We will get on to the inbound logistics part in a moment. But since it refers to one but important part of the supply chain, let's quickly understand the impact a single portfolio can have on a much greater function. In this case supply chain management. For a long time, and we mean a long long time, logistics was perceived as a cost-driver or cost-centre. Then emerged the 'Systems Theory' and gradually pushed enterprises to see logistics in a whole new light. The theory basically supports the concept of managing an enterprise as though it was a consolidate or integrated outcome of multiple independent functions. In other words, it highlighted that efficiency of one individual function will impact other functions and in some cases the whole system or, in this case, an entire business.
Coming back to our point. The Systems Theory emerged in logistics practices in the 1980s and during the same time the world witnessed a shift in how businesses approached customer service. Soon competing based on customer service became important. Logistics naturally became a key factor that got associated with great customer service. Businesses realized that by focusing on logistics they can bring down costs and at the same time deliver efficient customer service. Now, inbound logistics is one such part of a bigger phenomenon we know as supply chain management.
Inbound Logistics Meaning and Definition
Inbound logistics plays a pivotal role when it comes to the quality of products a manufacturer finally sells to its customers and the pace at which it goes to market. Inefficiencies in inbound logistics disrupt production lines and result in losses that are not easy to recover, even in the long run.
From a high-level view, inbound logistics may appear to be just the movement of goods inside a plant or manufacturing unit, but on a micro level is it much more complicated. It involves the movement of raw materials and goods from locations that are far-off from each other making risks very apparent. Then surfaces challenges in managing an inbound fleet, ensuring compliance, controlling materials handling processes, matching supply with estimated production out-put and administering in-plant logistics operations. So, what does inbound logistics actually entail?
What is inbound logistics in supply chain management?
Inbound logistics can be defined as logistics processes that bring raw materials and goods to or inside your business or production plants. Transportation, storage and delivery of goods are three key aspects of inbound logistics management. It is the force that drives your organization's production functions and ultimately impacts the quality of products that is sold to end-consumers.
Importance of Inbound Logistics in Supply Chain Management
The significance of inbound logistics with regards to supply chain management can be established by referring to the kind of impact it has on production. In other words, it can make or break what a manufacturer produces. To create finished products businesses need raw materials. Where do these raw materials come from? Who brings them? How do businesses know the materials they ordered-in have not been tampered with or damaged? Also, they are getting what they paid for? The answer to all these questions lies with inbound logistics operations.
When a manufacturer or other related businesses decide to produce a certain quantity of finished products, they need to ensure there is a smooth supply of key raw materials. Having said that, one needs to be extremely analytical while bringing-in raw materials. Too much of it in absence of adequate warehousing space means costly financial losses and tonnes of wastage. On the other hand, if raw materials fall short your production functions simply stop. That's wastage of time, money, manpower and energy. Hence, businesses need to have a robust inbound logistics strategy in place, something that can be achieved using modern and disruptive logistics tools.
How Technology Can Optimize Your Inbound Logistics Strategy
Inbound logistics is not easy to manage and with traditional logistics practices, it gets even tougher. But as logistics complexities evolved so did technology. Human effort, when combined with advanced logistics management technology, can empower businesses to achieve high levels of efficiency that make inbound operations smoother, economical, productive and digitalized. Let’s glance through some of the ways modern technology can improve inbound logistics management and operations.
Intelligent Route Planning and Transportation Visibility
Since inbound logistics mostly involves long-haul transportation, efficient routing is absolutely critical. Planning hundreds of miles of travel without the aid of modern technologies like machine -learning, analytics, real-time tracking and dynamic routing can result in delivery delays, productivity losses, increasing risks, poor SLA adherence and faster vehicle wear and tear.
Intelligent routing tools are powered by all these technologies. It helps logistics stakeholders track inbound delivery fleets right from the time they load freight till they unload the same in the end customer’s plant. It automates route planning as well. Leveraging machine-learning algorithms it selects the most efficient route to execute inbound logistics transportation. Intelligent logistics tools ensure that vehicles or trucks do not go off-route or indulge in unnecessary and prolonged stoppages.
Enhanced Carrier/3PL Management and Proactive Reporting
Third-party logistics providers, shippers and carriers play a pivotal role in ensuring successful inbound logistics management. Now, it’s worth highlighting that not all logistics partners can cater to specific inbound transportation needs of a business. Some have expertise in operating in a specific geography, some experienced in handling sensitive and volatile raw materials, some excel in meeting compliance and some are just better to completely avoid.
Having said that, key parameters like greater volumes of on-time in-full deliveries and ensuring service-level adherence forms the very foundation of an enterprise-logistics partnership relationship. Advanced inbound logistics management platforms help businesses select their 3PLs based on critical insights unearthed after analyzing huge volumes of historical data. It’s predictive intelligence capabilities, in the very initial stages of the journey, can intimate logistics stakeholders if their inbound trailer trucks are going to reach their destination early, on time, or late and that too exactly by how much time.
Improving Customer Experience
With regards to inbound logistics operations, one does not immediately think of customer experience. That’s a mistake. Heavy trucks, 100s of miles of travel, tonnes of raw materials and greasy manufacturing plants as end-customers can drive a notion that in this case customer experience is an afterthought. But it’s not. Not any more. The stakes in inbound logistics are too high, especially because of the kind of investment/costs involved and the fact that entire production lines depend on it.
Modern inbound logistics management tools can empower enterprises to provide their customers with end-to-end visibility of transportation operations. Customers can track delivery progress made at any given point in time and know if their raw materials are going to reach on time, early or there are delays involved. Based on the estimated arrival time they can plan production accordingly. It also helps them ensure that SLAs are being met, compliance policies are being followed and risks like thefts and pilferage are also being addressed.
Electronic proof of delivery (ePoD) is also a key component of an advanced inbound logistics management platform. It boosts customer experience by reducing physical paperwork and allowing them to give quick feedback on their delivery experience. Electronic proof of delivery helps businesses capture on-time in-full (OTIF) deliveries accurately and quickly identify gaps that are responsible for shrinking OTIF volumes. Leveraging e-indent capabilities businesses can quickly know the status of orders that have been assigned to a particular transporter. The status is automatically mapped as placed, confirmed and invoiced.
Digitalized In-Plant Logistics Operations
The inbound logistics journey ends when delivery fleets finally unload freight within a customer’s premises or plant. Such operations are in itself a complex phenomenon. The manufacturing plant is like a watering-hole. Imagine hundreds of trucks, coming from multiple locations, with different kinds of raw materials entering and exiting a plant round the clock. Exhausted parking capacity, vehicle idling, truck dwelling, detentions and more significantly impact the last leg of inbound logistics. According to research by the Department of Transportation Officer of the Inspector General, the overall cost of detention to the trucking industry can cross $1 billion a year.
Advanced logistics management tools significantly improve visibility of in-plant operations. It automates compliance checks of inbound vehicles, helps plant executives know the status of a vehicle inside a plant and improves KPI benchmarking of transporters.
FarEye’s Impact on Inbound Logistics Management
FarEye’s inbound logistics management platform is empowering traditional manufacturers to expedite their digital transformation journey. It’s helping them mitigate transportation risks, boost customer experience, optimize costs, gain real-time visibility of end-to-end delivery operations and match inbound logistics performance with growing production demands.