In today’s modern world, Ecommerce plays a vital role in buying products online. Its amazing features attract a lot of customers to the marketplace. Ecommerce involves numerous processes to ensure that goods are prepared and delivered properly. But for this, you need a system that enables you to manage the process of manufacturing to delivery to the customer.
Here, Supply Chain Management comes into the scene. In this blog, we are going to explore Supply Chain Management, its working, benefits and more about it. We will also understand how Elsner provides services to its customers with this amazing technology.
An Insight into Ecommerce Supply Chain Management
Before moving towards Supply Chain Management, first, we should know the supply chain. The supply chain involves the complete process required to bring a product from its raw material stage through production, distribution, and ultimately to the end customer. It includes sourcing materials, manufacturing, transportation, storage and delivery logistics, all to meet customer demand efficiently and effectively.
Supply Chain Management is also known as the backbone of Ecommerce. Supply Chain Management is the process of managing the flow of goods from suppliers to customers. SCM adequately ensures that the product is finished and delivered to the customer. It is the process of taking goods from one place to another.
Let’s say, supplying goods from the warehouse to customers. Supply Chain Management includes manufacturer, retailer, logistics, supplier, distributor and customer. It makes the processes of Ecommerce more efficient. SCM involves coordinating and integrating activities of different entities in the supply chain, some of them are suppliers, wholesalers, customers, and retailers to make sure that every process works smoothly.
Exploring the necessity of supply chain management
Supply Chain Management is important in Ecommerce as it encompasses the coordination of activities involved in producing and delivering products to the customers. It is responsible for managing every process from raw materials to distributing finished products. SCM provides efficiency in the following factors:
- Cost Reduction – The efficiency in supply chain management could lead to cost savings. Its streamlined processes, optimized inventory levels and reduced waste helps in saving cost.
- Customer Satisfaction – A well-managed system can provide quality products to the customers. SCM results in on-time delivery, reduced costs, good quality products and efficient customer service which intends customer satisfaction.
- Risk Mitigation – As SCM manages the flow of all the processes until the product is finished and delivered to the customer, it also ensures risks for the product. SCM has different strategies like risk assessment for risk mitigation.
- Competitive Advantage – Supply Chain Management’s efficiency and robustness provide major benefits to businesses, it also increases the value of businesses in the marketplace.
Decoding the Inner Workings of Ecommerce Supply Chains
To understand SCM in more detail, it will be beneficial to understand its working as well. Its working consists of various stages, they are:
- Sourcing and Procurement – Ecommerce has the source of products from various suppliers and different places in the world. SCM has its significance in managing suppliers, prices and many more.
- Inventory Management – It is important to manage inventory in order to avoid situations like out-of-stock or over-stock. To avoid these kinds of situations forecasting demand and implementing systems to track and manage inventory in real-time is done.
- Order processing – When the customer places an order, it has to be efficiently processed by the company. This involves various tasks such as order verification, payment processing and fulfillment of orders.
- Warehouse and Distribution – To store inventory, companies use warehouses in which they can store the products. The storage is done according to the feasibility of the delivery location. The warehouse is located at the places from which delivery can be done efficiently.
- Order shipping – The Ecommerce company should select an efficient shipping method. If any third party is required then it is needed to choose wisely according to feasibility. Proper tracking of the order is done when it is shipped.
- Technology information and integration – In SCM and Ecommerce, technology plays a very important role. Everything is highly dependent upon technology. Different integrations are done like shipping and tracking to ensure the proper functioning of the system.
- Return management and customer service – Supply Chain Management manages the returns and also provides services to customers such as customer inquiries, issues related to order shipping and other customer services.
Supply Chain Management Stats in Ecommerce
Here are some statistics for SCM in Ecommerce according to the Gartner website:
- The Supply Chain Management software revenue grew 9.3% in 2022, faster than most other application software markets, exceeding $ 24.7 billion.
- The growth rate in constant-U.S.-dollar terms (base 2020) was 14.7%, which was double that of the previous year, indicating much higher growth in investments.
- In North America, the SCM revenue accounts for 52% of the market and grew nearly twice as fast as the global SCM market, growing at 17.2% over the previous year.
What are the benefits of SCM in Ecommerce?
Supply Chain Management provides many benefits to Ecommerce and its businesses. Some of the benefits are mentioned below:
- Enhanced efficiency – SCM makes the process of product manufacturing delivery fast and robust. It increases the efficiency of the processes of Ecommerce such as manufacturing, retailing, supplying and delivery.
- Improved customer satisfaction – It has improved customer satisfaction by providing benefits to customers and also resolving their issues.
- Reduced Cost – SCM makes the process and the flow efficient, it reduces the cost. Also, warehouse management, shipping and customer services are reflected in the reduction of the cost.
- Global reach – With the help of supply chain management, it has become easier to manage the trade of logistics around the world. SCM gives benefits to companies to expand their business in every country.
- Inventory Optimizations – SCM helps Ecommerce businesses in inventory management with features like forecasting customer demand, avoiding overstocking and reducing costs.
- Return logistics – SCM also manages and provides benefits in return orders. SCM helps Ecommerce companies to resolve issues of the customer related to the order.
- Reducing risks – Supply chain management reduces the risks in the process such as in manufacturing, producing products, delivering the product to the customer and others.
SCM Risks and Compliance in Ecommerce
In the evolving field of Ecommerce, there are benefits but a few disadvantages as well. The marketplace is growing rapidly, which leads to a lot of changes to make in the businesses which are involved in Ecommerce. This also affects SCM, as it is quite difficult to handle the changes frequently and every requirement is complicated to find the solution for. There are many challenges such as:
- Inventory management – It is difficult to manage inventory because it is necessary to keep the stocks which are in high demand. If there is a failure in storing accurate stocks then it can lead to loss in the business. Technology can be used to maintain accuracy to avoid out-of-stock and overstock conditions.
- Match-up with demand – In supply chain management, it is crucial to accurately predict and meet the growing needs of our customers. While it can be challenging to satisfy their diverse expectations, there are effective methods to achieve this. One approach is to optimize our delivery timelines, ensuring prompt and reliable service. By doing so, we can enhance customer satisfaction and strengthen our relationships with them.
- Cost-effective and fast delivery – This is again a challenge for SCM, as to ensure fast delivery with reduced cost is not an easy task in this costly world. But for this, a solution is just-in-time delivery models in which only the order quantity is manufactured which saves the cost.
- Returns and replacement – In buying products online, there are some risks like what if the product is not the same as the customer assumed or the product is defective? This is a major issue in Ecommerce which needs to be focused on. SCM works on this and tries its best to avoid this situation.
Conclusion
In Ecommerce, which is leading in today’s generation of technology advancement, Supply Chain Management plays an important role. Not only is it an amazing option to go with but it is also the necessity of Ecommerce as through SCM, Ecommerce companies can easily manage their business processes and flow. It makes the process of manufacturing, finishing and supplying efficient. Its features provide benefits to Ecommerce companies and are helpful in expanding their businesses more and more around the world. It also helps to give customers a level of satisfaction with its amazing customer service.
Elsner Technologies, which is known for its Ecommerce services uses supply chain management to provide services to its customers efficiently and effectively. With the help of SCM, Elsner is able to meet the requirements of the customers. It provides major benefits in managing order processing, customer satisfaction, cost reduction, feasible shipping, etc. As Elsner Technologies helps to grow different businesses with Ecommerce, Supply Chain Management can be the best option for helping businesses expand all over the world and establish their value in the marketplace. Elsner Technologies provides services to different regions of the world and SCM also provides benefits to make it possible.
As discussed above about Supply Chain Management in Ecommerce, we can conclude that Ecommerce will grow and expand in the future and SCM is part of it so it also has a bright future in this and upcoming generation. Businesses that unlock the power of SCM and invest in it could be able to grow faster than other businesses.
