What is Inbounding?
Inbounding is receiving, inspecting, managing, and sorting a received shipment. It encompasses several processes like product procurement, inventory management, etc. The primary objective of inbounding is to ensure that all the services and goods required for regular business operations are provided efficiently in an organization. It is more commonly referred to as inbound logistics.
Significance of Inbounding in an E-commerce Shipping and Delivery
A well-synchronized inbounding process is rewarded by great turnaround times, resulting in shorter delivery cycles. Companies can even avoid delays caused due to product shortfall.
- Optimized inbounding flow: Periodic inbounding allows a company to leverage its resources optimally.
- Reduced delays: Companies can overcome delays by using buffer inventory, which is the concept that falls under inbounding.
- Low transit times: Inbounding focuses on optimizing inventory management, inspection, and product procurement. It allows consistent use of these services, allowing a company to identify possible drop-off points within the mentioned processes and make decisions to improve them.
- Inspection: Product verification plays a massive role in inbounding. It allows a company to identify misplaced and damaged products.
Prerequisites of Inbounding and How It Works
Inbounding requires an incoming consignment or service for a business. The steps below highlight how it works.
- Inbound flow management: The flow frequency, along with the product quantity, is decided.
- Acquiring stocks: An order is placed to procure the amount determined, to be sent periodically. For retailers, it is based on a contract, but for intermediate warehouses, procurement is identified through historical data.
- Processing: The received products are inspected, processed, and categorized.
- Disbursal: A product is identified and disbursed upon receiving a D/O from the freight forwarder.
Use Case with Inbounding
A seller in Manila city owns a storage unit in the same location. This merchant has an average monthly order rate of 1,500 units. Therefore, the retailer signed a contract with the manufacturer to ship 1,800 units at the end of each month. The seller subsequently optimized the warehouse for inbounding based on the determined quantity.