The growth of ecommerce has changed what customers expect from businesses. Product availability, accurate order fulfillment, delivery speed, shipment visibility, convenient returns and responsive customer service have all become important parts of the online shopping experience.
To meet these expectations, it's not enough to just have an ecommerce storefront. Ecommerce businesses require a connected ecommerce supply chain strategy that connects inventory, suppliers, warehouses, fulfillment, transportation, technology and customer service.
Businesses should be able to balance the cost, efficiency, flexibility, scalability and customer experience with a strong strategy. This checklist outlines some important aspects of an ecommerce supply chain to consider when creating or expanding it.
What Leads to an Effective Ecommerce Supply Chain Strategy?
1. Ensure Product Availability
The availability of product is one of the most significant aspects that can have an impact on ecommerce sales. When you offer products that are supposedly available online, customers expect that they will be ready to go and ready to order.
Businesses thus require the visibility of their stock in their warehouses, stores, fulfillment centers and other sites.
The following are benefits that businesses can gain from the effective management of their inventory:
- Maintain appropriate stock levels
- Reduce stockouts
- Identify slow-moving inventory
- Improve replenishment decisions
- Provide more accurate product availability information
Linking the inventory with ecommerce and order management systems could provide still further visibility and minimize the chance of taking orders for out-of-stock items.
2. Diversify Suppliers and Warehousing
Having all your supplies sourced from one provider, warehouse or distribution centre can create supply chain risk.
As an ecommerce business expands across regions, it may benefit from multiple suppliers or strategically positioned warehouses. A distributed network can help reduce dependency on a single location and may improve delivery performance for customers in different markets.
But diversification should be in accordance with the real requirement of business. Having several facilities or suppliers adds more of inventory, coordination and operating costs.
The goal is to create a supply chain that offers the appropriate level of resiliency, availability, cost and geographic reach.
3. Simplify Operations with Accurate Data and Documentation
There is a lot of data generated by ecommerce operations, with each stage of the chain from receipt to movement in the store, picking, packing, shipping and returns. Manual documentations can lead to errors and make it hard to maintain up-to-date visibility.
Barcodes, scanners, RFID and integrated warehouse systems are some of the technologies that can be used to efficiently capture and update information.
Barcode-based processes, for example, can support activities such as:
- Receiving
- Put-away
- Picking
- Packing
- Shipping
- Inventory counting
- Returns processing
The goal is to not only eliminate the paperwork, but to generate accurate and easily accessible operational data that can help in better decision making.
4. Optimize Shipping and Fulfillment Costs
Shipping is a major expense for many eCommerce companies. It can't be done simply by negotiating down transportation costs.
As a business, consider the entire fulfillment process such as:
- Warehouse location
- Inventory positioning
- Order consolidation
- Packaging and right-sizing
- Carrier selection
- Delivery routes
- Shipping service levels
- Returns
An order-management system may also be able to manage orders from various inventory sites and fulfillment processes, thereby minimizing the amount of movement and optimizing resources.
It should be a fine balance between the shipping cost and customer delivery expectations, not just the cheapest shipping.
5. Make Customer Support Part of the Supply Chain
In eCommerce, customer service and supply chain operations go hand-in-hand.
There are a number of reasons why a customer may call a business – such as late deliveries, order mistakes, out-of-stock products, damaged items and returns. Many of these are related to fulfillment or logistics processes.
Businesses can enhance the customer experience by offering:
- Clear order status
- Shipment tracking
- Realistic delivery expectations
- A variety of delivery methods, if applicable.
- Informative, proactive communication on delays
- Simple returns processes
Customer feedback can be a valuable source of information on order-to-order issues in the supply chain. Delays, delivery issues, damaged products, or incorrect orders can indicate aspects that need to be improved in their operations.
6. Develop a Smart and Connected Warehouse
One of the important elements of an ecommerce supply chain is warehousing. With growing order volumes and SKUs, manual processes can become challenging.
With technology and connected systems, a smart warehouse enhances inventory visibility, warehouse processes and operational decision making.
This can consist of:
- Warehouse Management Systems (WMS)
- Barcode and RFID technology.
- Real-time inventory tracking
- Warehouse mobility solutions
- Automation
- Data analytics
- Connected material-handling equipment
The goal is not to mechanize all of your warehouse functions. Rather, companies should seek to understand where processes can be enhanced by technology in terms of accuracy, productivity, visibility, safety and scalability.
Ecommerce Supply Chain Strategy Checklist
Prior to finalizing and/or reviewing your strategy, ask yourself:
Do we have real-time and accurate visibility of inventory?
Is our supply chain and warehouse location resilient enough?
Are the data of our warehouse operations captured correctly?
Do we offer the best fulfilment and shipping costs?
Is it easy for the customer to follow the order?
Is there a clear process that is in place for delays and exceptions?
Will our warehouse be able to scale with the seasons or promotion?
Is our technology unified throughout our ecommerce, inventory and fulfillment systems?
Is there an effective returns management?
Are we regularly using operational data to improve the supply chain?
If you are not confident in the answer to several of these questions, they might be points for improvement.
Creating a scalable Ecommerce Supply Chain
An efficient ecommerce supply chain must be able to manage today's orders. It should also be able to evolve to meet shifting customer requirements, new sales methods, geographical expansion, seasonal peaks and business expansion.
It's about ongoing coordination of inventory, warehouse, fulfillment, transportation, technology, suppliers and customer service.
Businesses which keep a close watch on those factors can detect the bottlenecks earlier, utilize the resources better and design a better supply chain that is more responsive to the changing market demand.
Conclusion
An effective ecommerce supply chain should not only support today's order volumes. It should also be capable of adapting to changing customer demand, new sales channels, geographic expansion, seasonal peaks and business growth.
Businesses must continuously monitor the performance of their supply chain, identify shortcomings and evolve their strategy as the business develops to supply chain management, rather than a project.
A well-designed ecommerce supply chain strategy ultimately helps businesses deliver the right products to customers efficiently while balancing cost, speed, visibility, resilience and customer experience.
