The ecommerce supply chain encompasses a variety of moving parts that all work together to complete the fulfillment and delivery of customer orders. Without a doubt, the efficiency of your supply chain management (SCM) is a determining factor in your company’s growth and longevity. However, building a strategic (and functional) supply chain takes a solid understanding of the individual stages and key metrics that define and measure this process from start to finish.
In the following article, we’ll take a deeper look at exactly that: the six stages of the modern ecommerce global supply chain, the most important metrics for you to track, and how to design the most effective supply chain for your unique business model.
What is the ecommerce supply chain?
The ecommerce supply chain comprises a series of logistics management processes, including procuring raw materials, manufacturing finished products, warehousing, fulfillment, inventory management, and last-mile delivery. In addition, an ecommerce supply chain typically oversees supply and demand, inventory tracking, and various distribution schedules.
The primary goal of ecommerce supply chain management is to ensure quality products and consistent product offerings, maximize inventory investments, and guarantee customer satisfaction with every order.
Top Ecommerce Supply Chain Metrics
It’s next to impossible to understand how well your supply chain is performing (and where you have room to improve) if you’re not actively tracking critical metrics, key performance indicators (KPIs), or supply chain analytics. That said, your business's most valuable metrics can be divided into three distinct categories: diagnostic metrics, predictive metrics, and prescriptive metrics.
Diagnostic Metrics
Diagnostic metrics are used to analyze supply chain issues and ‘diagnose’ the cause behind these concerns. Essentially, they catalog supply chain challenges and events to evaluate why something happened and inform where improvements can (and should) be made. Implementing diagnostic metrics often includes processes like customer surveys, data mining and/or data discovery.
Predictive Metrics
Predictive metrics help forecast what’s likely to occur within your supply chain in the future. More specifically, they feed historical data into a machine learning (ML) model to examine key trends and buying patterns. This information is then applied to current inventory data to help determine what’ll happen next, like a surge in sales following a new product marketing campaign.
Prescriptive Metrics
Prescriptive metrics recommend specific actions your business can take to affect its predictive outcomes. Once you have an idea of future happenings within your supply chain, prescriptive metrics can easily suggest a course of action to navigate these events. If you anticipate an increase in sales, these metrics ensure you have enough stock to meet demand.
How to Design an Effective Ecommerce Supply Chain
When establishing an effective ecommerce supply chain, you can use several actionable tips to ramp up your ongoing operations management. Among the most useful and accessible strategies are lowering shipping costs and delivery time, reorganizing your existing warehouse space, and implementing advanced software solutions.
Examine Your Current Supply Chain
Whether you have a single sales channel or are an experienced omnichannel retailer, there’s a good chance your company would benefit from reevaluating its supply chain strategies. In doing so, you can uncover workflow issues to determine which of your vendors are causing bottlenecks or product delays. Look for flaws in your fulfillment activities or for areas of congestion that, when cleared, could enhance your supply chain as a whole.
Lower Your Shipping Costs and Delivery Times
The reality of modern ecommerce is that customers expect lightning-fast delivery times, on par with Amazon’s Prime delivery. One of the best ways to meet (and even exceed) customers’ expectations is by lowering your shipping costs and subsequent delivery windows. Remember that if you offer free shipping, lower freight rates will boost your profit margins; if customers pay for shipping, however, they’re more apt to give positive feedback when those costs are low. Also, providing multiple service-level options to your customers gives them the flexibility that they desire, which lifts conversion rates and customer satisfaction scores.
Better Manage Your Workforce
The majority of fulfillment centers around the world still rely on manual labor, which can get pretty expensive as your company continues to grow. If you can't secure a favorable ROI through automation, the next best thing is to manage your employees more effectively. With the help of productivity benchmarks and improved time management, you can create a better-managed workforce that will lower your cost per order (CPO) and increase your order fill rate. Brick-and-mortar retailers can maximize in-store labor and inventory by having stores ship orders when footfall is slow, maximizing inventory turnover across the business.
Reorganize Your Existing Warehouse Space
Moving to a larger warehouse facility is not always practical nor possible for small businesses or up-and-coming brands. Instead of scoping out more square footage, you can reorganize your existing warehouse space to become more functional and profitable. By reimagining the layout of your distribution center, you can address inefficiencies related to storage capacity and improve efficiency by reducing footsteps and inventory movement so your ecommerce supply chain flows freely.
Increase the Number of Simultaneously Picked Orders
Order picking is the first step in the order fulfillment process and involves retrieving products from their respective warehouses and inventory locations. Accurate order picking is paramount to the success of the ensuing fulfillment stages, from packing to shipping to post-sales activity. If your brand can increase its cumulative picked orders, it’ll translate to faster shipment and an elevated customer experience (which is the key to driving revenue in the short and long term).
Use Technology to Decrease Processing Time
Barcode technology has essentially revolutionized the way warehouse logistics operate. Barcode scanners and labels allow ecommerce stores to track the who, what, and when of all warehouse activities, which increases accuracy to a notable degree. On top of that, utilizing barcodes decreases the processing time for receiving, replenishment, returns, and more — all of which adds up to a more efficient (and effective) ecommerce supply chain.
Partner with a 3PL Provider
If your store doesn’t have the funds or capacity to manage its own fulfillment center, you might benefit from teaming up with a third-party logistics (3PL) provider. While this strategy may not be appropriate for every brand, certain ecommerce companies can benefit greatly from partnering with a 3PL. Entering into this kind of relationship can regulate all the moving parts of your supply chain and connect your business to a large supply chain network of fulfillment locations. It will likely provide access to a team of experts who will help your business gain internal knowledge and access to best practices and growth.
Implement Advanced Software Solutions
Advanced software solutions—like an enterprise resource planning (ERP) platform or an order management system (OMS)—can transform your ecommerce supply chain in a major way. Not only do inventory and order management systems offer automation to streamline and synchronize your operational tasks, but they directly contribute to cost savings as well. Moreover, inventory management software (IMS) delivers around-the-clock data analysis to help you maintain inventory control and optimize your reordering process.
Enhance Your Customer Communications
Providing consistent communication throughout the entire customer journey, from order placement, processing, shipping, and expected delivery date to out-for-delivery and delivered packages through email, SMS, or in-app notification can reduce customer contact costs by significantly reducing inquiries while elevating customer satisfaction rates.
Improve Your Supply Chain Management with Extensiv
Extensiv’s solution for brands is an all-in-one platform designed specifically for the needs of modern online merchants. The Extensiv system is renowned for its ability to unify, automate, and grow your business in this new age of retail so your store can deftly handle all its incoming orders, synchronize orders across channels, and cost-effectively upgrade its supply chain management.
Make Data-Driven Supply Chain Decisions
Extensiv's platform supports everything and everywhere you sell, thanks to its unified dashboard that clarifies every stage of the supply chain. In addition to uniting your operations within a convenient database, Extensiv also assists with inventory tracking, minimum order quantities, and production lead time across every supplier. This way, you gain greater visibility into your inventory levels to make more data-driven supply chain decisions.
Boost Your Supply Chain Efficiency with Automation
Extensiv’s inventory management capabilities include numerous automations to drive productivity, lower costs, and amplify business intelligence. Additionally, by automating your order management across all channels rather than relying on error-prone manual processes, you can easily improve the efficiency of your supply chain functions. Extensiv's multifaceted automations track your order status, monitor counts and availability to sell throughout your warehouse, and source real-time data on your inventory.
Acquire Relevant Insights for Better Decision-Making
Extensiv has the warehouse, order, and inventory management tools needed to power (and grow) your ecommerce success for years to come. With Extensiv's innovative forecasting features, your business can increase its profits across each of your warehouses and channels, all the way down to SKU-level accuracy. Plus, retailers can continually track savings and acquire the relevant insights they need to encourage more informed decision-making and to better serve their end customers.
Interested in learning more about Extensiv's solutions for brands? Request a demo today!
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