Retail, CPG and Logistics
Inbound logistics: Best practices and advantages
Logistics and supply chains have been essential to global trade since antiquity. While the challenges and modes have changed drastically, the efficiency and resilience of supply chains remain the cornerstones of all businesses. Studies show that the global logistics market reached USD 5.7 trillion in 2024 and is set to touch USD 8.1 trillion by 2033. Focussing on developing effective inbound logistics proves to be a game-changer for inventory control and last-mile delivery.
Critical processes in inbound logistics
Inbound logistics form a crucial component in the supply chains of raw materials and finished goods. These activities, if not appropriately managed, can cause chaos, missed deadlines, lost items, and revenue leakage. Critical components of inbound logistics include:
- Sourcing: Identifying, shortlisting, and finalising the suppliers that meet your need for products and services with consistent quality and competitive prices.
- Purchasing: Negotiating contracts, placing orders with the supplier, and managing the payments.
- Distribution: Tracking and managing the transportation of items from the supplier to your warehouse or manufacturing facility.
- Receiving: Receiving the items and ensuring that they match the order placed and the quality standards., and returning or replacing them if they do not.
- Storage: Storing the items in such a way that they are readily accessible and retrievable.
- Inventory management: Tracking the items and placing orders when the stock is low to ensure continuous supply.
Businesses that adopt the best practices and state-of-the-art technologies will maximise the benefits in a competitive landscape and cope with any disruptions. Infosys BPM has a comprehensive range of logistics management solutions to augment your operations, growth goals, and internal team requirements. Global logistics service providers (LSPs), multi-modal transporters, and freight businesses leverage our industry knowledge, technology-enabled services, and operating models to deliver tangible business outcomes.
Best practices in inbound logistics
While the best practices depend on the nature of your business and how the supply chain is configured, most aspects of the process can be improved through a few concerted efforts:
Measure the performance of inbound logistics
- Key performance indicators (KPIs): KPIs help you measure the performance of your processes within the logistics and supply chain. Critical KPIs include order accuracy, cost per unit received, supplier performance, receiving cycle time, on-time delivery rate, inventory turnover ratio, and warehouse capacity utilisation.
- Cost analysis: By identifying the cost centres within logistics, you can optimise them. Common cost centres include transportation, inventory holding, labour, technology and equipment, and administration.
- Quality control metrics: High-quality logistics and supply chains are essential to reduce defects, returns, and inspection time. To achieve this, reviewing the supplier’s compliance rate and quality ratings proves helpful.
- Supplier/inventory metrics: This helps you manage the supply chain, inventory stock, and supplier relationship. Standard metrics include stock-to-sales ratio, stockout rate, carrying cost of inventory, inventory accuracy, on-time delivery rate, lead time, and order-fill rate.
- CSAT metrics: Customer satisfaction metrics help you measure supplier efficiency. These include order fulfilment rate, net promoter score (NPS), time to market, and customer retention rate.
Use new-age logistics technologies
The following technologies help you meet the needs of a competitive market by making the processes efficient, lowering costs, and meeting customer requirements:
- Artificial Intelligence (AI) and Machine Learning (ML): Achieve automated transport route planning, demand forecasting, and inventory optimisation, and assist customers through chatbots and virtual assistants.
- Internet of Things (IoT): Efficiently track and manage goods through real-time tracking, predictive maintenance, enhanced visibility, and automated status monitoring.
- Blockchain: Secure the contracting, documentation, and transportation process and improve identity verification to safeguard the company’s interests.
- Robotics and automation: Leverage Robotic Process Automation (RPA) to streamline operations within a warehouse. This includes automated sorting and racking to enhance the human workers’ capability.
- Big data analytics: Achieve advanced demand forecasting and real-time performance monitoring for better decision-making.
Advantages of efficient inbound logistics
By implementing the best practices discussed above, you can achieve the following benefits in your inbound supply chain:
Cost optimisation
By negotiating competitive rates, minimising the inventory on the shelf, and optimising the routes, you can reduce the overall operational expense.
Better supply chain visibility
Tracking items and vehicles using IoT devices gives you 360-degree supply chain visibility. This helps you prepare for incoming or delayed goods and make real-time decisions.
Enhanced customer satisfaction
An optimised supply chain consistently meets customer demands and improves their satisfaction and brand loyalty.
Risk mitigation
By constantly monitoring key metrics, businesses can foresee risks such as over- or understocking, delays in delivery, or impact on sales due to market changes. This helps companies maintain more operational funds while meeting industry standards such as ISO 28000.
Competitive advantage with scalability
Businesses with efficient inbound logistics and 360-degree visibility can respond faster to market changes. This makes them robust and better prepared compared to competitors.