Why is Supply Chain Management in eCommerce Important? Here is everything you need to Know

Successful e-commerce companies know they need to invest in their supply chain.

A company’s success depends on the strength of its supply chain, which connects suppliers, manufacturers, and distributors with retailers and customers.

The importance of a healthy supply chain cannot be overstated: A broken or inefficient system can lead to lost sales and customer dissatisfaction that will ultimately sink the company. Remember when Amazon had to recall more than half a million hoverboards in 2015 and 2016? That was because of a fire risk.

So what does it take for an e-commerce company’s supply chain to succeed? It starts with management understanding how all parts work together as well as where potential points for breakdown might occur. This blog post will explore the most important aspects of supply chain management in eCommerce.

Let’s get started with

What is supply chain management in eCommerce?

Supply Chain Management in eCommerce is a process that deals with the integration of supply chain activities. It ensures the effective coordination of all trading partners involved to ensure optimal performance at a minimal cost. The scope of SCM covers order management, manufacturing, logistics, transportation, demand forecasting, and fulfillment across different channels.

The main objective of supply chain management is to optimize the product or service delivery process.

How does the eCommerce supply chain work?  

The eCommerce supply chain is an intricate conglomeration of processes, procedures, and systems that are designed to take a product from the point of manufacture to the customer’s door in the most efficient way possible. Many people believe that when they order something online, it simply pops out of a factory somewhere near them.

This could not be further from the truth. Most eCommerce companies have a completely different supply chain from that of traditional retailers. Traditional retailers focus on geographically centralized warehouses where they can stock as many products as possible and a direct-to-consumer sales approach.

In contrast to this, the majority of online companies employ a completely decentralized warehousing strategy in which all or most of their products are stored in regional warehouses and then shipped to the customer via third-party carriers. This allows them to service a much wider area than their traditional counterparts.

The eCommerce supply chain is also more reliant on technology than traditional retail chains. In order to keep up with the ever-changing demands of the market, online companies must be able to quickly develop, deploy, iterate, and maintain systems that are always available.

This is especially true in the warehousing sector, where leading companies are using technology like RFID tags to improve visibility into their supply chain.

The eCommerce supply chain also differs greatly from traditional retail in that there is no physical store for customers to visit.

This means that the only way to interact with customers is through an online interface. To accomplish this, eCommerce companies use a variety of tools like live chat features, search filters, and customer support software to facilitate interactions between company and consumer.

Why is supply chain management so important in e-commerce operations management? 

Supply chain management is the process of organizing and managing the flow of goods and services from supplier to customer. In e-commerce, it is essential to have a well-functioning supply chain to ensure timely delivery of products to customers and meet customer expectations for fast and accurate order fulfillment.

A well-managed supply chain ensures that products are delivered to customers in a timely manner. A well-functioning supply chain is able to meet the delivery deadlines of all orders, even those with tight delivery timeframes.

If an organization’s supply chain is not well-managed, it may fail to deliver on its promises, or worse still, fail to deliver at all. This can damage the company’s reputation and lead to loss of customer trust.

Customers base their purchasing decisions on a number of factors, including shipping costs and speed of order fulfillment. A well-managed supply chain is able to process orders quickly while keeping shipping fees low.

By establishing clear guidelines for all business partners involved in the supply chain, it is possible for an organization to have its products delivered in a timely manner without resorting to overtime or hiring more staff.

How does supply chain management contribute to product availability?

A product’s availability is a key factor for a consumer; the demand will drop without availability. For instance, if there were no new iPhones available anywhere, not only would Apple have lower sales of their newest device, but consumers who wanted to upgrade from their old iPhone would also be lost.

In addition to this, retailers wouldn’t be able to sell any of their old iPhone 11 Pro and 11 Pro max models. Supply chain management is important for ensuring product availability because it allows different parts of the production process to be coordinated, which minimizes the amount of time that a product is unavailable.

By having accurate forecasts and ensuring a smooth flow of materials, companies can minimize the chances of a product going out of stock.

What are the key areas where supply chain management contributes to product availability?

The main places where supply chain management contributes to product availability are forecasting, efficient production flow, efficient distribution, and efficient transportation.

Forecasting helps companies predict how much of a certain item will be needed in the future so that they can produce enough stock to meet demand. If a company produces more items than have been forecasted, then the product will become unavailable due to overstocking, resulting in a loss of revenue.

Efficient production flow ensures that products are being made at the correct times so that they aren’t sitting on a shelf waiting to be sold. This is important because an unused product is a wasted product.

Efficient distribution ensures that products are being sent to the correct places at the correct time so that they can be sold as quickly as possible.

Lastly, efficient transportation helps get products to their destinations in a timely manner so that consumers can buy them. If products are not transported quickly, then they may go out of stock.

What benefits do consumers experience when companies use supply chain management to ensure product availability?

When companies use supply chain management, consumers experience more product choices at lower prices. This is because companies are able to minimize expenses which can result in lower costs for the consumer.

For example, if more of a certain item is available on the market, then it’s likely that one company isn’t producing all of those items and is instead sourcing them from different places.

This allows for more competition among companies, which drives prices down. In addition, when companies use supply chain management to ensure product availability, it means that products are being delivered to the consumer in a timely manner.

This eliminates the need to go from store to store in search of a particular product. Lastly, this benefits the company because it increases the chances of customers returning to that company for future purchases.

What challenges do companies face when they do not use supply chain management?

Companies that do not use supply chain management practices often experience a lack of product availability as well as higher costs.

Not using supply chain management means that products may not be available, which can result in a loss of revenue due to unmet demand.

Additionally, companies that do not use supply chain management may experience higher costs because they are unable to predict customer demands and the right amount of inventory needed for those customers.

For example, if a company overestimates how much inventory will be needed, it’s likely that the company will have to sell the product at a loss to get rid of it. This is because an unused product is a wasted product.

Lastly, not using supply chain management can also lead to inefficient production flow and transportation, which can ultimately result in products not being delivered on time. This could cause the company to lose customers if they are unable to provide products in a timely manner.

What are the types of supply chain management?

There are three types of supply chain management: operational, tactical, and strategic.

Operational supply chain management

Operational supply chain management is the day-to-day running of the supply chain. This includes things like ensuring stock is ordered and delivered on time, dealing with customer inquiries, and organizing transport.

Tactical supply chain management

Tactical supply chain management is the planning of long-term objectives. These are normally set out in a business strategy, which then gets broken down into specific projects (e.g., to expand operations), which are in turn managed by tactical SCM. Some of these may have short timeframes, some very long

For example; tactical supply chain management is about setting objectives and particular actions and the projects required to achieve them.

Strategic supply chain management

Strategic supply chain management is about making decisions on what to do in the long term (normally at least three years ahead). This involves deciding what products will be offered, where they will be manufactured, how they will get to market, which suppliers will be involved, and so on.

What are E-commerce supply chain strategies?

When it comes to eCommerce, there are a few different supply chain strategies that companies can use.

The first is known as the push strategy. With this strategy, the company will manufacture and stock products until there’s a certain level of demand. Once the demand has been reached, the company will then ship the products to the retailers.

The second strategy is known as the pull strategy. With this strategy, the company will wait for orders from the retailers before manufacturing and stocking any products.

The third strategy is known as the hybrid strategy. This is a combination of the two previous strategies.

Which supply chain management is best for eCommerce?

There’s no one-size-fits-all answer when it comes to supply chain management for eCommerce. It all depends on the company and what products it’s selling. However, the hybrid strategy is often seen as the best option because it allows the company to react quickly to changes in demand while still having a good level of stock.

SCM FAQs

How is supply chain management affected by electronic commerce?

Supply chain management is affected by electronic commerce because it affects how companies manage their supply chains. E-commerce makes managing the supply chain more complicated due to increased demand for products, new sales channels, and large quantities of data that must be analyzed on a real-time basis. However, e-commerce also reduces costs by eliminating physical store locations and allowing businesses to sell products to a global audience.

Advantages of supply chain management in e-commerce

Supply chain management in e-commerce provides businesses with the tools to quickly and efficiently reduce inventory levels by filling online orders. It also helps companies reach more customers than ever before. This, in turn, can increase revenue and decrease costs. Transparent supply chains allow online shoppers to see where their products come from and to track product shipments throughout the supply chain.

What does ATP stand for in the supply chain?

ATP stands for Available to Promise. It is a process that uses forecasts to determine the number of products that can be delivered on time. This helps organizations meet customer demand.

What is a supply chain flow chart?

A supply chain flow chart is a diagram that shows the flow of products through the supply chain. It includes the steps in the process and the relationships between each step. A supply chain flow chart can help companies identify areas where improvements can be made.

What is the role of transportation in the supply chain?

The role of transportation in the supply chain is to move products from suppliers to customers. This includes moving products to and from warehouses, shipping products to customers, and arranging deliveries. Transportation also plays a role in inventory management by helping companies move products between warehouses.

What are customer service issues that affect supply chain management?

Customer service issues affecting supply chain management include delivery times, product quality, and order accuracy. When these issues are not resolved quickly and efficiently, they can cause customers to stop doing business with a company. This can lead to decreased demand and disrupted production.

Role of e-commerce in supply chain management

E-commerce provides businesses with an easy way to sell products to existing and potential customers. This increases demand for products, increasing inventory levels if companies do not accurately predict demand. However, e-commerce makes it easier to reduce inventory by quickly filling online orders.

What is supply planning?

Supply planning is a process that uses forecasts to determine the number of raw materials, components, and other supplies needed for production or seasonal demands. The supply chain uses this information to plan orders from suppliers.

What is the role of forecasting in supply chain management?

Forecasting is a process that uses historical, current, and anticipated customer demand to predict future product demand. The supply chain uses forecasts to determine production levels and inventory level targets.

What are sales and operations planning in the supply chain?

Sales and operations planning (S&OP) is a process that brings together representatives from sales, marketing, operations, and logistics to plan product availability and ensure that customer demand is met. S&OP helps organizations make better production, inventory, and resource allocation decisions.

What is meant by the phrase “just in time?”

Just in time (JIT) is a production philosophy that emphasizes delivering products to customers only as they are needed. This reduces the amount of inventory that must be stored at any given time, which saves money and space.

How do sales affect the supply chain?

Sales affect the supply chain in two ways. First, they can increase or decrease demand for products. When demand increases, the supply chain must respond by increasing production or finding new suppliers. When demand decreases, the supply chain must reduce production or find new customers. Second, sales can affect inventory levels. When products are sold, the inventory level decreases. When products are not sold, the inventory level increases.

What is supply in supply chain management?

Supply is the amount of a product available for purchase in the market at any given time. Supply chain management is the process of managing the flow of products from suppliers to customers. It includes planning, organizing, directing, and controlling the activities and resources necessary to achieve desired outcomes.

Conclusion

Supply chain management is a critical component of any good eCommerce strategy. Whether you’re using the push, pull or hybrid method to meet customer demands, it is important that your company has an established plan in place for when things go wrong. With this blog post, we hope to have given you some insights on how supply chain management helps with all aspects of running an online store – from inventory and transportation to response time and efficiency.

We encourage you not only to read these tips but also to apply them if they make sense based on what type of product(s) your business offers.

If there are any other questions about supply chain management or anything else related to selling products via eCommerce, feel free to share in the Comment Below

1 thought on “Why is Supply Chain Management in eCommerce Important? Here is everything you need to Know”

Leave a Comment