Join Steven Brown for an in-depth discussion in this video Understanding outbound logistics, part of Logistics Foundations.
- Have you ever thought about how a huge company like Walmart keeps their shelves full of all those products? Well I was looking at their website recently, and it states that it all comes down to logistics, and that's how Walmart works. When most of us hear the word logistics, we think of the system that delivers finished goods to the customer. The part of the business that makes marketing and sales people happy, because their customers are happy. Actually, this is known as Outbound Logistics. And it is only a part of the overall logistics function.
Because of this focus on keeping the customer satisfied, outbound logistics is, of course, very important to every business. But it is even more important to a business like Walmart. Walmart, of course, has a lot of stores. And each of those stores carries a lot of different products. Each of those products come from many different suppliers and many different locations around the world. So Walmart has to have a pretty intensive effort to get those many products into their many stores, and into the hands of their many customers.
Distribution centers are of critical importance to Walmart's outbound logistics system. These are the places where Walmart receives the merchandise in large volumes, and then breaks down those volumes into smaller sizes to fill the orders from the individual stores. The size and the number and the location of these distribution centers are very important considerations for success. And success is defined as having the merchandise on the store shelf, when the customer wants it. No out of stock.
Walmart operates 158 distribution centers in the U.S. A pretty big operation, to say the least. To enable their outbound logistics success, Walmart owns and operates one of the largest fleets of trucks in the United States. And they drive about 700 million miles per year to make store deliveries. Believe it or not, they're also a huge buyer of transportation services from independent trucking companies. When business is especially heavy, they outsource part of their delivery process rather than add more trucks.
In logistics terms, Walmart is known as heavy in outbound logistics. Their logistics system is focused on getting products from their distribution centers to their stores. Of course they're also involved in bringing products from suppliers into distribution centers. But suppliers also deliver to Walmart centers. So they have a little help with that part of logistics. Once the merchandise is in the distribution center, Walmart has the sole responsibility to deliver that merchandise to the final customer.
They are heavy in the outbound flow to the customer. So there's a big emphasis on facilities, and physical distribution of the products. Constant changes in products and customers create the need to constantly re-evaluate the size, the number, and the location of your distribution centers. Operating a large truck fleet also means there is a need to continuously reduce the cost of the delivery system by driving energy efficient trucks along cost-efficient routes. If your company is heavy in outbound logistics, your emphasis is on efficiently moving your products from factories, through distribution centers and stores, to your customer.
Everything you do is focused on the end customer.
These lessons will help you understand the importance of logistics and help your company prepare for efficient delivery, distribution, and inventory. Plus, get insights on the latest logistics trends.
- Define order fulfillment.
- Describe the significance of logistics.
- Explain outbound and inbound logistics.
- Distinguish among transportation options.
- Explain the Bullwhip Effect.
- Identify types of obstacles to coordination.
- Manage customer requirements.
- Describe how to differentiate your company.