Every business that makes a product or provides a service has to figure out how to manage logistics. For example, a company that turns silicon into computer chips or a farmer who grows wheat from seeds both use logistics to get goods to their customers.

Inbound Logistics Example

A company’s inbound and outbound logistics depend on what it is selling and its business model. An example can show how these processes work. Here is how logistics work for an apparel manufacturer called Sorina Designs.

1. Purchasing and sourcing: Sorina Designs identifies how much fabric, thread, buttons, zippers and other supplies it needs to make its upcoming fall fashion line to meet forecasted sales volume. The procurement team works with the designers to find vendors for each component that meet Sorina’s needs for price, color, style, quantity and delivery date. The purchasing manager negotiates contracts with each vendor.

2. Recording and receipts: A procurement clerk generates purchase orders, sends these to suppliers, logs the purchase orders and matches them with invoices and receipts.

3. Notification: The vendors send electronic order acknowledgments along with shipment and tracking information.

4. Load Arrival: Trucks carrying the supplies arrive at Sorina Designs’ facility.

5. Receiving: Sorina’s receiving staff unloads the incoming materials, scanning barcodes or RFID tags to count and identify the products. They verify the quantity and condition against the purchase order. The materials move to the warehouse, where they are ready to be manufactured into clothing.

6. Reverse logistics: The receiving team also handles the return of unsold clothing from retailers. Their contracts dictate that stores send back leftover inventory and receive partial credit toward purchases of new season merchandise. Last-season apparel goes to a staging area for use by the team that fulfills orders from discount stores and liquidators.

Outbound Logistics Example

1. Customer order: A national boutique chain, Picture Perfect, has 37 stores. The company orders a collection of women’s pants, blazers, skirts, blouses, dresses and scarves in various quantities in women’s sizes 0 to 18 on Sorina’s website. Picture Perfect uses internal data about shopper preferences, past sales and trend forecasts to decide the quantities of each product and size to purchase.

   Sorina’s staff needs to pay close attention to the order’s details because of the variations in patterns (paisley and chevron), colors (burgundy and blue) and sizes. Sending the wrong item or quantity can result customer complaints and lost sales for products that did not arrive in time for seasonal shopping.

2. Order processing: Sorina’s order processing team checks Picture Perfect’s order by confirming Sorina has the right number, sizes, garment types and colors available. They send an order confirmation to Picture Perfect. Sorina’s inventory management system allocates these items so the clothes are no longer available for sale to anyone else. The system sends an order manifest and picking tickets to the warehouse.

3. Replenishment: Workers move clothing from remote storage to the shipping warehouse to replace purchased product as necessary. Sorina’s planners note that a particular blazer is selling faster than expected and ask the garment makers to sew more.

4. Picking: Warehouse staff uses a zone strategy to pick garments for multiple orders. Workers hang Picture Perfect’s blouses, for example, on electric garment racks along with blouses that are part of orders from two other retailers. They use barcodes to distinguish the orders.

5. Packing, staging and loading: All the clothing items in Picture Perfect’s order come together at the packing station. A staff member scans barcodes on the hangers to confirm the order is correct. Packers box the order with tissue, so the garments do not wrinkle. They put boxes together on pallets, shrink wrap the pallets and affix destination and manifest labels.

   The packers split Picture Perfect’s order into two batches, one for its distribution center in the West and the other for its distribution center in the East. Each one joins other orders heading in the same direction with similar service levels. Picture Perfect’s order will travel by ground shipping since they’re not rush shipments. Workers load the pallets onto outgoing trucks.

6. Shipping and documenting: The order departs. Sorina’s system logs the shipment and sends tracking information to Picture Perfect’s purchasing department. Sorina’s system also sends arrival information to the chain’s distribution centers.