Have you ever wondered what goes on behind the scenes when you make an online purchase? This process involves multiple steps, including suppliers who provide:

• The raw materials.
• Manufacturers who create the products.
• Warehouses that store these items.
• Delivery services that bring them to you.

Supply chain management (SCM) involves organising these processes that comprise the entire shopping journey. 

Did you know that 79% of businesses with high-performing supply chains achieve revenue growth greater than the industry average?

Effective supply chain management is essential for any e-commerce business. It helps cut costs, improve customer satisfaction, and maintain a competitive advantage in the market. By improving your supply chains and converting first-time buyers into loyal customers, you can ensure customers receive their orders quickly and safely.

Keep reading to know how you can do just that!

What is an e-commerce supply chain?

The e-commerce supply chain is a set of logistical procedures for operating an online store. It includes obtaining raw materials, producing finished goods, managing inventories, storing, filling orders, and last-mile delivery.

More specifically, because the business is online, products and goods are transferred from sellers (or suppliers) to buyers, payments are made between buyers and sellers, and information is shared at almost every stage.

Supply chain management is crucial to achieving an effective supply chain that provides buyers with high-quality products and excellent e-commerce customer experiences. Each link in the chain must work together and perform its job effectively to achieve the utmost value.

What is e-commerce supply chain management (SCM)?

In e-commerce, SCM means supervising how information and resources move through the supply chain. It serves as a guide for getting products from the point of production to the final customer.

Managing your supply chain requires the combined efforts of several parties, including manufacturers, suppliers, and couriers. If one of these parties fails, the chain as a whole may be broken, which could negatively impact when and how the products reach their end users.

The goal of e-commerce supply chain management is an efficient and effective supply chain. Several tactics and strategies can help you manage your supply chain more profitably, efficiently, and productively.

What are the benefits of e-commerce supply chain management?

Reduced cost

Cost is a major consideration when it comes to online shopping. It can be surprising when you consider the time, money, and effort you spend just running your online business.  Although e-commerce is a large and expanding industry, it is also very complicated. Supply chain management can help you accomplish several goals, including lower shipping costs and better customer service. 

Better customer experience

Customers always want a great shopping experience; if they don’t, they can leave negative reviews that affect your business. Supply chain management can help you offer them the best experience by ensuring their products are delivered on time, increasing your business’s reputation. 

According to an Oracle study on e-commerce delivery, 13% of consumers said they would never shop at an online store again if their orders were not delivered on time. If your SCM is ineffective, your customers are less likely to return. You can satisfy your customers by offering timely delivery, monitoring shipments in real-time, and, most importantly, ensuring that their goods are not damaged during transit.

Improved inventory management

Mismanagement of inventory costs retailers around the world approximately US$1.75 trillion in lost revenue yearly. This is caused by overstocks, understocks, and avoidable returns, most of which are caused by a lack of understanding of a company’s online and offline inventory.

Supply chain management eliminates bad inventory management like overstocking or understocking because the system keeps track of the stocks available at each location, ensuring you have the right amount of stock.

Improved delivery time

A supply chain management system allows you to give your customers an estimated delivery time. This means that instead of guessing when your customers will receive their products, you can accurately predict when their goods will be delivered to them.

According to a McKinsey & Company report, 90% of online buyers anticipate receiving their purchases in two to three days. If delivery takes longer than expected, you risk losing half of them to competitors.

Many factors can cause delays, which can lead to customer dissatisfaction. However, the appropriate SCM strategies can reduce these delays, resulting in quicker shipping times and satisfied customers. 

Best practices for effective supply chain management in e-commerce

Use multiple fulfilment centers

Relying on a single provider for your central distribution point is not ideal for your business and may expose you to unforeseen events. The best idea is to have more suppliers and distribution points maintained locally. This way, if something goes wrong with one of yours, you have easy access to products from other suppliers.

You can store inventory in several warehousing and storage facilities to reduce the cost of fulfilment and the time it takes to deliver goods to your customers. All inventory and data from all the storage facilities can be monitored on a dashboard. 

Drop Shipping

Drop shipping is a way of running an online store without keeping any products in stock. Instead, when a customer buys something from your store, you purchase that item from a third-party supplier, and they ship it directly to the customer. This means you don’t handle the products directly, making it easier to start a business with less money and fewer logistics to manage.

When you receive an order, you send it to another company, which ships the product straight to the customer. You act as an intermediary between the customer and the business selling the product. This method eliminates the need for unnecessary stock and reduces delivery time.

Partner with a third-party logistics (3PL)

One of the most popular and successful e-commerce supply chain management techniques is to use 3PL companies to improve your supply chain. Partnering with a 3PL company can help you improve your customer service by tapping into its existing supply chain.

By using 3PL providers to handle order fulfilment, you can cut expenses and transit times while freeing up more time and resources to concentrate on other parts of your business that require immediate attention and prioritisation.

Implementing management software

Supply chain management is one of the business processes that management software can automate but cannot be done manually. Although optimising it requires more than just automating software, it is a step in the right direction.

Adopting new technologies can improve production, system, operational, and decision-making processes. Examples of these technologies include big data analytics, cloud computing, and the Internet of Things (IoT). Many management software packages are pre-configured with these technologies to facilitate your handling of various chain operations. You will outperform your rivals by using an established and integrated SCM.

Automate manual tasks in the order fulfilment process

Gone are the days of solely managing your warehouse manually. E-commerce automation is becoming attractive due to technological advancements, which can lower labour costs and even problems caused by human error.

Barcode technology can improve material handling, storage, product flow, and labour productivity in warehouse automation and systems. If this approach doesn’t work, you can change your objective and try automating other tasks. Using these automation technologies, regardless of their basicity, employees can monitor their actions in the supply chain and process shipments quickly.

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