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A well-managed supply chain is essential now that customers expect seamless online experiences and rapid deliveries. If you’re not on top of it, you risk falling behind.
Improving your supply chain can improve profitability, customer satisfaction and growth.
Following on from Pro Carrier Head of Business Development Jon Nowak’s panel at Ecommerce Scotland, this article will discuss what good eCommerce supply chain management looks like and effective strategies you can start using immediately.
What is eCommerce supply chain management?
- eCommerce supply chain management covers all the activities to source, store and send products to customers. It requires a network of organisations, including suppliers, manufacturers, distributors and retailers, working together to fulfil demand.
Unlike traditional retailers, online stores face unique supply chain challenges like dispersed customer locations and higher order volumes. Customers also have higher expectations.
How does the eCommerce supply chain work?
The eCommerce supply chain is a complex, interconnected beast.
Here's a simplified overview of how it works:
- Forecasting demand. Retailers analyse market trends and customer data to predict demand for specific products. The goal is to make sure they have enough inventory to meet demand without overstocking.
- Sourcing. Retailers source the necessary products from suppliers, distributors or manufacturers. Negotiating favourable terms at this stage can increase profit and boost cash flow.
- Warehousing: Brands store products in warehouses or fulfillment centers until they need to fulfill customer orders. Efficient warehouse management is crucial for inventory control, order accuracy, and timely delivery.
- Distribution and delivery: Brands move goods from warehouses to customers. They might do this directly, or using a 3PL like Pro Carrier with a dedicated eCommerce delivery service. Fast and reliable delivery is essential for meeting customer expectations.
- Returns management: Handling product returns efficiently is a vital — and often underrated — part of the supply chain. A smooth returns process can enhance customer loyalty and reduce losses. Again, brands can work with companies offering a dedicated returns service.
- Information Flow: Throughout the supply chain, information needs to flow seamlessly between all parties involved. This includes order information, inventory levels, shipping updates, and customer feedback.
3 benefits of a streamlined eCommerce supply chain
A well-optimised eCommerce supply chain offers retailers numerous benefits from lower costs to happier customers.
Reduced costs
Efficient supply chain management can minimise warehousing, transportation and delivery expenses. For example, better demand prediction means you need less warehousing space to store stock. Working with multiple final-mile carriers will ensure the best prices.
Improved customer satisfaction
Customers don’t care about your supply chain. They only care if they get their orders fast. A well-managed supply chain, where products move smoothly between suppliers, warehouses and carriers, is in a better place to meet customer delivery expectations. Happy customers are more likely to make repeat purchases and recommend your business to others.
Increased efficiency
Streamlining your supply chain can optimise various processes, from sourcing to delivery. Working with dedicated partners at each stage of the process can lead to faster order fulfilment, reduced lead times, and improved overall productivity.
Supply chain management metrics to track
Monitoring key performance indicators (KPIs) is essential for evaluating the effectiveness of your eCommerce supply chain. Here are some important metrics to track:
- Order fulfilment rate: The percentage of orders that are fulfilled accurately and on time.
- Inventory turnover: The number of times inventory is sold and replenished over a specific period.
- Order cycle time: The time it takes to fulfil a customer order from placement to delivery.
- Shipping costs: The cost of shipping orders to customers.
- Return rate: The percentage of orders that are returned by customers.
- Stockout rate: The frequency with which a product is out of stock.
- Customer satisfaction score: A measure of how satisfied customers are with their overall experience.
By tracking these metrics, you can identify areas for improvement and make data-driven decisions to optimise your supply chain.
5 eCommerce supply chain strategies for online retailers
To thrive in the competitive eCommerce landscape, online retailers need to implement effective supply chain strategies. Here are seven key strategies:
1. Implement real-time inventory management
Your ability to avoid overstocking or stockouts hinges on the quality of your inventory data. Make that data as good as possible using advanced inventory management software that tracks stock levels in real time.
This software integrates with your eCommerce platform, delivery software and other tools to track the movement of goods from suppliers to customers. Real-time updates let your team know exactly how much product you have on hand at any given time, and analytics help you predict when stock will run out.
Being able to track your inventory in this way significantly reduces inventory holding costs since there’s less chance of overstocking, improves order rates by guaranteeing you always have inventory in stock, and enhances supply chain visibility.
2. Optimise your warehouse operations
The size and organisation of your warehouse can inhibit your efforts to improve your supply chain. Make sure you take every step to maximise space and inventory levels with an effective layout, a skilled warehouse team and well-drilled processes.
Reviewing your warehouse operations can help you improve order processing speed and accuracy, reduce labour costs and increase customer satisfaction.
3. Use multiple fulfillment centres
Ideally, you want to be distributing inventory across multiple fulfillment centers to reduce shipping times and costs. This strategy is particularly effective for businesses with a wide geographic customer base or those engaging in cross-border commerce. Doing so can increase delivery speed and reduce shipping costs.
It’s not always feasible to have warehouses in every corner of the country, however. In that case, partnering with an eCommerce delivery expert like Pro Carrier can help you fulfil goods quickly. For example, we collect daily with late pickup times so you can ship as many products each day as possible.
4. Automate order processing
Implementing automated order processing systems is a strategic approach to streamline order fulfillment. This strategy offers several benefits, including increased efficiency, reduced lead times, and improved customer satisfaction.
By automating order processing, businesses can significantly reduce manual errors, which in turn accelerates delivery times. As a result, customers receive their orders more quickly, leading to an enhanced overall customer experience. This streamlined process boosts operational efficiency and contributes to higher customer satisfaction, as timely and accurate deliveries are crucial for building trust and loyalty.
5. Work with a dedicated shipping partner
Collaborating with third-party logistics (3PL) providers is a strategic approach to outsourcing inventory management and order fulfillment. This partnership allows businesses to focus on their core activities while leveraging the expertise of logistics specialists.
This collaboration significantly reduces operational complexity, as professionals handle the intricacies of inventory management and order fulfillment. It also improves scalability, enabling businesses to adapt more easily to changes in demand without expanding their internal logistics capabilities.
Additionally, it enhances supply chain reliability by ensuring that inventory and orders are managed efficiently and effectively, leading to smoother operations and improved customer satisfaction
Improve your eCommerce supply chain with Pro Carrier
Effective eCommerce supply chain management is crucial for success in today's competitive online marketplace.
By understanding the key components, stages, benefits, essential metrics, and effective strategies outlined in this guide, online retailers can optimise their supply chains to reduce costs, improve customer satisfaction, and drive business growth.
At Pro Carrier, we’re here to help. Our dedicated cross-border eCommerce delivery service helps you build a fast, flexible and convenient supply chain.
We also increase your supply chain visibility through our custom-built platform that delivers real-time visibility into your parcels and edit orders on the fly.
Speak to an expert today to find out more.