Business efficiency at all operational levels is critical for the success of e-commerce. Supply chain management is an essential component of e-commerce. Supply chain management in e-commerce focusses on procurement of raw material, manufacturing, and distribution of the right product at the right time. It includes managing supply and demand, warehousing, inventory tracking, order entry, order management, distribution and delivery to the customer.
Supply Chain and Logistics Process in E-commerce Industry
It is not all about selling products online, e-commerce means a lot more than that.
Product configuration, appropriate infrastructure, logistics, secured payment gateway, and supply chain management is all kept into consideration. Customer expectations is met when an efficient supply chain accelerates e-commerce processes.
Necessary components that form the Supply Chain and Logistics Processes of E-commerce Industry are:
1.Inventory Management: A critical component of every supply chain management. As per the risk-pooling strategy, unlike the traditional inventory model, e-commerce businesses do not hold their own inventory and rather outsource their inventory to a larger wholesaler. Thereby reducing risk for e-commerce businesses for keeping their own inventory.
Many businesses are accepting the drop-shipping model for their inventory. As per the model, a store does not hold the product it sells on the website, but instead it purchases the product from a third-party and ships it to the customer.
2.Reverse Logistics: Reverse logistics is planning and execution of the movement of goods from the point of consumption to the point of origin. Practically all e-commerce businesses provide the facility of exchange and returns. This enhances the need for logistics.
3. Product Availability and Service Level: Success also depends upon customer satisfaction. To retain the customers they need to get the right product at the right time, or else they switch to other e-commerce stores. A service level should ideally be 95% of products for e-commerce success. Delivery process has to be fast to avoid the risk of losing potential customers.
Processes are required to be well-coordinated and optimized right from inventory to logistics and purchase to supplier management.
4.Customer Reviews: Customer reviews and experiences are important and to be kept into consideration. A critical factor that impacts the growth of an online store. Price comparison search engines are usually the first point of contact for online shoppers. The search engine ranking is also done based on customer reviews. To receive good reviews, the delivery of the right product at the right time is necessary.
5.Excess Inventory Increases Costs: Increasing inventory drastically is a most common mistake e-commerce businesses commit to meet the demands of customers. Inventory represents a significant portion of the total investment of e-commerce businesses. Excess inventory can mutate into obsolete stock (dead capital) which can lead to increased costs.
6.Supply Chain Management in E-commerce: E-commerce is about selling and buying goods over the internet and the movement of goods between two parties. The dispatch of right quantity products at the right time to the right person is essential and hence efficient supply chain is required. A quick, uninterrupted and secure supply chain is a critical aspect of the e-commerce business. Efficient supply chain management in e-commerce can reduce costs and enhance cash utilization. When a customer purchases a product from an e-commerce website, he/she wants the product in a short time. New e-commerce websites are evolving every day. But, customers prefer only those sites that have an efficient supply chain to deliver the right products at the right time.
Reduction of costs, global trading and enhanced customer satisfaction are some of the benefits of supply chain management in E-commerce.