Supply Chain Operations: Strategies for Efficiency
The number of supply chain disruptions globally is on the rise! A recent survey reveals that more than three-quarters of businesses experienced some kind of issue during the past year. These disruptions are an economic hardship that can cost companies around the world an average of 184 million US dollars yearly, according to research done in 2021. [1]
So, there is an urgent need for firms, especially eCommerce retailers, to develop ways to improve their operations and boost efficiency.
Reports show that enterprises with optimised supply operations can lower costs by 15% [2], reduce risk, grow profits, satisfy buyers and improve product quality. However, most online retailers find it difficult to walk their way through this tough process.
At Bezos, we have extensive experience helping organisations, small or large, to manage their eCommerce fulfilment needs, and that is why we have written this article to provide top strategies on how to boost supply chain operations and increase efficiency.
What Are Supply Chain Operations?
Supply chain operations are the interconnected activities and procedures that work together to transport raw materials to the manufacturers for production, processed products to the warehouse, and finally to the end customers when an order is placed.
One typical example of this in action is Supply Chain by Amazon. The process begins when the Amazon team picks up the inventory from the manufacturers and ships it across borders. The team handles the customs clearance (the buyer pays the duty fees) and ground transportation, stores the inventory in bulk, handles replenishment across the site and other sales channels and sends the package through Fulfilment by Amazon (FBA) to the consumers.
Components of Supply Chain Operations
These operations include at least seven processes that function in sequence.
- Demand planning: This is a crucial part of the supply chain and involves forecasting customers' demands for each product to make sure that you have enough inventory to meet their needs for a certain period.
- Purchasing: It comprises all the activities related to procuring the raw materials that would be used in production. The team will be tasked with evaluating and sourcing suppliers, negotiating prices, and finalising purchase agreements.
- Production/Manufacturing: At this stage, the raw materials will be turned into the desired finished product. Some online sellers make their goods, while others get them from 3rd party manufacturers.
- Inventory management: It begins with counting the merchandise delivered by the manufacturers to make sure that they are the right items and in the right quantity. Also, the goods are conserved orderly so that pickers can find what they need quickly.
- Fulfilment: The store activates this stage when a buyer makes a purchase. Orders are processed, confirmed, packaged in boxes and set aside to be sent to consumers at the distribution centre.
- Delivery: Here, the package is shipped from the warehouse to purchasers through last-mile carriers. The company may employ software to track and provide real-time updates on the location of the parcel.
- Customer service: This function involves providing support to the shoppers before they receive their package in the form of periodic updates and includes assisting them with complaints, replacements, returns and refunds after obtaining the items.
10 Top Strategies for Ensuring Supply Chain Operations Efficiency
Attaining efficiency is about how well an online retailer gets its goods to the buyer in a timely manner and at the lowest possible cost. This is important because achieving excellence in this area will save the enterprise money and keep buyers satisfied with the services.
Let's consider some tips on how businesses can manage their supply chain efficiently:
1. Create a Detailed Risk Management Plan
Managing risk in the supply chain involves a systematic process to identify and assess the impact of hazards on operations and develop strategies to mitigate them. These threats can be issues with suppliers, carriers, retailers, and manufacturers that can affect the successful delivery of goods to end users.
They can be problems such as quality concerns, legal liabilities and reputational damage. To create a plan, you have to document any known risk and their impact and create a contingency plan for those with severe consequences.
Also, assign employees to monitor specific threats and implement contingency plans when necessary. Doing this will serve as the foundation for achieving efficiency in your operations.
2. Increase Supply Chain Visibility
Research conducted by JDA, Incisive and Microsoft in 2019 reveals that 78% of C-level executives do not have up-to-date visibility into their supply chain operations despite plans to invest in automation and intelligence initiatives. [3]
This lack of insight has led to issues that can damage an enterprise's reputation. Visibility is necessary if you want to fully understand the whole process and ensure that no cost inefficiencies occur or go unmanaged.
The best way to achieve visibility is to implement strategies that allow you and your team to track inventory levels as products pass various stages of the procurement and delivery process. Modern inventory management systems are essential tools that can provide insight so you can avoid over-stocking, stockouts and backorders.
3. Use Advanced Technology to Automate the Processes
Most eCommerce retailers make use of several systems to control their operations. From basic software such as Excel spreadsheets to complex applications that are integrated with enterprise resource planning (ERP) systems, these technologies assist in making the supply chain efficient.
Also, it makes it easy for you to redirect human time and effort away from time-consuming tasks and channel them toward those that are necessary. For example, duties such as processing orders, assigning picking slots and paying out invoices are extremely time-consuming, leading to inefficiencies.
Automating them with technology makes the whole process quicker and decreases the chances of making mistakes. Some companies employ the use of Robotic Process Automation (RPA), which transforms functions by automating the repetitive jobs of sorting, packing, and storing goods in a warehouse.
Enterprises that manage warehouses across various locations might contemplate using a warehouse management system (WMS) to help with inventory tracking, data reporting, and analytics.
Aside from that, for efficient eCommerce logistics, firms can use trucking dispatch software to help track trucking routes, monitor the condition of delivery vehicles and simplify scheduling activities. CRM platforms also come in handy as they help keep track of buyers and suppliers and streamline communication between them.
Big corporations with lots of investment have developed their systems and tools to help with this process. However, since technology can be pricey, some retailers rely on tech-driven 3PLs or fulfilment service providers that have invested in automation to optimise their supply chain.
4. Diversify Suppliers to Avoid Delays
Diversifying your supplier base means getting your products from various manufacturers instead of depending on one or a few. This strategy can include obtaining goods from producers in different regions, countries and industries.
By collaborating with several suppliers, businesses can easily navigate potential disruptions such as natural disasters, labour strikes, political instability or quality issues that disrupt the supply chain. Also, they can avoid losing their main manufacturer due to bankruptcy or termination of contracts.
In addition, sourcing your products from various manufacturers increases your bargaining power to negotiate better prices and terms. Aside from that, you can also benefit from different cost structures, tax regimes and exchange rates.
When you work with dealers close to your buyers or market, you can reduce the distance and time needed for transportation and save freight costs, lower your carbon footprint and increase your speed to market.
5. Manage Documents in One Place
There are several documents that facilitate the movement of merchandise from one stage of the supply chain to the other. These documents often suffer from inconsistencies, misalignment of processes, and disconnect due to siloed functions and departments, which can create confusion and inconsistent processes.
Investing in a solution that can help address purchase orders, custom paperwork, bills of lading, inspection reports, and other documentation will help. This solution will serve as a centralised hub and a comprehensive source for decision-makers to address and review the firm's activities and provide clarity over end-to-end processes while eliminating disparate document management.
6. Spell out Who Is Responsible for What Within Your Organisation
To reduce the reputational and financial damage that can occur as a result of disruptions, eCommerce businesses must appoint a leader and provide the necessary tools to enable them to take control and resolve problems.
It is paramount that this individual is held accountable and is able to provide recommendations and lead the charge in addressing issues as they occur.
When businesses establish clear procedures for each stage and assign roles and responsibilities, they limit the risk of failure because there is someone in place to rectify the situation as quickly as possible.
7. Make Sure Team Members Are on the Same Page
The supply chain is divided into various parts such that if appropriate steps are not taken to integrate them, the teams will operate in silos. This can lead to information gaps, slow or no communication, and increased chances of errors because of a lack of cooperation.
So, for efficiency, the strategy would be to align everyone involved in the process. This would be possible if the company had already assigned a leader to oversee the whole process.
The manager would develop standardised strategies and make sure everyone is on board. Once that is done, the group will follow the procedures and make adjustments as necessary to ensure consistent operations.
8. Train Your Team
It is one thing to have technologies to optimise the supply chain process and another to have trained personnel that can operate those systems. This skill shortage can affect efficiency drastically.
That is why companies must close this skill gap by finding talents with the required knowledge and experience. It is also necessary to provide career development opportunities for new employees to bolster their skill sets and help retain talents.
9. Set up and Track Metrics
The leader who oversees the supply chain needs to set specific parameters or key performance indicators (KPIs) by which they can assess performance. These KPIs enable organisations to pinpoint and analyse strengths and inefficiencies in the systems to enable data-supported goals.
Some of these metrics include:
- Perfect order rate: This assesses the firm's capability to deliver orders error-free. It evaluates the arrival time of the order, how intact the package is and whether it contains the right items. A flawless order rate has one of the biggest impacts on the bottom line, as it affects customer satisfaction.
- Inventory velocity: This metric enables managers to optimise inventory levels by showing them how fast items need to be restocked. It is calculated by dividing the inventory count at the start of the sale period by the sales forecast. With this metric, the company can avoid over-stocking.
- Warehousing costs: ECommerce businesses that want to establish a financially efficient supply chain need this metric. It evaluates all expenses related to warehouse operations and management, such as rent, utilities, labour, and equipment. Leaders must review this KPI frequently and make adjustments as necessary.
- Inventory-to-sale ratio: This KPI considers the amount of stock available for sale compared to how much has been sold and assists the firm in avoiding over or under-stocking.
When these metrics are set up correctly, it would be easier for managers to assess whether they are performing at optimum or underperforming.
10. Enhance the Order-To-Pay Process
The order-to-pay process encompasses all the steps involved in getting the goods. It involves several departments within the firm, such as finance, warehouse, logistics and sales, all of which may be using different software systems to perform their tasks.
Fragmented operations such as this can cause challenges, including data discrepancy, misalignment and lack of responsiveness. To address this, an eCommerce retailer might adopt a unified platform that streamlines the entire operation.
Every aspect, from vendor management to the issuance of purchase orders, delivery and final payment recording, must be centralised to improve visibility across the entire cycle.
Achieve Supply Chain Efficiency With Bezos
If you desire to deliver your customer's orders to their doorstep hitch-free, you need to partner with the best fulfilment service provider in the industry. No need to look further; Bezos is here to take the pain out of the eCommerce supply chain. We help you succeed because we treat your business like it is ours.
At Bezos, we store, organise and ship your inventory quickly and safely. This ensures that the supply chain moves freely, eliminates delays and boosts efficiency. Our facilities are large enough to hold your products no matter the size of your company, ensuring that you have the time and the means to scale up efficiently.
Partnering with us gives you access to one of the largest networks of fulfilment warehouses in the UK, enabling your firm to benefit from an advanced eCommerce warehouse management system.
Is your business in the US or the EU? No worries, our global fulfilment is tailored for companies in Germany, the Netherlands, the US and 12 other countries.
Looking to expand your business? You can scale your customer base by using our fulfilment services to sell your products in new countries. And if you are struggling to integrate your eCommerce platform with your provider, you won't have that problem with Bezos.
From eBay to Amazon, Etsy, Shopify, and Magento, we provide easy integration that makes it easy to process orders seamlessly and efficiently. Partner with a fulfilment service provider that makes your eCommerce supply chain as efficient as it should be. Contact our team today.
Frequently Asked Questions
What are the types of operations in the supply chain?
Some of the operations include procurement, getting raw materials; logistics, moving goods from suppliers to producers, distribution centres and buyers; inventory management, ordering and storing items in warehouses; and customer service, answering shoppers' requests about delivery time and initiating returns.
What is supply chain management?
This includes the design, planning, execution, control and monitoring of all supply chain activities. It encompasses the manufacturing process and the delivery of goods to warehouses and customers.
What is the difference between logistics and supply chain operations?
Logistics deals with the efficient and cost-effective delivery of products to the buyers. In comparison, supply chain management focuses on the whole process from sourcing goods to production, warehousing and delivery to the end user.
