In this increasing competition, companies that use linear and sequential supply chains cannot keep up with their competitors.
According to the CEO of Sourcify, “most of the eCommerce stores out there in the market struggle with their supply chains”.
In every industry on every platform, supply chain is the backbone of the company.
As that is said, there are three main foundations of the supply chain management:
- Cost
- Quality
- Tenure of the process (Lead times)
Considering the price aspect of any major business, there can be areas where capital is spent more than necessary.
If you really want to cut the costs and improve quality and lead times, delve deeper into supply chains. By understanding, who produces all these products for your business.
For an instance, smaller businesses who deal with overseas companies usually have assembly factories as their suppliers.
These are the biggest mistakes companies do.
They don’t manage the dynamics between overseas sourcing, inventory levels and marketing.
Cutting Inventory Costs
Calculate the total inventory cost (TIC) and break down the value into ordering costs, shortage costs and carrying costs.
After breaking down the costs, you will exactly know which ares of the cost framework needs improvements.
However, one of the best ways to cut costs is by manufacturing the product overseas.
To do that, you should know every piece that goes into manufacturing your product.
For example, if it is a shoe product… you should know what kind of materials are being used to blend, different types of sizes that are being made, the designs and the logo print, types of shoes (like platforms, wedges or casuals).
Further, you need to keep contact with the production factories.
They suggest methods for you to set margins and to increase the supply chains.
Working with Factories
Sometimes, factories start selling their products directly to the customers. This is the worst nightmare any eCommerce company could ever face.
Hence, the companies try to keep up with the factories.
However, most of the times they find it difficult to engage with the factories to produce their product.
The key to increasing production in a very short time is to explain your requirements very clearly and precisely. Sooner the factories understand your vision, sooner you receive your outcome.
Control Your Quality
What if your products don’t have enough quality to be sold? You will have to send them back to the factory for re-manufacturing.
This process might as well cause a huge loss to your business.
Quality issues can further lead to many other problems like shipping, customer dissatisfaction and loss of revenue.
To prevent all these to happen, choose your suppliers wisely. Jot down all the requirements you need in the quality assurance and make sure the suppliers will be able to meet your needs.
Even after choosing your suppliers, don’t evacuate yourself from the production processes.
Always ask for samples.
Samples decide if the product is meeting your quality requirements or not. Give feedback on those samples to try and make them better.
Also, if you could observe the whole factory process, it might prove to be even more beneficial since you can make sure all the protocols in the quality assurance are taken care of.
Channeling Your Sales
This mostly deals with expanding your purview on the sales: like, if you are retailer, become a wholesaler.
If you decide to transform into a wholesaler, it can be smooth in some ares like market and product knowledge, and customer base.
But however, you need to keep in mind all the challenges that come with it: scaling, sourcing and gaining customers for the wholesale market.
These challenges can be overcome easily, especially while considering the fact that this channel could bring a lot of potential profits.
Warehouse Logistics
The last part of supply chain is the shipping process.
One of the most efficient ways to handle a warehouse working is to organize a plan.
You should make sure all your products are organized in such a way that your employees won’t be confused or waste time in searching for items to pick.
After picking the orders, make sure your packing stations are placed conveniently. Preferably, at the end of all the picking stations.
And later during shipping process, check whether all the shipping labels are clear and detailed enough to leave the warehouse.
These concepts may seem the most basic and obvious actions in the supply chain but they are mostly time consuming processes.
They can also impose big revenue if the whole process becomes inefficient. Hence, generate a layout of all the shipping processes to make them cost efficient.
Final Word
Supply chain is the most complex process of an eCommerce business. One wrong move and they can infer a lot of unwanted costs and are time consuming.
Keep direct contacts with the factories. They can have a better understanding of your requirements if you meet the face-to-face.
Also, use multiple ways for communication: Email, messaging apps, or even phone calls. This will help if the factories are located overseas or miles away.
The key is to optimize your supply chain by monitoring department by department, to make sure if everything was in place before shipping it off onto the market.
