“In the new economic environment, e-commerce enterprises are facing greater competition, which leads to the integration of e-commerce enterprises on their supply chain has become the key to obtaining competitive advantage in the future.”– Research Gate

What is Supply Chain Management in Ecommerce: Detailed Overview

A network of procedures involving many e-commerce business verticals is referred to as the e-commerce supply chain. Sources, handlers, producers, distributors, last-mile delivery, and returns are some of these major verticals. Following the flow of materials from their sources to the end users’ destinations in the form of commodities is another method to depict a supply chain.

• For instance, an online furniture retailer’s supply chain may consist of:
• Procuring raw materials such as wood, metal nails, and paints.
• Designing furniture informed by market insights.
• Producing furniture with various sourced basic materials.
• Managing inventory of both assembled and semi-assembled furniture.
• Handling and processing customer orders.
• Overseeing delivery and installation of furniture at customer locations.
• Managing the return and processing of furniture.

eCommerce Supply Chain Challenges & Opportunities

Consumers want their orders to be delivered on schedule. E-retailers must have the right staff and infrastructure in place to fulfill their obligation to deliver items on schedule. This is the area of difficulty for e-commerce endeavors, and the challenges fall into four categories:

• Lack of infrastructure,
• Inadequate packaging and storage in the warehouse,
• Incomplete inventory records, and
• Issues with logistics

Nonetheless, eCommerce business owners are figuring out how to handle the challenges considering new technological advancements. Manufacturing and distributing goods closer to the consumer, shipping goods directly from fulfillment centers to customers instead of via physical storefronts, and omnichannel sales and marketing to provide a consistent customer experience across all channels are a few instances of this kind of innovation. In turn, eCommerce in supply chain management will be much reduced by these new strategies, but there will be plenty of opportunity for profit.

eCommerce in Supply Chain Management: Key Metrics Businesses Should Track

The truth is that if you’re not continuously monitoring important metrics or data, it’s nearly impossible to know how well your eCommerce in supply chain management is operating (and where you have space to improve). Having stated that, there are three main categories into which the most valuable indicators for businesses can be separated:

• Predictive Metrics: With the use of predictive analytics, businesses can forecast future events in their supply chain. To be more precise, they use past data to train a machine-learning model that analyzes purchasing trends and other indicators. Then, using current inventory data, this information is applied to predict future events, such as a spike in sales after a new marketing campaign.
• Prescriptive Metrics: It suggests measures that businesses should take to influence their forecasted results. Prescriptive metrics can offer recommendations for how to proceed easily to traverse future events that may arise in their supply chain. With these measurements, businesses can ensure that they have adequate inventory to fulfill demand if sales are expected to increase.
• Diagnostic Metrics: To “diagnose” the root cause of supply chain problems, diagnostic metrics are used in analysis. To put it simply, they record supply chain occurrences to assess the reasons behind them and identify areas that both warrant and are capable of improvement. Data mining and/or data discovery procedures are often used in implementing diagnostic metrics.

Role of eCommerce in Supply Chain Management

Let’s examine the significance of e-commerce in supply chain management and some of its effects now that we have examined the concept of supply chain management and how it affects e-commerce.

• Increased Price Competition: Customers now have a preferable and more convenient way to shop because of the development of eCommerce in supply chain. They may now purchase everything they want from the convenience of their homes rather than going into a physical store and now they have many options for online shopping. As a result, e-commerce businesses operating in the same industry face fierce pricing competition. Businesses have had to rethink their eCommerce supply chain strategies in response to the heightened competition to remain competitive and offer better prices.
• Improved Customer Experience: Online customer data collection has become easier because of eCommerce in supply chain. Customer preferences and products of interest can be gathered from visitors to the website as they browse through your offerings, and this information can be utilized to enhance the user experience. By continuously presenting customers with tailored content on their screens based on information gathered from the website, businesses can enhance their overall experience. E-commerce companies can benefit from supply chain management through improved customer satisfaction and operational efficiency. These benefits include expedited logistics, effective inventory control, and prompt order fulfillment.
• Increased Demand for Fast & Timely Delivery: A consequence of e-commerce’s explosive expansion on consumer behavior is a rise in the need for quick delivery services. Prominent e-commerce companies like Amazon are driving the trend in same-day or 2-day delivery, therefore smaller businesses are under pressure to follow suit. To fulfill these delivery expectations, e-commerce companies must have efficient supply chain management. Consequently, businesses need to adjust or enhance their E-supply chain management system to meet the demands of prompt and effective delivery services and stay competitive in the field of e-commerce.

How eCommerce in Supply Chain Management Works?

Every business’s supply chain is an ever-evolving, ever-flowing machine. Nonetheless, the functioning of eCommerce in supply chain sector has mainly not altered. Enabling maximal order fulfillment has been the industry’s aim. When eCommerce emerged, the logistics sector had to employ every resource at its disposal to meet consumer demands. If businesses think of the supply chain as the whole of its parts instead of the entire process, they can examine each of the supply chain’s steps closely.

1. Processing Order Information

When the inventory is prepared, filled, and directed toward the clients, it’s time to act. Pulling the trigger in the context of eCommerce in supply chain involves several phases. Every order must have a suitable shipping partner chosen once it is placed. To ensure that the order arrives at the correct location within the allotted time, the shipping partner must then process the order. This procedure entails packing the item, designating it for delivery, and creating the AWB and shipping labels.

Supply chain management software can automate this process and create a quick-trigger system.

2. Delivering Orders Effectively

An order’s life cycle usually comes to an end when it reaches its destination. The customer’s location is the optimum destination for an order to ensure maximum fulfillment. Businesses might ask for client feedback surveys or confirmation of delivery to be submitted to make sure the delivery was successful. When an order returns to the warehouse of origin, the order’s journey comes to an end if it is refused or if delivery is unsuccessful after several attempts.

To prevent this cycle of rejection from happening again, businesses would need to get in touch with the consumer in these situations to find out why the order wasn’t successful.

3. Transportation of Orders

Businesses can use third-party applications to handle duties like order processing and warehousing. This allows their shipping partners to concentrate on the essential portion of the transaction, which is moving the products to the clients.

Shipping partners can access various transportation modes, including road, sea, and air. Some could even be able to offer extra shipping services, such as insurance for expensive items, temperature-controlled transit for perishables, or even bulk or hazardous material handling. These choices provide eCommerce businesses with even more functionality.

4. Assessing Supply & Demand

Examine consumer behavior, market trends, and historical data throughout this phase. Estimating the expected supply and demand for your goods will be useful. This directs economical purchase decisions.

Accurate demand forecasting:

• reduces expenses,
• optimizes inventory, and
• helps avoid overstocking and stockouts.

Unpredictable market conditions and evolving customer preferences might present challenges. Use data analytics, conduct market research, and build strong channels of contact with suppliers and customers to manage this stage well.

5. Reverse Logistics

Keeping track of things that consumers return to you for exchanges, repairs, or refunds is recognized as reverse logistics. Approving returns, inspecting products, fixing them, and determining what to do with them are some examples of these kinds of activities. Keeping consumers satisfied requires effective reverse logistics management. Moreover, it facilitates efficient inventory management and loss reduction.

Challenges could include complicated and expensive return procedures, examining the state of the product, and managing client expectations. Establish precise return policies and streamline your return procedures for your clients and yourself to effectively handle reverse logistics. This could include, for example, the way you inspect, and repair returned goods.

6. Inventory Tracking

Predicting and controlling inventory levels precisely is a crucial step. To figure out how many items to stock entails keeping an eye on inventory levels, reviewing sales information, and examining past trends. By helping to automate these procedures, inventory management in supply chain management systems ensures that there are never too many stockouts or overstocks and that there are always enough products to satisfy consumer orders.

Errors in inventory tracking, discrepancies between recorded and actual inventory, and a lack of real-time information are the main causes of problems. Inventory tracking can be achieved using SKU numbers, inventory software, barcodes, or RFID technologies, and routine checks and audits.

7. Warehousing

Products are kept in fulfillment centers or warehouses that are positioned carefully. These facilities are built with effective inventory reception, storage, and organization in mind. Lack of space, having multiple warehouses, and ensuring accurate inventory are among the challenges faced by the warehousing industry. Tools such as warehouse inventory management system software and inventory management systems are available to businesses.

Order fulfillment is made easier, inventory is tracked, and storage space is optimized with warehouse management systems. The technology instructs warehouse staff to gather and package items for shipping when a customer places an order. These issues can also be resolved by improving warehouse organization and utilizing quicker picking and packing techniques.

How Do Businesses Complete eCommerce in Supply Chain Audit?

Every procedure, method, and element of your online eCommerce supply chain is examined and evaluated in-depth during an eCommerce supply chain audit. Finding opportunities for supply chain optimization in eCommerce, as well as potential weak points, is the aim.

Steps for a Comprehensive eCommerce Supply Chain Audit:

• Define Objectives & Gather Data: Clearly outline the goals of the audit. Collect all relevant data, including process diagrams, inventory records, supplier agreements, and technology system details.
• Map the Supply Chain: Develop a detailed visual representation of the supply chain, illustrating the flow of goods and information from procurement to customer delivery.
• Evaluate Supplier & Partner Performance: Assess the performance of suppliers and partners based on reliability, cost-effectiveness, and service quality.
• Assess Technology & Systems: Review your technology stack, including inventory and order management systems, for efficiency and integration.
• Examine Inventory Management Practices: Analyze inventory levels to identify excess or obsolete stock. Evaluate order fulfillment processes for accuracy and efficiency.
• Review Transportation & Logistics: Optimize shipping routes and assess logistics for cost reduction. Evaluate customer service practices, including returns and complaint handling.
• Consider Sustainability & Ethics: Assess environmental impact and ethical sourcing practices. Explore opportunities to enhance sustainability and ethical standards.
• Identify Risks & Develop Mitigation Strategies: Identify potential risks within the supply chain and formulate strategies to address them.
• Compile Findings and Develop & Action Plan: Summarize audit findings and recommendations. Create a detailed implementation plan with clear timelines and assigned responsibilities.

Wrapping Up

Supply chain management is both a tactical and strategic benefit in the age of e-commerce. Businesses must be able to get goods from suppliers to customers quickly and efficiently to succeed in today’s cutthroat market. Businesses that make SCM investments benefit from lower expenses, higher customer satisfaction ratings, and a competitive advantage.

As a leading AI supply chain management solutions company, with over a decade of experience, NextGen Invent is in a good position to help e-commerce businesses optimize their supply chains. We are a vital partner for both corporate behemoths and SMEs in the e-commerce space because of our dedication to offering cutting-edge single-window supply chain solutions.

Supply chain management will continue to be essential to success as the e-commerce sector develops. Companies that adopt and use SCM effectively will be well-positioned to meet the challenges and take advantage of the opportunities presented by this fast-paced industry. Ready to enhance your eCommerce in supply chain management? Contact us today to learn how we can help you optimize your processes and stay ahead of the competition.