With many Ecommerce brands sprouting over the past years, it’s getting challenging for them to attract buyers coming to their platforms. Marketing efforts such as providing product videos, and endless online campaigns are definitely not enough.
Making the best of your Ecommerce includes having a well-managed supply chain. As big competitors like Amazon exist, your Ecommerce should have exclusive advantages and implement excellent systems to support internal operations.
It goes beyond competitive prices over products you sell, but rather fast and accurate manufacturing, packing and delivering processes. All of those processes play a solid part in your supply chain.
An Ecommerce supply chain revolves around the pre-production, manufacturing, delivery, and post-delivery stages. So, having an expeditious supply chain can lead to a company’s growth and customer satisfaction.
We’ve compiled the essentials to establishing an Ecommerce supply chain. You can also find the eight strategies to help you make the most of it. Without further delay, let’s delve deeper into the topic!
What is the Ecommerce Supply Chain?
Ecommerce supply chain refers to the logistic processes in an online business. The processes include raw materials preparation and production, manufacturing, warehouse, inventory management, order fulfillment, delivery process, and post-delivery service.
Having a well-managed and structured supply chain will lead to effective and efficient operations. It also has more benefits, such as:
- Manage every operational process
- Provide process visibility across the entire network (including to customers)
- Maintain employees productivity
- Build and enhance good customer service
- Avoid delivery delays
- Turn customers into loyal buyers
All in all, an Ecommerce company must have an integrated supply chain to build positive customer satisfaction. It’s key to making them happy and keep coming to your platform and purchasing more products.
5 Phases of the Ecommerce Supply Chain
In every Ecommerce company, the supply chain always starts with suppliers and ends with customers. First of all, responsive suppliers are key to developing a smooth supply chain. If suppliers fail to give the best service, it will go down the line affecting the entire funnel.
There are five phases of an Ecommerce supply chain. Each of them holds a vital role in building a good management system.
Planning is everything in a business. In this stage, you need to create an inventory of your supply chain. Therefore, you’ll need information and collect data on your vendors, suppliers, and their products through contact forms or transactional data tracking.
You should also identify your customers and their demand for products. Moreover, always look at the market trends to stay competitive in the global industry.
The sourcing stage requires deciding your inventory’s vendors, suppliers, and manufacturers. Finding vendors with a good reputation and competitive price is paramount.
This stage includes producing raw materials into finished products. Processes such as product testing, storing, and packaging also belong to this stage.
- Delivering or Logistics
The logistics process involves every movement of the shipping process. You should provide information on where customers can track their purchases.
- Handling returns or Reverse Logistics
Sometimes, customers ask to return the products they purchase due to wrong, defective, or expired products. You also need to build a scenario and make a solution to this case.
How to Measure the Performance of Your Supply Chain?
In order to know whether your Ecommerce supply chain is working well or not, you need to set some metrics to measure its performance. The metrics you use should be easy-to-understand, quantitative, and easy to collect.
Mainly, there are three metrics to measure Ecommerce supply chain performance: time, cost, and quality. Let’s discuss the explanation of each below.
An Ecommerce should set metrics related to time as it relates heavily to customer satisfaction. Time metrics are also easily calculated, monitored, and understood.
Moreover, it clearly shows the effectiveness of your supply chain and system. Some metrics examples are the level of on-time deliveries and time to purchase and fulfill orders.
Cost metrics are also necessary to examine the supply chain performance. It will show whether your overall business strategy is making a profit or not.
One of the most-used cost metrics by companies is inventory carrying cost. It is a metric to see spending costs to carry products or items in the warehouse. Some other cost metrics are production cost, manufacturing cost, and delivery cost.
Quality metrics relate to customer satisfaction. It shows buyers’ satisfaction with the product they buy on your Ecommerce. Quality metrics will help improve your products’ quality and customer satisfaction.
8 Valuable Tips on Establishing Effective Ecommerce Supply Chain Strategies
Now, we’re down to explore some strategies and tips on establishing an effective supply chain for your Ecommerce. We’ve also broken down every point to help you understand better. Let’s discuss each of them below.
1. Choose the Right Suppliers and Vendors
Choosing vendors and suppliers is vital in building a well-performing supply chain system. Therefore, getting the details of your vendors is necessary to know their reputations in the industry.
Make sure those who become a part of your inbound supply chain show high communication standards, packaging, delivery, and customer service. So they won’t slow down your operational progress.
2. Build a Time-Efficient Delivery System
Every customer’s dream is to get their order as fast as possible. However, due to some circumstances, including geographical matters, the delivery process can take a while. If you only have one distribution center, the shipping process can take longer for distant areas.
The Amazon delivery system has become a benchmark for customers. A way to compete with major Ecommerce brands is by adjusting multi-distribution center operations, which allows you to reduce shipment time.
Learn how Amazon structures its delivery process. Take some notes on insights that you can adjust to your supply chain. However, you’ll still need improvements to level up your system and thrive in the global industry.
3. Manage Warehouse Capacity
Make your warehouse manageable to be space-efficient. You can set and segment areas for specific purposes, such as inbound products, shipping, and returns.
For example, you can put high-demand products in a more approachable area. Also, make enough space for your employees to move around comfortably.
Having a manageable warehouse helps workers to do their job efficiently. It can improve productivity, avoid inventory errors, and maintain a safe working environment.
4. Utilize Technology to Increase Order Numbers
Utilizing tech-based programs and tools to support your work system can help you be all-efficient. Most importantly, they are valuable for maintaining employees’ productivity and helping them work faster.
QR code technology and graphic organizers are two options you can use to be all-efficient. You can adjust them in picking, packing, shipping, and labor tracking areas. With technology, you can speed up any process by one to three seconds.
Of course, marketing is the biggest channel to increase order amount for your Ecommerce. You constantly have to share exciting offers and deals with your customers using personalized campaigns.
It’s best to have solid software in hand that can simplify campaigns for you. There are email marketing platforms in the market. But that’s a limited outlook on marketing and may cost you more. Rather, pick a CRM with marketing automation that allows you to execute multiple kinds of campaigns, other than just emails.
5. Improve Labor Management
For smaller Ecommerce companies, investing in the latest automated tools can be burdensome as they can be overpriced. Consider improving labor management to level up your employees’ skills and competencies as a good alternative.
As Anthony Bergs CMO at WritersPerHour, a content production company that manages hundreds of writers, editors, and other staff members states, “Provide training programs and introduce them to small wearable technologies to support their job. Skillful employees can help reduce overall system costs and increase the profit margins.”
Having competent employees is key to having a good working flow. Building processes, SOPs, and management systems can help you streamline the work.
6. Lower Outbound Shipping Costs
As outbound shipping costs take around 50%-70% of total logistics costs, lowering the spending is a great strategy. Negotiating effective rates with logistics and carrier companies is a way to do it.
Investigate the logistics companies’ factors to determine shipping costs, including the current market situation. Also, consider adding your fleet to smaller companies. They often offer competitive services and prices.
7. Decide on Cost-Efficient Logistics
When deciding on the most cost-efficient logistics, you have two options: to have an internal fulfillment or use third-party logistics (3PL). Each option has its advantages and downsides.
You can build your internal logistics but must sacrifice more time and effort to set up the infrastructure and establish the system. Considering the efforts you need to take, and many Ecommerce businesses use third-party logistics instead.
They help you provide warehouse space, handle overhead costs, and restock shipping supplies. Choose third-party logistics that offer a competitive price and excellent service.
8. Adjust Excellent Management System
In the Ecommerce business, terms like ERP, WMS, and OMS are frequently heard. They are management systems that support certain activities for the industry.
ERP (Enterprise Resource Planning) is a system to support a company plan its core operations, including manufacturing, finance, and logistics. WMS (Warehouse Management System) is a program to help you track your warehouse operations and logistics.
Moreover, OMS (Order Management System) is a program to track orders across channels, including online stores, retail shops, and phone orders. As an Ecommerce company, adjusting one or more management systems is worth every investment and will benefit you greatly.
A PIM (Product Information Management) and DAM (Digital Asset Management) system work hand-in-hand and most PIMs have built-in DAM capabilities.
A PIM is used to centralize, store and distribute accurate product information across multiple sales channels. Both of these systems are invaluable to an Ecommerce business as it allows teams to collaborate seamlessly while keeping information up-to-date and safe.
Making the Most of Your Ecommerce Supply Chain
In a world where online shopping is preferable, the competition among Ecommerce brands is getting more intense than ever. Your Ecommerce brand won’t thrive without a robust supply chain management system.
An Ecommerce supply chain must be considered necessary. You need to make more effort, including studying your competitors’ supply chains to keep up with them and, if possible, level up your supply chain to stay ahead of the competition.
The above eight tips can be your consideration when building your Ecommerce supply chain. Take your time to research vendors, logistics, warehouses, and management systems before choosing and implementing one.