STUDENTS' CORNER - 114
seen some basics of Inbound logistics, let us move on to Outbound logistics.
opposed to Inbound logistics which deals with goods moving into the company,
the Outbound logistics refers to the activities that take goods to the
entire process begins with the customer sales order and passing through
warehouse packing ends with product delivery. Of course, for an efficient
outbound logistics which in essence has to be cost effective, right
distributions channels must be chosen preceded by sensible and sensitive
inventory. Finally, as any business deal must close, the business bills the
client for its order and gets the cash for the order. Cost effectiveness is the
key concern for every step in the business deal.
both Inbound and Outbound logistics are essentially logistics, they have to
follow the common practices for efficient performance. For example, they have
to take care of the products when delivered to the customers or delivered
internally in the sense that the products must not be damaged in transit. And
the transportation must be cost effective. Efficient logistics reduces
logistics cost thereby increasing the profitability of the company. To achieve
this sustained profitability, the supply-chain partners must be carefully
entering into transport agreements with suppliers and customers, it is always
advisable to be specific as to who should bear the cost in case of any damage
to the product. There are some general practices such as Free on Board (FOB)
and ‘Delivered Duty Paid’. This is only to underscore the point that there must
be clear sense of who is to pay for damage of the product, if any. This kind of
definite decision helps avoid ambiguity and maintains relationship between the
parties unstrained. After all smooth relationship with a party promises better
prospects for continued business.
have talked of Vertical Integration. It means that a company acquires or merges
with its own suppliers or customers. This practice as can be expected increases
the efficiency of the supply-chain management and additionally, it fetches
competitive cost benefits. The customer who has become integrated with a
business will sell a product rather competitively to the company but not to an
external buyer for the same price. Other advantages of the vertical integration
are automatic ordering, readiness to share vehicles, quick responses in terms
of effective cooperation among managers, etc.
have seen some of the basic points of Outbound and Inbound logistics. And we will be spending sometime on Role of
Logistics in Supply Chain Management.