What Is The Role Of Logistics In Supply Chain Management In E-commerce?
Logistics refers to the movement of products from the manufacturer to the final customer. It includes several activities, such as inventory management, warehousing, transportation, and delivery. Effective logistics ensures that products are available when customers need them, allowing businesses to meet the growing demand for fast and dependable shipping.
As e-commerce grows, so does the importance of logistics. It is more than just moving packages; it is about giving customers a good experience. Effective logistics can be the difference between a satisfied customer who receives their order on time and a dissatisfied customer who experiences delays.
This article will discuss the impact of logistics in the e-commerce sector and its role in supply chain management.
What is the ecommerce supply chain?
An e-commerce supply chain is a series of logistics procedures, including producing raw materials, making finished products, storing and managing your inventory, order fulfilment, and last-mile delivery, which is the last stage of the e-commerce supply chain that links businesses to customers by delivering the purchased item.
The aim is to provide customers with premium products that meet their needs and provide them with an enjoyable shopping experience. Also, maintaining a reliable brand depends on each stage of the supply chain.
What is e-commerce supply chain management (SCM)?
E-commerce supply chain management oversees the flow of resources along every stage of the supply chain. This involves coordinating distributors, manufacturers, suppliers, and retailers to meet customer needs while improving quality and reducing costs.
For SCM to be effective, customers must have a positive experience by receiving the right product at the right time, and there must be significant business growth. The various supply chain stages must be optimised to achieve customer satisfaction and business growth for e-commerce supply chain management to be considered adequate.
Types of logistics in supply chain management
Inbound Logistics
Inbound logistics is transporting products or raw materials from suppliers to businesses. It involves moving products and services from suppliers to warehouses and into production. Its primary goal is to transfer raw materials to the appropriate departments to continue the production process. Inbound logistics also includes location tracking and reviewing price quotes and receipts.
Outbound Logistics
Outbound logistics begins at the end of a supply chain. This is where goods are shipped out and delivered to the final receivers-customers. It involves optimising delivery routes, inventory management, packaging, and order fulfilment. For outbound logistics, you can work with a logistics partner specialising in last-mile delivery. Furthermore, you can use logistics aggregators to assist you in locating logistics partners that offer the best value, or you can conduct your search.
Reverse Logistics
Although reverse logistics has long been disregarded, it is now an essential component of the supply chain as e-commerce brands prioritise improving the customer experience. It refers to transporting goods from the customer to the supply chain. This includes recycling, reusing packaging, and refurbishing products that customers return.
These activities are carried out at the end of the product life cycle.
The Role Of Logistics In Supply Chain Management
Sourcing of Goods
Logistics is an essential factor to consider when sourcing goods. This means looking for a reliable source to deliver the best price and value. Logistics also assists in analysing backorder delays, unnecessary fees, shipping costs, and warehousing costs. These factors must be scrutinized to identify the most reliable source of raw materials, and logistics can help simplify the process.
Transportation
Transporting goods is the basis for logistics, and transportation is how various supply chain processes are connected. When choosing a transportation method, you should consider distance, cost, availability, and route conditions. A thorough analysis of the transportation infrastructure is necessary to ensure prompt delivery at the lowest possible cost and make the supply chain effective.
Order Fulfilment
Order fulfilment involves receiving and delivering customer orders, and logistics systems are essential here. In order fulfilment, orders are picked from the warehouse, properly packaged and labelled, and then shipped to the customers by logistics. Customers now want their orders delivered faster on the same day, making the role of logistics in order fulfilment increasingly important. Although order processing is now mostly automated, last-mile deliveries are still performed manually, and a practical logistics framework is required.
Packaging
As they are being shipped, goods are at risk of damage during handling and transit. For this reason, safe packaging is essential to securing the goods. Customers also assess brands based on how the products they order are packaged.
Demand Forecasting
Product demand forecasting is another way logistics is currently used in e-commerce operations. Logistics plays a vital role in helping the supply chain control unpredictability. Additionally, it guarantees that companies can control the overflow in demand for specific products, and by anticipating customer behaviour, they can make wise decisions.
Warehouse Management
Warehouse management and logistics operations work together to make last-mile delivery possible. The logistics requirements determine how the inventory in the warehouse is organised and placed. For quick movement and convenience, goods frequently ordered or requiring transportation are arranged at the front of warehouses. Perishable goods are rotated often, so the oldest items are shipped out first. Low-demand products are comparatively positioned at the back of warehouses.
Return Management
For e-commerce businesses to reduce excessive waste, they must have a good way of managing products customers want to return. Logistics is not only important for getting products to customers but also required for retrieving those products from customers upon request.
Last-mile Delivery
A successful logistics system can facilitate last-mile delivery, and it’s essential to customer satisfaction. It assists businesses in responding promptly and efficiently to each customer’s order without hold-ups or obstructions.