How eCommerce redefined supply chain management
In contemporary times, across a decade or so gone by, the eCommerce industry has become more a part of our lives than one could have earlier presumed. Before the eCommerce business model found success, few people had presumed that it was destined to succeed. Timely fulfillment of orders and secure online payments that are trusted by all people was something difficult to imagine a few decades back.
The eCommerce industry has bought about a change in the ways in which business is conducted. Beyond the retail and banking industry, the effects over the logistics industry are prominent. The eCommerce industry currently redefines logistics and makes it more efficient and reliable. The effects are easy to see over the logistics industry as a whole, and not just the eCommerce logistics industry.
eCommerce presents a range of choices before us, and makes the consumer more choosy, demanding, and quality conscious. Retailers and the logistics industry are striving to meet consumer demands in a dynamic marketplace by inducing flexibility in their operations and keeping on top of their game.
SAAS for managing supply chains
Software-as-a-service (SAAs) for managing supply chains is a new trend in the eCommerce industry, which found popularity when cloud computing came to market. sAAs simplifies supply chain operations for eCommerce businesses and brings efficiency to the processes. Timely upgrades become easier to achieve, and sAAs also helps with managing infrastructure-related expenditures.
Technology nowadays defines how goods are stored and shipped
The effects of the eCommerce industry over warehousing and logistics are prominent. Walmart, the largest retailer across the US is likely to start using drones for inspecting labels and inventory in its warehouses.
This is just one of the ways in which technology delivers a competitive edge for market players while bringing ease to processes and streamlining them. The methodology further simplifies order fulfillment for the end customer.
Inventory management is a parameter that is difficult to overlook for the success of any eCommerce company, small or large. To achieve efficient inventory, the inventory management software used by an eCommerce company should be high on ease of use and understandability. A staff member should be able to instantly figure out the available products, the quantities available, and the fulfillment centers where they are located.
This simplifies order fulfillment by reducing turnaround times and costs involved and brings efficiency to supply chain management. It further helps with customer retention.
More and larger fulfillment centers spread across geographic locations
eCommerce makes warehousing more organized than it ever used to be earlier. Fulfillment centers are nowadays more, larger, and well spread across geographies.
Half a century back, warehouses used to be around 24 feet high on average. They are nowadays around 33 feet high. eCommerce companies, currently operational, often seek 40 feet high fulfillment centers, which feature mezzanine levels.
Another notable trend in the regard is that eCommerce companies are nowadays major buyers of warehousing spaces, over brick and mortar sellers. This goes to show that the eCommerce business model is growing and is going to be around. In 2016, eCommerce sales grew by 25%, while brick and mortar purchases declined by 6%.
The requirement for warehousing spaces is also high for eCommerce companies, who characteristically require 3 times more space as compared to traditional retailers. Amazon, just as an instance owned 150 warehouses in 2016, which totaled up to 100 million sq. feet of floor space. They have been expanding warehousing space since.
3PL eCommerce reduces fixed costs and in terms of warehousing, and can scale up and down to meet market demands. With fulfillment centers closer to the end consumer, fulfillment times and costs are lower as well.
Technology defines the future of logistics
With the rapid growth of the eCommerce business model, modern supply chains will be less expensive and more efficient across the years to come. Across the past few years, overall expenditures over logistics have been declining, even while power costs have been on the rise.
Unlike earlier, energy costs no longer form the primary factors that determine logistics costs. Instead, nowadays, consumer demand is the key factor that renders an effect on the costs associated with logistics.
Technological advancements and their adoption by eCommerce companies reduce logistics costs. This works at every stop across the supply chain, ranging from warehousing to motor freight and through to parcel delivery.
A range of modern technologies is used to streamline supply chains. They include robotics, AI, predictive analytics, and big data. Several studies have shown that the use of technology and analytics in eCommerce business cannot be ignored. The eCommerce companies most likely to succeed in the future are the ones that embrace technology.
The change in the eCommerce supply chain is continuous, and it is unlikely to slow down anytime soon.
eCommerce product returns are simpler, easier, and more responsive
Consumer demand brings about a change across eCommerce logistics in several ways. An important implement of the same is product returns.
eCommerce customers prefer to have more options before them for returning purchased goods. This will induce simplicity in the processes involved. The logistics industry, correspondingly, works towards meeting customer demands.
eCommerce businesses nowadays prefer to keep the focus on the bigger picture, and are looking beyond merely returning the products to the warehouses.
Digitalizing supply chains
Another important development in eCommerce logistics is that eCommerce businesses are working towards digitalizing the supply chain and inducing more flexibility within the same. As a cumulative effect, supply chains are optimized for last-mile and last-minute deliveries. The persistently changing technological hemisphere helps the supply chain improve incessantly. Adaptability and using technology helps eCommerce businesses stay relevant through changing times.
Complex logistics are the norm in the eCommerce industry
When we consider the case of brick-and-mortar retailers, processes for fulfillment are frequently well defined. Consignments reach retailers from suppliers or corporate distribution centers at predictable intervals.
Logistics requirements in the case of brick and mortar stores are relatively simple because purchases and returns are all managed at physical locations.
For an eCommerce business, however, complex planning is a must for safely transporting goods to dynamic destinations. Reverse logistics and last-minute deliveries are a few of the typical processes associated with eCommerce logistics and necessarily call for complicated and costly planning and execution.
The aforementioned deliver a competitive edge for eCommerce businesses and aid with customer retention while resulting in higher profits. Businesses hence attempt to refine their logistics processes with specialized functions. Partnering with experienced logistics enterprises is one method frequently used by eCommerce businesses.
Quicker shipping times
Quick shipping times enabled by eCommerce businesses build consumer expectations. When an eCommerce business fails to meet the parameter, it affects the profitability of the business. Strategic decision making hence forms an indispensable part of the eCommerce business.
eCommerce makes the market for warehousing spaces more competitive
With more market players expanding their distribution networks, the market for warehousing spaces is more competitive. Space, in warehouses, is a must for managing inventory, shipping, packing, and picking operations. Similarly, warehouses should have room to process the returned items.
Having a network of warehouses enables an eCommerce company to speed up fulfillment. Over the years to come, warehousing spaces will hence become more competitive, especially in major cities.
Effects of covid-19 over the supply chain
Coronavirus has rendered its effects over a range of supply chains and the eCommerce supply chains are no different. The initial problems surged during the times of lockdown, wherein home delivery of products was halted in entirety, and only the sale of essential goods at retail shops were permitted.
The supply chain problems never halted following the lockdown and were affected by Covid-19 in varying measures across all domains. The changes in work culture made it difficult to meet consumer demand, and fewer logistics channels delayed fulfillment. Production of goods similarly came across a setback.
The flexibility of supply chains was once again highly sought after. In the post-Covid world, the eCommerce businesses that are most responsive to the customer and market demands are best placed to succeed. This becomes an even more important metric for small businesses, for whome the profits fuel the operations.
It is an unfamiliar business environment that we are currently presented with. Flexibility in supply chain operations put one in a better position to succeed in these uncertain times.
eCommerce businesses have faced a range of new challenges in the times of Covid, and a few of them make the day to day eCommerce logistics operations more costly. The businesses have had to make additional expenditure of money, manpower, and man-hours to ensure that their warehousing facilities stay hygienic and sanitized. Furthermore, additional precautions have been taken to ensure that the delivery of items is safe, which further comes at an additional cost. Restrictions on passenger and freight air transport have also caused disruption in supply chains.
Governing bodies across the world have been receptive to problems faced by small businesses, and have played a role in helping businesses deal with the difficulties faced. One example of the schemes churned out by the government includes the Paycheck Protection Program (PPP), in the US.
Over time, it will be easier to restore normalcy into business and supply chain operations, as the global business environment becomes more conducive for running a business.