If real estate investors say their motto is “location, location, location”, supply chain managers worldwide will say that for them, it’s more of “efficiency, efficiency, efficiency”.
But how exactly do you streamline your supply chain and improve your logistics and fulfillment processes? It’s not easy to improve supply chain efficiency, especially with all the moving parts, cost considerations, and funds required.
Still, remember that the stakes are high because customer expectations are high. The only way they’ll be satisfied is if your operations can meet their demands—the likes of fast shipping, easy returns, and more.
In this blog, we provide 6 proven tips to improve the supply chain management of your eCommerce store.
What is Supply Chain Efficiency?
Supply chain efficiency refers to the effectiveness and productivity with which goods or services move through the entire supply chain process, from raw material sourcing to the delivery of the final product to the end consumer. A supply chain involves a network of organizations, individuals, activities, information, and resources, all working together to produce and distribute goods or services.
If you do it correctly, you’re part of the 79% of companies that have supply chains that achieve greater revenue growth compared to relevant industry averages. These high-performing supply chains have 15% lower costs, under 50% of inventory holdings, and 3 times faster cash-to-cash cycles.
A well-optimized supply chain gives the following benefits:
- Cost reduction: It eliminates waste, optimizes inventory levels, and improves transportation and logistics.
- Faster lead times: Efficiency results in faster production and delivery times, which can give a company a competitive advantage in the market.
- Enhanced customer satisfaction: Faster delivery times, fewer stockouts, and consistent product availability lead to happier customers.
- Better resource utilization: By minimizing waste and excess inventory, resources such as raw materials, labor, and storage space are used more effectively.
- Improved forecasting and planning: Efficient supply chains can better anticipate demand fluctuations and adjust production and inventory accordingly.
- Increased flexibility and responsiveness: Agile supply chains can quickly adapt to changes in market conditions, demand patterns, and disruptions.
So, that leads us to the question: how can you improve your supply chain to get all these benefits?
How to Improve Supply Chain Efficiency
In the highly competitive e-commerce landscape, supply chain efficiency can be a crucial differentiator. By continuously optimizing their supply chain processes and embracing new technologies, eCommerce brands can improve customer satisfaction, reduce costs, and gain a competitive edge.
So, here are 6 tips to enhance your supply chain:
Tip #1: Expand your supply chain visibility.
Increasing supply chain visibility means having a clear view of your logistics operations at every stage.
Implementing robust inventory management strategies and using modern Inventory Management Software (IMS) can provide real-time tracking of inventory as it moves from receiving to warehousing, picking, packing, and shipping to customers.
With better visibility, you can avoid stockouts, backorders, and overpaying carrying costs.
- Example: A clothing retailer uses an inventory management system that shows real-time stock levels. When a popular item starts running low, the system automatically triggers a reorder to restock before the inventory runs out.
Tip #2: Develop a good relationship with your suppliers.
Effective communication with suppliers is crucial to ensure a smooth supply chain. By establishing strong relationships with reliable suppliers, you can plan better and avoid shortages, delays, or quality issues in the sourcing process.
- Example: A electronics manufacturer maintains a close relationship with their suppliers and regularly communicates forecasted demand to them. This helps the suppliers plan their production schedules and ensures a steady supply of electronic components.
Tip #3: Automate your supply chain processes.
Automation helps streamline supply chain operations by reducing human errors. And that saves your brand time and money. Implementing automation in tasks like order processing can increase efficiency and improve overall supply chain performance.
- Example: An online bookstore uses automated order processing and shipping systems to fulfill customer orders. When a customer places an order, the system automatically generates a picking list and shipping label, reducing the time and effort required for manual processing.
Tip #4: Implement supply chain software.
Using the right software and technology can optimize your supply chain processes and enhance efficiency. A Warehouse Management System (WMS) can help manage inventory storage, track inventory in real time, and boost productivity in order fulfillment.
- Example: A toy retailer uses a WMS to manage its warehouse operations. The system optimizes picking routes, monitors inventory levels, and provides real-time updates on order status. This helps the retailer fulfill orders faster and more accurately.
Tip #5: Cultivate supply chain experts.
Training your employees and building a skilled workforce is essential for a well-functioning supply chain. Providing training on standard operating procedures helps ensure consistency, efficiency, and accuracy in decision-making.
- Example: An eCommerce company invests in ongoing training for its warehouse staff to improve their picking and packing skills. This reduces errors and minimizes order processing time, leading to higher customer satisfaction.
Tip #5: Establish green initiatives across your supply chain.
Sustainability and eco-friendly practices are becoming increasingly important for consumers. Implementing green initiatives, such as using eco-friendly packaging or carbon offsetting, can attract environmentally conscious customers and reduce waste.
Plus, doing so makes your supply chain more efficient as well, since it’ll contribute to the general sustainability of your entire process in the long run.
- Example: A beauty product company uses biodegradable packaging materials for its products and partners with a logistics provider that offers carbon-offsetting options for shipping. This aligns with their customers’ values and reduces the company’s carbon footprint.
Tip #6: Optimize your supply chain regularly to remain efficient.
Improving supply chain efficiency is an ongoing process. Continuously analyzing performance metrics, identifying areas for improvement, and making data-driven decisions to optimize your supply chain is key if you want to outperform your competitors.
- Example: An electronics retailer reviews performance metrics such as order accuracy, fulfillment speed, and shipping costs. Based on the data analysis, they make adjustments to their warehouse layout, optimize picking processes, and expand to new fulfillment centers to improve efficiency.
Efficiency Means Better Business Operations
By integrating these proven tips into your eCommerce business, you can elevate your supply chain efficiency to new heights. The result? Increased customer satisfaction, reduced costs, and a thriving business that stands out in the competitive eCommerce landscape.
And if you can’t apply these tips yourself, it may be time to outsource logistics to 3PL warehouses.
Looking for a reliable 3PL company to work with?
At San Legend, we help eCommerce businesses scale their brands and break into new markets by providing customized, agile, and forward-thinking third-party logistics solutions. Reach out today to see how we can help.