It is significant to develop a system that would help you to deliver your products and goods to the end, customers, without jeopardizing the quality and integrity of the product. The e-commerce industry has become highly competitive because of the great number of stores. Today, we’ll discuss e-commerce supply chain management; its definition, processes, strategies, advantages, and disadvantages.
Nowadays, customers have got a lot of shopping choices and there are various alternatives available to them. It is significant to develop an effective and proactive SCM strategy to differentiate your business from the competitors by improving customer experience, profitability, and market size.
According to an estimate, approximately 80% of all shoppers and 56% of young customers want their orders to be delivered on the same day. It is very difficult to satisfy the needs and expectations of customers without having a proper SC system that would help you to make sure that you need logistics and inventory.
What is E-Commerce Supply Chain Management?
E-commerce supply chain management is the method of dealing with vendors, suppliers, warehouses, manufacturers, producers, consumers, fulfillment centers, distribution, and transportation companies. Every element plays a key role in the SC process and contributes significantly to the growth and success of meeting the expectation of your customers
How E-Commerce SCM Works
The process of e-commerce SCM begins with vendors and suppliers and finishes with end consumers. Along with the value chain; the product or good moves from supplier, vendor, and manufacturer to the end consumers. Money or cash moves from end consumers to the suppliers, and the information moves in both directions.
The manufacturer or producer allows you to transform the raw material and suppliers and vendors into the finished goods. The SCM system has transformed from a manual and conventional SCM system to an integrated SCM system by employing AI and ERP solutions to amplify efficiency at various stages of the SC system.
Process of E-Commerce SCM – Stages
Some of the key stages in the process of e-commerce supply chain management are as follows;
It is the stage where you gather data about the SC process to know the needed inventory that would help you to meet the market and customer demands.
Here, you find the manufacturers, suppliers, and vendors that would offer you the needed inventory to satisfy the demands and wishes of customers.
It is the stage where you transform the raw material into finished goods; then testing, packaging, storing, and then delivering the products to the end consumers.
It also goes by the name of product delivery. It comprises managing the flow of goods and products to the end consumers.
Here you manage the returned, expired, and defective goods and products send back from customers, and then send it back to the warehouse and suppliers.
Every phase of the SCM system plays a significant role in the efficiency and effectiveness of the SC process.
Strategies for E-Commerce SCM
Some of the main strategies for e-commerce SCM are as follows;
Alliance with Logistics Companies
Establishing partnerships with delivery network service providers and logistic companies to decrease the delivery time. It helps you to make sure that the product would reach customers on time and focus on other areas of your business like product development and marketing.
Proactive and Flexible
It comprises staying flexible, dynamic, and proactive relevant to the changing market demands and expectations.
It offers a clear insight into the type of product and answers questions of who, where, and when. It decreases the processing time and cost, and paperwork accuracy.
It comprises maximizing and amplifying the space utility of your warehouse to store more goods and products.
It means establishing clear rules, guidelines, and expectations between the manufacturer, supplier, and vendor.
It comprises responding to the changing customer needs and requirements in the market. You should make sure that your delivery system has a quick and speedy delivery and shipment system.
It allows you to develop open communication with various stakeholders in the SCM process. It offers you real-time transparency and visibility so that you could make accurate decisions.
The integrated ERP system helps you to develop a better inventory management system and tracking; make more reliable and accurate forecasting decisions.
Advantages of E-Commerce SCM
Some of the main benefits and advantages of e-commerce supply chain management are as follows;
Well-optimized SCM system offers you complete transparency over the entire SC process in real-time. It becomes easier to recognize bottlenecks and cracks in your SC system.
An efficient SCM system would make sure that the strategic positioning of warehouses, vendors, and suppliers; they are quickly delivering the products and goods to the customers. It allows you to establish the trust and confidence of customers with your brand in order to generate more revenue.
If you have got transparent SCM system, then it allows you to sell more goods and products to customers by employing various channels. You do so by integrating fulfillment centers, warehouses, and vendors.
Transparency offers you real-time data about the needs of customers, capacity logistics, product lifecycle, and warehousing capacity. It allows you to rightly forecast the demands of customers so that you could buy the inventory relevant to the customer’s requirements.
Responding to Changes
Efficient SCM develops an open line of communication among various stakeholders of SCM. Transparency communication among suppliers, producers, dealers, manufacturers, and vendors, and allows you to quickly respond to the changing market conditions.
Disadvantages of E-Commerce SCM
Some of the main challenges and disadvantages to the e-commerce SCM are as follows;
Transportation and logistics are complex and it would cost a lot of capital to your business, depending on the size of your business. You should manage the delivery time, pay the truck drivers, and timely deliver the product to the customers.
It is difficult to deal with various warehouses and channels, if your company is scaling up, then you should locate your warehouses and select the one for your particular product. In order to stay ahead of WMS, you should employ a solution or software that would help you to track distribution and inventory levels.
It is difficult to manage an inventory management system while knowing what type of items are for delivery and the remaining are on the site. The process becomes complex with the growth of your business, it is because of maintaining a high amount of SKUs and managing replenishment.
Conclusion: E-Commerce Supply Chain Management
After an in-depth study of e-commerce supply chain management; we have realized that efficient SCM processes play a key role in e-commerce. If you are learning about the role of SCM in the e-commerce industry, then you should keep in mind the abovementioned strategies, processes, advantages, and disadvantages.
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