The supply chain strategy is more complicated than ever. For certain companies, supply chains are significantly more complicated when they start incorporating E-commerce.
A well-designed and effective eCommerce Supply Chain Management System can make what makes the distinction between struggling and flourishing online businesses. If you’re looking to succeed in selling your products online, it is essential to improve the supply chain. This is the ideal guide to help you begin.
Table of Contents
- 1 What is a supply chain?
- 2 What is eCommerce supply chain management?
- 3 What are the different stages of the eCommerce supply chain?
- 4 Advantages of eCommerce supply chain management
- 5 E-commerce supply chain strategies you should implement
What is a supply chain?
Supply chains are the chain of all the people or organizations, resources, technologies, and activities involved in developing and distributing the product. It encompasses everything from transporting raw materials from the manufacturer to the manufacturer to the final delivery to the final consumer. The part of the supply chain that involves getting the final item from its manufacturer and to the customer is called the distributor channel.
What is eCommerce supply chain management?
eCommerce Supply chain management involves control of the transfer of data funds, resources, and information between the various entities and phases that comprise the eCommerce supply chain, starting from the purchase of raw materials until the distribution of the finished product to the customer.
The companies in the supply chain comprise suppliers and producers, vendors, warehouses, logistics companies, transportation companies, fulfillment and distribution centers, and the final buyer. Each company controls a distinct connection in the supply chain and plays a role in your success in satisfying your customers’ needs.
What are the different stages of the eCommerce supply chain?
Each step in the e-commerce supply chain plays an integral function in the success of a brand based on its product (with exceptional customer service). This kind of supply chain is generally classified into six distinct segments: demand and supply and warehousing; inventory management and order entry; order management Distribution; and delivery and returns.
Demand and supply
The concept of supply and demand has become a well-known concept in the world of e-commerce because it can profoundly influence how retailers set prices and the speed at which they can fulfill orders from customers. There is an elusive equilibrium point at which both demand and supply are equal, and the price (and the quantity) of an item sold by a retailer is in line with the consumers’ demand for the products. Since this equilibrium point is not reached often — instead, it’s constantly shifting — it is the responsibility of the ecommerce logistics chain to respond to the fluctuations.
Warehousing is essential to any Supply Chain Management plan because it involves outbound and inbound processes like storing finished goods and packaging physical orders. Also, warehouse facilities are the central point for everything related to receiving, storage and distribution. Everything from the identification of products (via categories of products) and the dispatching of shipments are under the control of your warehousing business. Today, many retailers employ Warehouse management software (WMS) for their warehouse management system to ensure that their warehouse operations operate smoothly.
If you’re an e-commerce company, one of your primary responsibilities is ensuring that you have the correct stocks in the correct quantities. Because your inventory is constantly fluctuating (thanks to orders from customers and replenishment orders that arrive) It’s vital to know what products are available at any given moment. As the name suggests, inventory tracking is a method of monitoring (or keeping track of) the inventory levels throughout the supply chain to ensure that you are able to respond to consumer demands, prevent overselling, and decrease surplus inventory products.
Order entry is the procedure of logging order slips (i.e., an order from a customer) in your purchase management system and then internally reclassifying it as a sale order. With the sales order in place, retailers can organize the necessary tasks to complete the order, such as procurement of raw materials, manufacturing, warehousing, shipping, and invoicing. In addition, sales orders play an important role in ensuring that every sale is properly documented and executed so that both your customers and your store know what to expect regarding the fulfillment process and when it will be delivered.
Management of orders
Order management integrates with almost every aspect of your e-commerce supply chain. It begins when a consumer places an order and ends after the delivery has been completed. In simple terms, order management assists online retailers in coordinating the entire fulfillment process, starting with inventory visibility and collection of orders up to the availability of services. The good news is that the order management software (OMS) can assist in reducing the entire order process, by enabling automated inventory tracking and providing real-time information on inventory data.
Delivery, distribution, and returns
Distribution and delivery focus on the flow of goods from the manufacturer or supplier to the point of sale. Distribution management, in turn, is an umbrella term used to refer to supply chain activities like warehousing and packaging. Returns of product returns, however, on the contrary, are in opposition to distribution and delivery, as they are considered to be components of reverse logistics. Returns interrupt the normal flow of raw materials and finished goods through the supply chain; instead, they move the items from the purchaser back to their supplier or the manufacturer.
Advantages of eCommerce supply chain management
The competition among eCommerce companies is growing every day. Internet access has enabled customers to access eCommerce websites and make purchases. An efficient and efficient eCommerce SCM allows customers to connect and turn leads into sales.
SCM offers clear information across the whole network. It aids users to monitor the progress of the various activities that are in the process throughout production, supply, warehousing, and distribution. This will allow for better monitoring and control of the entire steps from order to delivery of products that have been finished.
The benefits of a good CRM cannot be ignored! SCM guarantees timely delivery that, in turn, keeps the customers content. It also helps the company to monitor the demands of its customers. This ensures that the company can respond to changes in the needs of its items and services. With the aid of an integrative supply chain, companies can get feedback and requirements regarding their products and services directly.
Delivery delays could result in strained relationships and loss of business. In the event of a late shipment from vendors, delays in production and logistical errors in distribution channels can negatively impact the image of a business among its clients. With a well-functioning SCM, the entire process can be planned and carried out from top to bottom.
One of the primary reasons customers put time and money into eCommerce is the lower cost. There are likely many areas where companies invest more than they need to. A few of them could definitely be reduced. It’s worth looking over your entire supply chain in order to find areas where expenses could be reduced.
An eCommerce-based SCM takes away all stages of distribution, including retailers, distribution, and much more. This can also mean higher profits!
Adoption of Omni channel Practices
A well-organized SCM allows for omnichannel interaction, which results in more technological advances that lead to ever-more complex customer engagement. This cycle continues.
E-commerce supply chain strategies you should implement
1. Use multiple fulfillment centers
It’s no surprise that consumers want fast delivery times for a low cost (often cost-free). With multiple storage and warehousing places, you will be able to increase your customer’s reach and dramatically decrease delivery durations.
For example, ShipBob has a rapidly expanding network of fulfillment centers throughout the United States, Canada, and Europe. Utilizing an exclusive system, ShipBob retailers can keep inventory within one or several ShipBob locations to cut down on the costs of fulfillment and shipping times while keeping track of the inventory and order details all on one dashboard.
2. Velocity of Your Goods
The speed of goods is associated with the time it takes for each item to market itself from the moment it is introduced to the market, or so it’s called. It is generally determined by three key aspects: need, affordability, and marketing for the product. Certain products are generally predicted to be more popular than others. Track which products are moving faster so that you can estimate your margins on sales precisely and determine which products are best liquidated to decrease the cost of storage and storage.
3. Make use of real-time inventory management
When orders are being placed and then shipped in, inventory control can be a problem if it is not controlled promptly and continuously. A good Inventory management software or ERP-based inventory system can assist you in stopping stockouts, maximizing the delivery of your freight from your supplier, and accelerating delivery to customers. There is also access to an abundance of statistics and data to assist you in making better decisions about improving your supply chain’s efficiency.
4. Decide on Third Party Logistics or Internal Fulfilment
Many businesses can cut down on fulfillment costs by outsourcing to Third-Party Logistics (3PL) service providers. This way, they can eliminate the need for infrastructure set-up, workload management, and regular maintenance. Third-party companies will purchase warehouse space, replenish shipping equipment like cartons, labels, and pallets, as well as take care of overhead expenses like rent and utilities. The best part is that e-commerce businesses will have more flexibility as their presence expands.
5. More Effective Labour Management
Smaller companies that don’t have the money to invest in vast warehouse automation can still benefit from the benefits of reassessing their manual labor. Implementing effective training programs can allow employees to perform their jobs more efficiently and effectively; the introduction of small wearable technologies makes it simpler to pick and pack boxes. These little improvements can cut the cost per unit, line, and also per order.