Every product-based business has an advanced system of intricate components, which makes each part function as a whole that is working towards a common goal: delivering your goods to your customer. Upon an online purchase, an intricate process is initiated: an inventory check is conducted, a stock is confirmed, items are fetched and packed, and the shipments are prepared and scheduled to be shipped.
It is also worth noting that your supply chain is not merely a logistical route, but the key to your eCommerce business. Knowing how to manage them and doing it correctly is crucial to attaining the business goals.
As a summary, eCommerce supply chain management includes all the processes involved in transporting a product from the origin point to a customer’s doorstep. The process includes, but is not limited to, procurement and purchasing, inventory management, order fulfillment, and shipment and delivery.
In summary, proper supply chain management results in operational efficiency, reduced costs, and timely delivery of goods and services. These elements not only maintain customer satisfaction but also provide a distinct edge over competitors in the ever-growing world of eCommerce.
Every online shop, irrespective of its size, undertakes a systematic process to deliver products from a producer to the customer. The whole procedure can be simplified into five critical stages of eCommerce Supply Chain Management.
This is the foundation for your entire Supply Chain Management plan. Long before you place an order for a product or dispatch a package, you should have an actionable plan. This stage requires estimating demand by evaluating past sales, market activity, and seasonal shifts. The objective is to understand what your clients anticipate and when demand peaks. The resulting forecast should also enable you to achieve a balance in inventory management, striking neither overstocking and choking cash flow, or understocking and frustrating clients.
This is purely obtaining what you have already planned for. Sourcing is the stage of identifying and choosing the right suppliers or manufacturers for your products. This involves much more than simply the lowest price. It is important to build enduring partnerships with suppliers whose goods are of the right standard and are delivered promptly. The act of obtaining the goods is what procurement is all about. It involves purchasing, negotiating the price, as well as managing the contracts. This plays a vital role in the whole Supply Chain Management approach.
This marks the main part of your Supply Chain Management system. Storing and managing incoming products in a warehouse must be done systematically. Efficient inventory management means that every single item is tracked, counted, its location recorded, and stocked up on when necessary. A warehouse that is well stocked and organized offers fast and accurate order picking, essential for prompt order fulfillment. This can be done in-house or can be outsourced to a third-party logistics provider.
For a customer, this is the stage where your magic occurs. An order is placed, and your staff or 3PL picks the items, packs them, and gets them ready for shipment without delay. This phase is also responsible for the appropriate carrier selection, shipping label creation, and real-time tracking updates to the customers. Timely and transparent delivery is a huge factor in customer satisfaction and repeat business. This is one of the critical phases in the process of Supply Chain Management.
The delivery of an item is not the end of the process. Managing returns is a crucial feature of eCommerce. This segment, commonly referred to as "reverse logistics", focuses on the returns process, which includes the creation of a return label and the final evaluation of the item that is returned, which includes either restocking, refurbishing, or disposal. In addition, a smooth process increases reliability and trust. In addition, the way they are processed plays a critical role in the contemporary supply chain.
The backbone of any successful product-based business is a well-oiled Supply Chain Management (SCM) system. It is the one part of the business that will “power” your eCommerce store. It is also the part that can determine whether your business will succeed or fail. Businesses with well-optimized supply chains tend to outperform their competition with revenue growth. In addition to revenue growth, businesses that work on their SCM will realize a significant reduction in their operational expenditures.
Let’s examine how one of the supply chain's components can work for you as a business.
Shoppers purchasing online are a lot more unsparing with their time. In contrast to the past, today, people’s expectations tend to be a lot lower, for example, 2 to 3 days for delivery. If the user’s expectation is not met, as many as 47% of shoppers are ready to switch to a different store.
As your business grows, setbacks like uploaded folders, holdups in production, or stocked items in your warehouse may slow shipping. Regardless of how trivial they seem, they can result in serious holdups. In turn, losing customer trust harms the business. Having the right supply chain strategies would help you resolve these issues and meet shipping deadlines. As a plus, this fosters customer satisfaction.
Inappropriate stocking of inventory leads to a business losing a large sum of money. The reasons can be too much stock (overstocking), too little stock (understocking), or returns. All of this poor stocking and returns can stem from a lack of insight into your inventory.
An efficient eCommerce Supply Chain Management (eSCM) fosters accurate tracking, managing, and forecasting of inventory. Because of this heightened visibility, you can save money by:
You may have heard that retaining a customer is sometimes easier and less expensive than acquiring a new one. About customer retention, experience is paramount, and in quite a striking manner, your supply chain impacts this.
Safeguarding products from damage during shipment, providing up-to-the-minute tracking, ensuring packages are delivered on schedule, and offering real-time tracking are all critical to customer satisfaction. Indeed, Oracle’s research demonstrates that a large proportion of customers would completely stop using a particular online store after a single late delivery. This demonstrates that a well-managed supply chain is crucial in fostering customer retention and business expansion.
With the growth of your online business, managing processes is equally important as sales. Those customer journeys you built can fall apart in seconds if your business operations aren’t flawless. The reality is, effective eCommerce supply chain management is not an operational detail; it is an invaluable asset to the business that impacts brand perception and profitability.
Improving information, processes, and collaboration in managing the entire network is Supply Chain Management. It encompasses many areas of business. Here are some of the most effective tips on supply chain management.
To implement effective solutions, you first need to identify exactly where the issues lie. Begin by conducting a thorough analysis of your current supply chain, walking through every step. It will help to follow a product's journey from the moment it leaves a supplier's facility until the moment it is delivered to the customer's doorstep. Examine your data and demand forecasting processes. Are you spending excessive amounts on shipping? Are there demand surges that are not being met? Are you accurately forecasting demand? A systematic, step-by-step review of your process highlights the weak spots and supports precision decision-making.
The issues that stem from handling inventory using spreadsheets are more serious than you think. Inaccurate manual data entry makes it impossible to have a current, accurate, and holistic view of your stock. A step toward effective inventory control is the investment in dedicated inventory management software. Automated systems help keep an accurate track of stock on hand and help to prevent the most common issues faced by retailers - stockouts and overstocking. Advanced systems guarantee appropriate stock levels; this way, you can meet demand without losing cash on excessive inventory.
Order processing takes time. Each minute spent on order processing increases the lead time. Scaling operations without the cost of more repetitive work becomes manageable with automation. Order confirmation, inventory allocation, and the preparation of packing slips, shipping labels, and tracking information can all be accomplished using automated processes. Automated systems use a hands-off approach. As a result, human error is considerably minimized, the order fulfillment cycle is shortened, all activities are finished quickly, company operations become more dependable, and the entire system becomes more reliable.
The order fulfillment location where a business's products are housed has a big impact on its efficiency. Speed is essential, so a well-organized warehouse, whether owned or managed by a third-party logistics provider, is required. Popular products can be carefully stored in easy-to-reach locations to improve accessibility. This can be made easier with an advanced Warehouse Management System (WMS). The time-saving process of picking and packing things for transportation becomes easier. Delivering products and reducing shipping times are critical to customer happiness.
True supply chain management is more than just warehousing; it requires having visibility into every stage of the product's lifetime. RFID (Radio-Frequency Identification) systems enhance tracking capabilities. Smart tags on products allow you to obtain real-time updates on their travels throughout the supply chain. Such openness allows you to notice potential interruptions, such as shipping delays or supplier issues, and respond to them in real time. Gaining insights at this level enables you to keep control and proactively tackle issues that, if ignored, would negatively impact your customers.
Inbound and outbound logistics should go smoothly and efficiently. Foster strong, long-lasting relationships with your suppliers and transportation carriers, as they are essential to your logistics. With dependable partners, you can rely on a consistent stream of products without worry about delays. Streamlining your logistics also entails negotiating pricing, consolidating shipments when possible, and selecting shipping partners who satisfy your company and consumer requirements for delivery deadlines and costs.
All supply chains, no matter how well-planned, might encounter problems such as port congestion or other worldwide events. Adapting to these issues is where true excellence occurs. A well-defined Supply Chain Management system will include a backup plan, which could take the shape of a secondary supplier, backup delivery carrier, or customer expectation management. Backup systems, robust communication, and proactive systems all help to promote a brand's reliability and trust.
Most eCommerce firms have the challenge of managing their whole supply chain. A 3PL with advanced services could provide much-needed convenience. They can handle your warehousing, fulfillment, and shipping more effectively since they have the necessary infrastructure, technology, and expertise. With their logistics, you may benefit from their infrastructure and technology, logistic systems, international connections, and shipping route optimization, allowing for rapid expansion with no investment.
A streamlined supply chain is essential for market success when competing with other businesses. It is not only about enhancing operations; it is about establishing a reputation for quality, which will ensure customers always return. Following these rules helps you build a reputation for excellence, and when combined with enhancing operations, automating processes, streamlining workflows, improving systems, and ensuring supply chain security, your brand will continue to be recommended.
The final part of this article shows how supply chain management enhances corporate systems and how precise preparation in detailed operations can lead to a positive reputation. It contributes to establishing a strong market position and increasing corporate value. By streamlining and optimizing business operations, businesses can boost their brand value and keep customers satisfied.
A fast and well-planned strategic system will ensure business success and satisfy clients. Ultimately, it benefits the business. A brand with built-in trust assures revenue and represents a percentage of the brand. It improves brand reputation and ensures the preservation of brand value. Implement techniques that will help you achieve success and keep your clients happy.
CEO & Founder of DecodeUp, a tech agency helping brands scale in eCommerce and Fintech. With 12+ years of experience, he blends technical expertise with business insight to build user-focused platforms that drive growth, engagement, and lasting impact.
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