Outbound logistics
Outbound logistics moves finished goods from a company's plants and warehouses to its customers: order picking, packing, carrier selection, shipping, and final delivery. It is the customer-facing half of logistics, where cost and service trade off directly; faster promises require more inventory, closer warehouses, or premium transportation, and every improvement shows up somewhere in cost-to-serve.
Examples
Cost-to-serve split: A distributor's average outbound cost is 6% of revenue, but account-level analysis shows full-pallet customers at 3.1% and small-parcel customers at 11.4%. Raising the free-freight threshold from $250 to $400 moves half the small orders into consolidated shipments and saves $310,000 a year.
Service-level promise: An industrial parts maker wants 95% next-day coverage. Hitting it everywhere requires a second warehouse and $1.8 million in added inventory; analysis shows only the top 400 SKUs need next-day, so it stocks those regionally and quotes 3 days on the rest.
Definition
Where inbound logistics answers to production, outbound is the half of logistics that answers to the customer and the revenue line. An order is not finished until it ships complete, arrives on time, and invoices cleanly, which is why outbound performance is measured with on-time-in-full (OTIF) and why it sits inside the wider order-to-cash cycle rather than off to the side.
The recurring management problem is cost-to-serve. Two customers buying the same product can cost very different amounts to deliver: one orders full pallets monthly to a single dock, the other orders mixed cases weekly with 2-day expectations and retailer routing rules backed by chargebacks. Network structure follows the promise you make: a machine builder can ship from one plant against a quoted 2-week lead time, while a parts distributor promising next-day coverage needs regional stock and a deliberate plan for last mile delivery, routinely the most expensive segment per mile. The discipline is choosing service levels customers actually pay for, not matching the fastest promise in the market.
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