Top 10 Supply Chain Strategies for eCommerce Businesses
Due to technological advances, digital systems can upgrade supply chain practices. To get the most out of digital transformation, however, businesses must highlight their strategic goals before deciding on a provider and system. Here are 10 supply chain strategies for ecommerce companies.
10: Implement New Information Systems
By introducing new warehouse management systems (WMS), companies can allocate their products based on stock turnover. Products that traditionally sell out more rapidly can be stored in easily accessible warehouse locations, and employees can adapt to unexpected demand for certain models. While companies need to carefully analyse WMS pros and cons—about 50% of expensive installs are delivered late or over-budget—the long-term benefits can save on labour and management.
09: Decide on Third Party Logistics or Internal Fulfilment
Many companies lower fulfilment costs by outsourcing to third-party logistics (3PL) providers. By doing so, they eliminate infrastructure setup, workload management, and ongoing maintenance. Third-party providers will procure warehouse space, restock shipping supplies such as labels, cartons, and pallets, and handle overhead costs like utilities and rent. Best of all, ecommerce companies can achieve greater flexibility as their footprint expands.
08: Reduce Outbound Shipping Costs
Outbound shipping remains one of the largest expenses for ecommerce shippers—anywhere from 50%-70% of total logistics costs. To negotiate effective rates, companies should investigate the same data that logistics and carrier companies use to determine freight charges. This will allow you to negotiate based on current conditions, not last year’s targets. In addition, consider augmenting your current fleet of larger shipping providers with smaller companies offering excellent deals on price and value.
07: Improve Warehouse Capacity Utilisation
Taking up 15-20% of the cost per order, warehouse space is one of the first areas companies should optimise to increase their efficiency. Space use studies can determine potential solutions. For example, companies should use all available vertical space, consolidate all shipments of the same item in one location, and try to design warehouse aisles to meet minimum widths. Keep in mind that you may need to investigate your fire code before implementing changes.
06: Increase Order Numbers Per Day
One way to increase order numbers is to rely on voice-enablement. This strategy substitutes voice direction for scans and key entry, which reduces the time employees spend reading devices, manipulating barcodes, and re-keying in data. Companies will have to evaluate whether the up-front costs are worth the result, but voice-enabling can save 1 to 3 seconds per pick.
05: More Effective Labour Management
Companies that don’t have the resources to invest in extensive warehouse automation can still reap time savings by re-evaluating their manual labour. Implementing effective training programmes can help employees work more safely and rapidly, and introducing small wearable technology can make it easier to pack and pick boxes. These small upgrades can lower costs per line, unit, and order.
04: Improve Processing Speed and Accuracy
Barcode or radio-frequency identification (RFID) can help companies quickly track goods in transit and collect specialised size and SKU information. Overall, tagged picking, packing, returns, and cycle counts mitigate delays and make estimated shipping times more accurate. RFID technology generally works quite well for ecommerce, since the products (fashion, apparel, and cosmetics) don’t interfere with tag readability.
03: Increase Potential Warehouse Capacity
By upgrading warehouse floor plans, companies can increase worker productivity, reduce inventory errors, and avoid safety risks. To use every square foot of space, segment the layout into separate areas for goods-in, shipping, and returns. Techniques such as forming cross aisles or shortening aisles can help cut picking time.
02: Reduce Delivery Times
By shifting operations to a multi-distribution centre, companies can reduce delays due to their geographic location. Customers now compare all ecommerce shipping to that of Amazon, and many ecommerce operations would do well to push shipping closer to their target markets. Though new facilities take time to set up and require additional staff, the flexibility payoffs may be worth it.
01: Inbound Supply Chain Efficiency
Receiving your products on time is critical to keeping shipping times short. To increase your inbound efficiency, select suppliers who have a reputation for high standards of customer service, packaging, and communication. If you have current vendors who are slowing down operations, either search for more efficient alternatives or work with them to mitigate delays.
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