In the case of companies, while emphasis is placed on production and marketing of products but logistics too play their part in helping the company in achieving its objective of growth and development of business, inbound logistics is one such activity. Inbound logistics refers to that logistics that helps the company in bringing together all materials whether its raw material or finished products into the company for a further process so that company can sell the final product to its customers. In simple words, everything which is coming into the company is called inbound logistics, in order to get a better idea about this concept one should look at some of the important features of inbound logistics –
Inbound Logistics Characteristics
Influx of Materials
The first and foremost feature of inbound logistics is that it is related to the purchase of materials by the company and hence raw material will come into the company which needs to be worked upon and improved upon in the form of finished goods so that company can sell that finished products to its customers. In simple words, just as in the case of computers we input all the information to get the desired output in the same way in the case of manufacturing firms inbound logistics involves an influx of materials to get desired output which is finished goods.
Related to Suppliers
In the case of inbound logistics, the company has to deal with suppliers right from ordering materials from them, doing negotiations with respect to the pricing of raw materials, transportation from supplier’s place to the company’s place, and so on. In simple words, the company is the buyer while suppliers are the seller and hence it is the company that holds the upper hand if there is perfect competition between the suppliers.
Outflow of Funds
Inbound logistics involves the outflow of funds because the company has to pay the suppliers for the supply of raw materials, besides storage of raw materials also requires a warehouse which again involves rent, the cost of transportation in the majority of cases is borne by the company only and hence one can safely say that inbound logistics is a cash outflow activity as far as the company is concerned.
Timing is Key in Inbound Logistics
In the case of inbound logistics, timing plays a crucial role because any delay in acquisition of raw materials can lead to a delay in production which in turn will lead to a loss for the company due to non-fulfillment of the order of the consumer. Hence inbound logistics can be successful only if the company manages it on time as without proper timing the whole process of inbound logistics will be futile.
No Involvement of Customers
In the case of inbound logistics, various parties are involved like suppliers, manufacturers, companies, distributors, transporters, and so on but one party is missing and that is the end consumer who is going to use the product because in the case of inbound logistics the consumer has no role to play and they come into the picture only when the product is ready for sales.
Focus Areas of Inbound Logistics
The focus areas in the case of inbound logistics are material management, sourcing of materials, storage management, supplier management, and quality control which is not the case with outbound logistics where the focus is more on delivery of goods to the customers and proper customer service.
As one can see from the above that inbound logistics has some important characteristics and that is the reason why any company should carefully plan and implement this system into the company as any laxity can lead to a big loss to the company both financially as well reputation-wise.