Efficient supply chain management and logistics functions are vital for the success of any e-commerce business. This ensures that everything is running smoothly, costs are kept low and that your processes and delivery are able to meet your customer’s expectations.
And let’s face it, keeping your customers happy should be your number one priority! That’s why it’s crucial to get an effective strategy in place.
To help you do this, we’ve put together the following guide. Below, we’re going to offer six ways that your e-commerce business can keep your supply chain running smoothly and improve your logistic functions to make them as strong and cost-effective as they possibly can be.
1. Identify any areas of weakness
The first important step to improving supply chains and logistics is to identify any areas of weakness you may already have. This way, you can act fast to strengthen these and get better processes in place.
To do this, do an analysis of your costs and contracts to see if there is any way you could be saving money. For example, are you paying too much for couriers or delivery? It also pays to review all contracts regularly to see if you could be getting a better deal with your existing providers or whether you should switch it up.
If you’re not sure how to do this yourself, that’s OK! You can hire an expert to do this for you.
What’s more, you should consider any warehouses or storage you have and if these are being used effectively and whether you could be doing more (or less) with your packaging. It’s also worth looking at your teams do determine if there are ways they could be working more efficiently.
By assessing any areas of weakness first, you’ll have a better idea of how to start improving your functions. We’ll now look at some of these areas in more detail below.
2. Invest in your teams
Employees are the lifeblood of any business; they are the key to success. But if you don’t invest in your teams, you might find they’re actually part of the problem.
Therefore, if you hope to make your supply chain and logistics more efficient and strategic, check in with your employees. Make sure you’re offering adequate training, especially to your supply chain managers.
Nurturing a strong and skilled team really can give your e-commerce business a competitive edge and ensure that all employees are happy, motivated and working at maximum efficiency.
Asking for their feedback is always a positive way to find out if your business could be doing more to help them work more efficiently. And by helping them, you’re ultimately helping yourself and your business.
3. Ensure you’re making the most of your warehouse(s)
Warehouses can be costly but if you’ve got a lot of inventory, they can also be necessary. However, if you’re not making the most of the space or design of your warehouse you could run into some issues.
Interestingly, the use of warehouse space can actually account for 15 to 20% of the cost per order. So if you’re not utilising these spaces, you could quite literally be costing your business. What’s more, if you don’t choose the most efficient layout and design of your warehouse/distribution centre, you could find capacity issues and a decrease inefficiency.
To combat this, speak to the staff that work there and then conduct a space-use study. This will help you to re-organise the warehouse for a more effective layout, product flow, storage space and other important warehouse logistics functions.
This will help you and your teams to make the most of the space, cutting costs and making the supply chain run more effectively.
4. Manage labour more effectively
Following on from the points above, you need to manage your labour more effectively to help improve functions and increase output.
To do this you should use automated systems where necessary to save time and labour costs. It’s also a good idea to increase the number of picked orders in your warehouse each day (without overworking your teams, of course).
By ensuring the most efficient processes and layouts are in place, you can then incentives your picking and packing teams to increase their numbers. These two areas can be some of the most significant for saving money on labour and boosting efficiency.
5. Consider the resources available to you and whether to use third-party providers
As an e-commerce business, there will come a time when you need to decide whether to outsource your supply chain or use internal fulfilment. This will usually depend on how big your organisation has become and whether you have more than one warehouse/distribution centre.
Review the costs and any other data you may have on internal shipping capabilities to work out whether you could be more efficient and budget-friendly. It might be that by using a third-party logistics provider you can achieve faster delivery and a better customer experience.
Alternatively, you might find it’s more effective for your business to invest in your internal shipping capabilities. It’s important to gather all the data you can and to assess this, before choosing the most cost-effective and efficient solution for your business and workforce.
6. Streamline your inbound supply chain
No matter what you sell, whether you’re an omnichannel retailer or purely e-commerce, you’ll require inbound products or materials to be able to serve your customers. This can be one of the key contributors towards an inefficient supply chain.
To make sure you’re streamlining and improving your inbound supply chain as much as possible, you need to review your vendors and see which (if any) are causing delays or problems with cost. Once you know who it is, it might be time to speak to their teams or look for a better supplier.
You might also wish to implement a new vendor compliance program that means any suppliers have to fulfil certain activities such as ticketing, inspections, etc before you receive the products. This can make the process much more efficient when the goods reach your warehouse.
Written by Stuart Cooke of Irish Parcels, a courier comparison tool based in Dublin helping businesses find the best shipping solutions.