Supply Chain Management Techniques: The e-Commerce Edition

Legacy retail has been swept off its feet on a global scale with a new electric charged broom called e-Commerce. Of all strategic players involved, SME operators have been down out of luck, taking the biggest hit since the retail giants, i.e., Amazon and Walmart, introduced Same Day Delivery to all customers close and far alike. While online customers’ today develop a shorter and shorter attention span and ever growing impatience to receive purchased orders, delivery at the speed of magic had actually neither been imagined nor expected back in the days. Given the global phenomena, nonetheless, retail has been taken back to the drawing board for a conceptual overhaul. Thus, a new vision and mission has been identified along with adjusted legacy requirements and SOPs to run things systematically and get back on a competitive track again. As supply chain will never ever be the same again, the choice thus is very simple: to go through the gauntlet that certain change brings and come out better, or, get left behind competitors with obsolete infrastructure to compete.

Change in Supply Chain Process Following the Invasion of e-Commerce

Shoppers who used to drive to shops to buy goods can now order online and have it delivered on the doorsteps minutes later. As such, customers today have far more options than in the past as they can switch to other stores whenever the first seller is backordered.  That means retailers that operate both on- and off-line must be equipped with real-time inventory management to match multiple channels up and ensure the customers don’t buy from phantom inventory, i.e., goods that are actually unavailable, hence, a following turnover.

Thus, instead of goods kept on shelves, warehouses and distribution hubs are strategically deployed to match supply with delivery requirements nationwide. This is of course a feasible bid for big time retailers and department stores. For SME operators to scale at the same pace, on the other hand, seems a bit reaching even if it makes sense to jump over small, medium and large, from micro straight to macro. In fact, it’s an impossible mission to envision without committing unrealistic investments in supply chain or, better yet, through the acquisition of companies that specialize in last-mile logistics and e-commerce startup. Say hello to Walmart’s new vertically integrated partners, Parcel and Jet.com, respectively. Solution: the best option is to pass the buck to a fully integrated supply chain service provider. The same way major organizations around the globe are divesting from fossil fuels for both economics and environmental reasons, major retailers have also been and are still divesting from their own legacy systems to both attain streamlined services of a full time provider with Fulfillment expertise as well as leaner core competencies that allow them to operate with footprint footlightedness. 

Online Competition

Inventory management is the main concern, hands down. Retailers must make sure that the system handling goods in stock is quantitatively effective and applies the best distribution method to reduce delivery time. With omni competition online, everyone has to maintain adequate stock at all times to meet customer demand. Yet, excess inventory can have reverse effects on management, too.  Thus, the prediction of customer demand needs to be highly accurate. A recent Veeqo survey shows that 70% of customers prefer turning to other retailers over waiting for restock with one particular store. When they do, it’s unlikely to return for business with the backlogged store again.

In addition, retailers must be able to swiftly handle incoming orders. The fulfillment process following the receipt of orders, i.e., retrieving of items from shelves, movement, parcel, and distribution, must be swift while delivery must be both reliable and prompt. A survey by Dropoff shows that 43% of customers expect faster delivery than in the previous year while two thirds of them opt to buy from retailers such as Amazon or Lazada who are capable of providing faster delivery service.

Online Retailers’ Inventory Management Techniques 

Giving more attention to delivery and inventory management via the following techniques: 

  • Maximized Space Efficiency 

A delay in handling purchase orders (PO) means delayed delivery and, in turn, customer dissatisfaction. Thus, retailers must have effective inventory management to ensure the fastest handling of items according to purchase orders.

Warehouse storage containers should be used to facilitate the staff’s swift retrieval of required items whereby both containers and shelves need to be properly marked for speedy retrieval, including vertical stacking (certain items can be put on top of others).  These can maximize space efficiency and storage capacity as regards other types of goods.  It ensures that the use every square inch is cost-effective.

  • Automatic Product Retrieval 

Fast handling of purchase orders is a determinant factor of winners and losers in e-Commerce.  Some online retailers might want to invest in the storage and automatic retrieval systems as they ensure not only fast retrieval of ordered items but also high accuracy and cost reduction as regards additional cost incurred due to human errors.

  • Faster and Cheaper Shipping 

Logistics has become the most important factor with regards to customer’s decision to buy.  Thus, it is essential that retailers locate quality logistics service providers who are capable of meeting customer needs involving particularly urgent delivery, real-time tracking and uncomplicated product return procedure.

  • Demand Forecasting 

Regardless of whether they are manufacturers or distributors of products received from suppliers, retailers must be able to accurately predict customer demand so that they always have the items in stock.

As mentioned, customers nowadays are impatience with waits, which causes retailers to prevent the out-of-stock situation as regards best selling items.  But how to ensure adequate inventory?  Retailers need to rely on past sales data in their analysis, whether on their own or through the help of programs, in order to prevent excess inventory and also to keep abreast of market trends.

  • Real-Time Tracking 

Because every order can make or break hard earned reputation, retailers cannot risk handling orders erroneously. Knowing the status of products before and during delivery allows merchants to build customers’ confidence. Should an error actually occurs, given the slimmed chance that it still may, albeit out of control external factors, e.g., delayed transportation and lightning, merchants are able to notify the waiting customer and offer compensating benefits or retainers in apology to keep the customer happy.

Swiftness, keeping everyone informed, good customer service and reliable transport are all key success factors in eCommerce, but not every retailer will be good at both selling and back office work at the same time. More often than not, outsourcing mind boggling details that come with supply chain and inventory to a professional that handles orders, manage warehouses, inventory and transportation, instead, proves to be immensely beneficial in making available invaluable time for the owners to focus on areas that matters the most for the business; core competencies and even sales and marketing.

Outsource Your Supply Chain

Needless to say, if you are looking for such a specialist with proven expertise in all aforementioned supply chain management capacities, look no more. Go to Fulfillment by SCG Logisticsor drop us a line at LINE ID: @SCGLFULFILLMENT.

Compiled by BLOG.SCGLogistics         

References and photos easyship.com,retail touchpoints.com,Freepik.com

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