Optimizing outbound logistics management is essential to running a smooth supply chain.
And there’s a lot that can go wrong:
All of these are indicators that you need to tweak your outbound logistics in supply chain management.
There are many factors over which you have more control than you think.
So if you want to avoid these issues, you’ll enjoy this article.
We’ll go over everything you need to know about outbound logistics.
And how you can optimize the entire process, from start to finish.
Let’s start.
Outbound logistics refers to the process of storing, moving, and distributing goods in order to deliver them to the end-customer.
Warehousing and storage, distribution, transportation, and last-mile delivery are also the stages of outbound logistics operations.
All systems that assist in preparing an order for delivery and bringing it to the customer are covered by outbound logistics.
Outbound logistics impacts how products are distributed from the point of manufacture or the point of sale to their final destination.
But in the age of e-commerce and online fulfillment, this means that its role also extends to how companies generate income.
In turn, improving outbound logistics is an essential part of optimizing ecommerce fulfillment.
Errors and delays in delivery are the most visible problem. They can rack up unnecessary expenses for the buyer and supplier.
For example, transportation costs raise cost per delivery for the business. That can lead you to increase the retail price of goods.
So what affects the efficiency of upstream logistics?
The simple answer is everything. This includes:
Any disruption to any one of these components has a serious impact on your ability to build an agile delivery that maintains efficiency and a competitive advantage on the market.
The previously mentioned components make up outbound logistics.
But on closer inspection, all four are involved in at least five logistical activities.
These include:
Inventory management determines how you source goods from suppliers or manufacturers so you have enough products to sell and deliver to customers at and from the right location.
That’s why managing inventory is part of both inbound and outbound logistics.
But while it’s the last stage of inbound logistics, it’s the first stage of outbound logistics.
The main objective of effective inventory management is to keep enough inventory to maintain a steady supply of goods to meet customer demand.
Read this article if you want to know how to improve last-mile delivery when demand exceeds your capacity.
Depending on the industry, this also means maintaining the quality of products you store.
For example, if you own and operate a grocery or food delivery business, you’ll want to prevent the obsolescence or spoilage of the goods you sell.
Warehousing and storage is the process that determines how you store products, but also how you prepare them for delivery, including picking and packing goods from inventory.
Because it’s almost impossible to forecast demand with 100% accuracy, storing enables you to keep a certain amount of goods on hand.
This outbound logistics process also secures and organizes goods in proper conditions before shipment and fulfillment.
Here as well, inbound and outbound logistics overlap.
In outbound logistics, transportation refers to the physical movement of goods across the first and last mile of delivery.
The type of transportation varies depending on the type of shipping you offer. But also the structures that make up your outbound logistics.
For example, if your delivery network extends beyond one delivery zone, you’ll need to transport goods to multiple locations.
This may vary depending on your supply chain, as well as whether you’re routing deliveries in urban areas or across the country.
Some deliveries that are perishable, might have to be transported in refrigerated containers.
Last-mile delivery is the final stage of the fulfillment process. It refers to the movement of goods to the customer and involves multiple sub-processes beyond transportation.
These activities include (and depend on):
Our Guide to Reverse Logistics: When eCommerce Return Costs Go Down, Profits Go Up
Typically, the last mile is the most expensive and inefficient part of the delivery process.
In fact, last-mile services accounts for 41% of total supply chain costs as delivery becomes more popular.
This is because each delivery goes to a single address. And each one requires individual handling.
Due to this complexity, most companies that handle deliveries rely on last-mile delivery solutions to manage their operations.
Delivery optimization entails lowering the cost of fulfillment, as well as reducing time per delivery by raising the speed of delivery and improving visibility over the last mile.
To do this, you have to analyze and evaluate each process in outbound logistics. It also requires you to collect data, so you can accurately measure the efficiency of your operations.
Doing all of this is impossible without technology.
That’s why many companies rely on software to streamline optimization.
Because transportation accounts for over 50% of the costs of delivery logistics, most SMBs use route optimization software.
This enables them to plan and organize a vital part of order fulfillment, which lowers costs while improving efficiency.
Enterprise-grade solutions include delivery management software.
The tool enables end-to-end visibility and last mile management.
Technically, it gives you the ability to analyze operations by measuring and monitoring key performance indicators (KPIs) in delivery logistics.
How you organize outbound logistics depends on your distribution channels.
Simply put:
How your products reach your customers.
In distribution management, there are two broad categories you need to be aware of:
Which one governs outbound logistics depends on the type of business you operate.
But for the most part, your business will fall under one of three distribution channels:
Wholesale is a distribution channel that you choose based on the nature of the products you sell (consumers have to buy in bulk); or restrictions and regulations that prevent retail sales.
For instance, most construction delivery management is used to fulfill large orders by wholesalers that sell construction materials in bulk.
On the other hand, laws that govern alcohol delivery may prevent manufacturers from selling products as retailers.
Retail uses only intermediaries. This makes it an indirect type of distribution channel as retailers buy products from manufacturers or suppliers before selling them to the consumer.
This kind of distribution is the most widespread channel. Most companies, from small e-commerce stores to large supermarket chains, are considered retailers.
Direct-to-consumer refers to the distribution channel where manufacturers make, sell and deliver products straight to customers.
A good direct-to-consumer outbound logistics example is Apple.
The company produces a variety of products at their manufacturing facilities, before selling them both at physical and online stores and delivering them to customers.
Many businesses that manufacture goods sell products online but outsource e-Commerce fulfillment. They are also direct-to-consumer distributors.
In 2021, 81% of organizations said that customer experience is the main way they gain an advantage over competitors.
As we recover from the impact of COVID-19 on last-mile delivery, the effectiveness of outbound logistics has been critical in how companies manage customer experience.
So in this part, we’re going to show you how exactly do delivery logistics affect customers:
An outbound logistics system manages on-time delivery and provides real-time updates to the customer.
When a customer, for example, is notified that a shipment may arrive later than expected, it lessens the consumer’s disappointment when the delivery is late.
Transparency with the consumer increases consumer confidence that the company is in command of the narrative.
A well-executed outbound logistics process involves technology-related planning strategies.
This is the only way to gain visibility over the many factors influencing the supply chain. Including the position of every piece involved in your operations on the map.
Manual processes make it impossible to track driver locations accurately and quickly.
Poor data quality prevents you from performing predictive analytics.
Advanced visibility is essential for effective warehouse and outbound logistics transportation management.
Maintaining address accuracy, delivering the shipment, making sure orders stay in good shape, and being transparent with the consumer are all critical components of delivering a good final result in the outbound logistics process.
This necessitates meticulous attention to detail in order to enter each order without error.
Even small errors can lower the delivery experience. In turn, this results in poor reviews and a negative reputation.
So improving outbound logistics can help you to create a frictionless delivery experience, where it doesn’t impact how customers perceive your brand.
To optimize delivery, organizations have to streamline operations. This is only possible through the use of data.
By collecting, measuring and evaluating data, companies can accurately determine the value of their outbound logistics.
It also means you can quickly identify issues in the process. But also effectively implement delivery tactics that drive growth at scale. (Without risking customer satisfaction)
Optimizing your outbound logistics provides significant opportunities to improve operations.
Beyond that, it has a tangible impact on your company’s bottom line, besides making your customers more satisfied.
Optimizing outbound logistics requires you to take a holistic approach to how you manage it.
This means you have to choose centralization vs. decentralization.
Managing everything from a central vantage point gives you complete control and oversight of the entire process.
Because of this you can plan deliveries ahead of schedule. But also account for potential unexpected delays. Which means you can react immediately if something goes wrong.
What customers value in last-mile delivery has changed over the past couple of years.
According to research, modern consumers place even greater emphasis on convenience, speed, and efficiency.
This has given rise to faster fulfillment, including one-day delivery, overnight shipping, and even same-day delivery.
So when managing outbound logistics, every minute counts.
That’s why optimization is crucial. It allows you to uncover opportunities to streamline processes and operations, which, in turn, cuts the time it takes to execute them.
By optimizing outbound logistics, you also have to raise visibility over the last mile.
This enables you to see each order, driver, and vehicle as it moves across the map.
Beyond that, you combine the various activities under one roof. So you have complete oversight over inventory, storage, transportation, fulfillment, as well as, evaluation.
If a failed delivery does occur, you can implement changes to your operations to prevent them from happening in the future. And overcome any other challenges in last-mile delivery.
But to do all of this you’ll need help.
And that’s where technology comes into play.
Both inbound and outbound logistics are complex processes.
To manage them effectively, you need tools that provide a level of detail to handle them.
And because manual planning isn’t an option anymore, you’ll need technology to do it.
Enter:
Advanced logistics systems.
These systems vary in type and focus. But a robust solution covers many various aspects of outbound logistics.
This is delivery management software.
So in this part, we take a look at how this kind of logistics software can help you improve your operations.
Logistics management software, like DMS, reduces human error. By automating delivery logistics, the system can easily notify users if an action isn’t valid.
At the same time, modern tools are typically SaaS delivery management software. This means you don’t have to invest in additional hardware to use them.
And because it takes a cloud-first approach to managing delivery logistics, it stores vast amounts of data. But it also helps you to create a network of interconnected devices.
You can use this connectivity to optimize fleet dispatching, and automatically direct drivers to customer destinations via delivery driver apps, for example.
This streamlines workflow and reduces the workload for each employee, regardless of whether they are at the office or in the field, or if they’re part of an internal vs. external delivery fleet.
A key capability of almost all modern software is route optimization.
Automated route planning helps you to reduce the cost of transportation.
Besides helping you to map routes with multiple stops for all the vehicles in your fleet, it also allows you to find the best route for your drivers.
By accounting for traffic, speed limits, turns, and other external factors, it cuts the time vehicles spend on the road. And, as a result, it also reduces fuel consumption.
This means drivers can complete more drop-offs at a lower cost.
Besides mapping routes, the software provides a new level of visibility over the last mile.
Logistics tools like these use GPS tracking and geo-tracing to give you a position of each vehicle or driver as they move along their to-do list.
By knowing the location of each agent, you can dynamically manage operations on the go. Which may increase output, as you can schedule orders as soon as they arrive.
Predictive intelligence capabilities compile and compare data from previous logs to generate optimal recommendations for future outbound management processes.
These all contribute to better operations because you can forecast many things based on previous deliveries, from customer demand to traffic and potential delays.
To forecast anything, you’ll need large data sets to achieve it. That’s why logistics software stores data on the cloud, and allows you to analyze it within the system.
This makes it easier to uncover opportunities for optimization that may have been hidden otherwise.
At the same time, the software enables a greater level of detail when it comes to planning deliveries.
You can manipulate and customize each aspect of your outbound logistics:
From the load capacity of a particular vehicle through inventory demand, to the shifts and work hours of specific drivers and the items within each order.
Using software lowers the overall cost of handling outbound logistics.
When it comes to inventory, it helps you to measure fulfillment demand. You can use this to determine frequency of ordering new products or materials from suppliers.
This means that you can streamline the supply chain, so that you have enough inventory to meet demand, without having to store large quantities of goods that don’t sell as often.
Another way it lowers costs (that we’ve already touched upon) is scheduling and route optimization which reduce transportation costs.
But they also raise efficiency. Which means you don’t just reduce expenditure, but you also increase profit and productivity.
At first glance, the function of outbound logistics appears to be simple and clear.
Seemingly, it has a clear goal of transporting goods from one location to another.
But before products set food outside the storage facility, the whole process previously had to require a lot of paperwork, verification, and auditing.
With software, these procedures are automated.
That means you can handle routine tasks faster and save time with delivery management software.
It also means that you spend less resources to fulfill more orders.
So you can invest more money back into your business. Or allocate more of them to higher priority goals, like growing your company or distribution network.
And if you’re looking to do just that, we can help you.