In 1960, Jay Wright Forrester developed a supply chain simulation called The Beer Game. In this game, participants role-played retailers, wholesalers, distributors, and factories, each trying to meet customer demands for a specific beer brand. Sounds easy, right? Think again!
They came to an interesting realization: small fluctuations in customer orders triggered a tsunami of inventory problems and miscommunication. This is the infamous bullwhip effect, where minor disruptions ripple into major inefficiencies.
The Beer Game exposes the dangers of information gaps in a supply chain, where each link in the chain operates in a silo, unaware of the whole picture. It reveals the costs of poor collaboration, as independent actions lead to stockouts, increased holding costs, overstocks, and, ultimately, financial losses. It also highlights the critical role of inventory management—the delicate balance between meeting customers’ needs and avoiding costly excesses.
This exercise isn’t just fun and games; it's a call to action for retail and ecommerce brands aiming to outperform their competitors and achieve better financial results. Not only that, it boosts efficiency and customer satisfaction without increasing working capital.
Many businesses fail to see how supply chain effectiveness can be a strategic asset, and it shows. Almost 60% of businesses surveyed by Anvyl, a member of Extensiv's partner ecosystem, reported a 15% revenue loss due to supply chain delays. What does this mean? You need an efficient supply chain to improve your business.
In this article, we’ll unwrap actionable strategies for streamlining your ecommerce supply chain management. You'll also learn how to leverage supply chain management software solutions like Extensiv to stay ahead of the competition.
Ready to transform your supply chain and see these benefits in action? Let’s dive into the steps to make it happen in the next section.
5 Steps to Improve Supply Chain Efficiency
Drawing on our experience in ecommerce and logistics consulting, we've seen firsthand how strategic continuous improvements can revolutionize supply chain operations.
Follow these 5 steps to improve your brand’s supply chain efficiency:
Step 1: Assess Your Current Performance
Assessing your current performance is crucial for understanding how well your operations are functioning. It provides a baseline of key performance indicators (KPIs) and distribution metrics such as holding costs, on-time delivery, inventory levels, order accuracy, and customer satisfaction. An assessment helps identify areas of inefficiency, ensuring they’re addressed to improve overall supply chain efficiency and increase customer satisfaction.
For example, if your customers constantly complain about slow deliveries and stockouts, you can assess your overall performance to identify where the problems lie and fix them. You can achieve this by streamlining warehouse operations and investing in the right supply chain management solution to forecast demand and improve order processing. Following these steps can fast-track deliveries, increase customer satisfaction, and significantly solve other supply chain inefficiencies.
Step 2: Use the Right Technology
To streamline supply chain operations, your business needs the right supply chain technology. Extensiv's integrated, cloud-based warehouse management, order management, and inventory management solutions improve supply chain efficiency, accuracy, and real-time supply chain visibility. By using Extensiv's solutions, businesses can track and fulfill orders better while preventing warehouse overflow.
Step 3: Optimize Inventory Management
Effective inventory management helps brands reduce overstock and high holding costs, which ultimately chip away at the bottom line. This ensures products are available when needed without incurring extra operational costs. For example, adopting a just in time (JIT) inventory system can streamline inventory flow, reducing the time products spend in storage and improving cash flow.
Additionally, applying inventory management techniques such as First-In First-Out (FIFO) ensures that the first products to arrive are the first to leave. This helps avoid spoilage for perishable goods and reduces obsolescence for products with expiration dates.
Step 4: Maintain Great Vendor Relationships
Building lasting relationships with your suppliers, distributors, and partners like third-party logistics (3PL) providers is crucial for ensuring supply chain effectiveness. A best practice is to cultivate great relationships with a few qualified suppliers instead of relying on just one or too many. This concentrated approach allows greater leverage in negotiating better prices based on volume. This aligns with the Pareto Principle (80/20 rule), which suggests that roughly 20% of suppliers often contribute to 80% of a company's procurement value.
It’s also important to maintain clear and regular communication to ensure everyone is on the same page and reduce misunderstandings. Investing in relationships through face-to-face meetings and vendor appreciation strengthens these bonds. Don’t forget to regularly monitor performance and provide feedback that drives continuous improvement.
Step 5: Improve Logistics & Distribution
Efficient logistics and distribution are critical for timely delivery and customer satisfaction. Want to nail your logistics game? Focus on route optimization, cross-docking, and buddying up with some top-notch 3PLs. These practices help simplify the logistics and transportation management processes and can improve delivery times, enhancing overall supply chain responsiveness.
In today's complex logistics environment, no solution operates in isolation. Extensiv's platform boasts extensive integration capabilities, allowing you to smoothly integrate all systems and software in your ecommerce technology stack. This connectivity provides a holistic view of your operations and ensures data uniformity, enhancing the effectiveness of your real-time logistics management.
When you start implementing these strategies, your brand can achieve a responsive and agile supply chain equipped to meet the demands of modern commerce and exceed customer expectations.
How the Right Software Streamlines Your Supply Chain
Retailers aiming to improve their overall supply chain efficiency should decide on the right supply chain management software that’s ideal for them. The ideal software, or mix of systems that work together to make up your technology stack, should be packed with features that automate, streamline, and optimize different processes in the supply chain.
Here are some notable software options that help real-world businesses optimize their supply chains:
Warehouse Management Systems
Warehouse management system (WMS) software offers essential features like real-time inventory tracking, automated order picking, and stock replenishment alerts. These features facilitate warehousing operations, enhance accuracy, and ensure timely inventory management.
Extensiv’s warehouse management offering for brands tackling their own fulfillment in-house provides a complete solution for managing every SKU in your inventory across multiple warehouses.
Inventory Management Systems
Advanced inventory management is a crucial feature of an efficient supply chain. It lets brands maintain optimal stock levels, reduce carrying costs, and prevent stockouts. By providing real-time visibility into inventory across multiple locations, inventory management software (IMS) allows businesses to better forecast demand, manage reorder points, and streamline procurement processes.
Automated stock replenishment and inventory tracking reduce human errors and ensure that products are available when and where they’re needed. This proactive approach enhances operational efficiency, minimizes delays, and supports a responsive supply chain capable of meeting customer demands promptly and accurately.
Order Management Systems
Seamless order management is a crucial feature for an efficient supply chain as it streamlines the entire process from order receipt to fulfillment. By automating routine tasks, tracking inventory in real-time, and integrating shipping with order management system (OMS) software, businesses can significantly reduce errors, enhance accuracy, and improve order fulfillment times.
Centralized insights and visibility across sales channels and fulfillment networks enable proactive decision-making and demand forecasting, ensuring that customer expectations are met consistently. Extensiv's order management solution provides unparalleled visibility and control across all sales and fulfillment channels. It allows businesses to automate order management, control inventory, and replenish stock with ease. Businesses can also track and integrate shipping with Extensiv's order management solution.
Robust System Integrations
Whether you’re connecting your ecommerce store with your warehouse or syncing accounting software with your order management system, integration eliminates data silos and enhances operational efficiency.
Businesses that use Extensiv Integration Manager benefit from integrating all their operations into one comprehensive platform. Extensiv lets you automate all your ecommerce and fulfillment technology seamlessly, providing clear visibility into your inventory and sales while offering unparalleled insights.
Read a highlight from a review on G2 by a verified user below:
[Extensiv Integration Manager's] automation capabilities are extremely helpful for any team that needs to be able to prioritize other tasks that require more attention. It's helping our team/company automate very simple but previously very manual processes for our team."
Supply Chain Management Platforms
Integrated supply chain management (SCM) platforms are comprehensive systems designed to manage and optimize all aspects of the supply chain. These platforms have features like end-to-end visibility, real-time data integration, and customizable dashboards.
Customizable dashboards provide real-time insights into performance metrics, enabling proactive adjustments and optimized supply chain performance. Automation of tasks further streamlined operations, and collaboration tools facilitated better communication among supply chain partners.
They also consolidate functions such as procurement, production, inventory management, order fulfillment, logistics, and sales into a single platform, providing a unified view of the entire supply chain.
Improve Your Supply Chain Efficiency with Extensiv
Extensiv's solutions have played a crucial role in helping businesses achieve significant improvements in supply chain efficiency. Extensiv’s comprehensive suite of software has robust features that address various aspects of supply chain management, enabling businesses to automate management processes, enhance visibility, and make data-driven decisions.
Extensiv’s integrated order and warehouse management solutions have helped companies streamline warehouse and logistics operations, achieving speedy deliveries at lower costs. Demand forecasting and supply chain planning tools have empowered businesses to maintain optimal inventory levels, reducing stockout costs and excess inventory. Supplier management features have fostered stronger supplier relationships, ensuring reliability and consistent supply quality.
Don't just take our word for it; read what Michael Smith, Senior Director of Supply Chain at Netrush, has to say about our solutions:
"Extensiv supports our growth and allows us to move at the pace we need to. So many of our routine tasks are now turnkey and automated."
This sentiment is echoed by other businesses that have leveraged Extensiv’s solutions to achieve remarkable gains in efficiency and customer satisfaction.
Ready to take your supply chain to the next level? Let Extensiv be your guide! Request a demo today to see the magic in action!
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