
- Process optimisation
Goals of outbound logistics
The logistics service provider's mission is to ensure that the customer has access to the goods at the right time in the right quality at the right price. Key drivers of this mission include maintaining close relationships with customers and keeping service promises such as reliability, flexibility, on-time delivery and merchandise quality. IT systems support close integration in the supply chain.
Application areas of outbound logistics
Outbound logistics is implemented differently depending on whether the distribution is direct or indirect. In direct sales, the manufacturer makes direct contact with the end customer. This approach is particularly suitable for products that require a great deal of explanation, expensive goods that cannot be stored cost-effectively or highly personalised products with a small customer base. Direct sales platforms include factory outlets, showrooms, online stores and teleshopping.
Indirect distribution is one of the most common forms of distribution and can be subdivided into two stages:
- One-level distribution channel: There is one intermediary (e.g. wholesaler or retailer) between the manufacturer and the customer
- Multi-level distribution channel: There are several intermediaries between the manufacturer and the customer
In multi-level indirect distribution, products may pass from the manufacturer to a wholesaler and from there to a supermarket or small late-night shop and then to the end consumer.
What distinguishes it from inbound logistics
Unlike outbound logistics, inbound logistics revolves around transporting, handling and storing raw materials used to manufacture a product. It is the link between the raw material supplier and the manufacturer. It depends heavily on just-in-time and just-in-sequence strategies.