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Why is Supply Chain management important?

Supply chain management is an integral part to many businesses of all sizes, it is an important cog in ensuring customer satisfaction and plays a big part in the company’s success. It involves anything from obtaining the raw materials to manufacturing goods and delivering those products to the customer which will hopefully be the final step in the process unless any goods are returned. A good and well organised supply chain will be optimised to ensure a fast and efficient system.  

Supply chain management is part of a wider ecosystem which is designed to create an efficient operational system as well as reducing costs from efficiency. Modern supply chain management incorporates strategic alignment to realise the economic and market value as well as giving the company a competitive advantage over other businesses. In recent years the digital age has brought about many changes and the way companies operate their businesses has had to transform along with the world. The high speed processes and automated systems have led the way for supply chain management and the increased demand it has seen.

Enhancing customer service

·       When a customer has ordered a product or service, they will firstly expect to receive the correct item(s) as well as the correct quantity that they have paid for. In addition to this, all items should be of the quality they were expecting.

·       Products should be in the right place at the right time to avoid delay and customer dissatisfaction.

·       Items should be delivered within the agreed time frame. Customers will have an expectation once an order is put through and this should be met to ensure satisfaction.

·       Support after sale. The customer may need added assistance after they have made their purchase. There could be many reasons why a consumer may need help but for whatever reason they should be able to receive the help and support needed.

Reduce operating costs

·       Decreasing the purchasing costs is important as retailors depend on the supply chains to deliver expensive goods quickly. This prevents retailors from sitting on expensive inventories any longer than absolutely necessary.

·       Decreasing the production costs is vital in the flow of manufacturing including delivering parts and products. Any delay could cost a company thousands of pounds and create a backlog or even a shutdown in production. This is one of the prominent reasons why supply chain management is important.

·       Decreasing the total supply chain management costs play a big part in meeting customer service goals at the least total cost as retailers and manufacturers depend on a competent supply chain management to design efficient networks to meet these needs and expectations. An efficient supply chain management will provide a good platform for businesses to provide a competitive edge within the marketplace.        

Improve financial position

·       Decreasing and controlling the supply chain expenses is valued amongst businesses as this can increase the profit leverage with the company.

·       Supply chain managers can decrease fixed assets including the likes of vehicle transportation, warehouses and plants which is greatly valued with firms as it can aid in shrinking costs.

·       Supply chain management is valued among firms as it increases the cash flow by speeding up the product stream to customers.  

As mentioned above, supply chain management plays an integral part in the day to day product flow dealing with issues that unexpectedly arise whilst maintaining a steady flows of goods from start to finish to ultimately aid in the satisfaction of both businesses and customers.

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The importance of a well managed supply chain

Supply chain management can be summarised as the overall management of supply chain activities in order to maximize the customer value. Having your supply chain correctly managed will also grant an organisation competitive advantage compared to an unmanaged supply chain. It is evident when a supply chain is well managed as good overall management will lead to smooth and efficient operations.

Supply chain management covers a huge range of activities, including product development, production, outsourcing, and logistics. And if you can improve the efficiency in each of these areas, you will find that your supply chain’s overall efficiency increases too. A supply chain is made up of a network of businesses and individuals that all work together to change raw goods into finished goods to be sent to the end-user. The supply chain can be either directly or indirectly responsible for fulfilling the needs of consumers.

Benefits of an effective supply chain

It is important to have a strong supply chain behind your business. Without that strength, it will be hard for your business to succeed. The whole approach of supply chain management is cross-functional, meaning that each team with different areas of expertise are working toward a common goal. It takes each step being completed, started internally to have the external outcome. Sometimes it is more cost effective to outsource some things from within your business. This is where supply chain management comes into play.

Having a supply chain can also be beneficial to the overall organisation of your company. It has been proven that organizations with more extensive supply chains are far more productive overall. While a supply chain can be on a large scale, smaller supply chains can be just as efficient, if not more. Although both are possible, you may find that a larger scale is far more beneficial, depending on your organisation.

When it comes to having a successful supply chain, networking is going to be key to making it work as it should. Each link of the chain needs to run smoothly to produce your desired results. Networking will also allow you to find new contacts that will be helpful along the way.

A better supply chain means better business

The impact that an effective supply chain has on business is immense. Delivering the correct product on time will result in happy producers, distributors as well as customers. A good supply chain will have a direct impact on customer service as well as customer satisfaction.

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How ecommerce logistics works - 5 things you need to know

When starting an online retail business, the importance of having a good understanding of how ecommerce logistics works cannot be understated. Getting an ecommerce business off the ground is no easy task, however, a properly outlined logistics strategy will get you in an incredibly strong starting position.

We at iForce maintain that a well-coordinated ecommerce logistics strategy gives you an edge over your competitors as well as helps you gain a loyal customer base. While you may be the expert within your sector, logistics is a science in it’s own right and growing your business from an idea scribbled on a napkin to a fledgling company will require knowledge on sectors other than your own. What’s more, spending too much time and money on inefficient logistics can really inhibit your growth and progress.

Your logistics should be the foundation of your online business so we’re here to help you understand the ins and outs of ecommerce logistics.

5 simple points to understand regarding your ecommerce logistics

Are you lost when it comes to logistics, use these 5 steps as a guideline to making your business more efficient. 

1.      Inventory planning

As an ecommerce start-up, you have the advantage of not being saddled with legacy overstock and inventory. After all, your inventory represents your investment in your business and having a clear overview of that investment is vital for your cash flow. As a start-up, however, you won’t have access to historical data to inform your inventory planning – so how do you forecast demand? There are a few tricks you can use before you establish your own sales history.

First and foremost, pay attention to the mileage of your marketing campaigns. If a product is gaining a lot of traction on social media, or driving traffic to your website, make a note of it. Seasonal trends, such as peak gifting periods or changes in weather, will affect your inventory planning.

2.      Offering free shipping

In a world of fast-evolving customer demands, free shipping has gone from being a luxury to a customer expectation. According to an e-Tailing survey, 73% online shoppers list free shipping as ‘critical’ to their purchase. It’s no coincidence that the world’s largest online retailer, Amazon, has more than 100 million subscribers to its Prime service. Free – and fast – shipping is clearly non-negotiable for online consumers.

While the convenience of free shipping has been a boon to the ecommerce industry as a whole, it comes at a cost to individual retailers. Being disciplined about order fulfilment is a way to keep shipping costs low while still providing fast delivery.

3.      The Last Mile

The last mile, or final mile, is the last step of the order fulfilment phase of ecommerce logistics. This part of the process is vitally important; it can mean the difference between a positive customer experience and a return, or even a complaint. Simply not delivering a package in the customer’s desired timeframe can lead to a significant increase in order cancellations and refunds.

A successful and sustainable Last Mile reconciles customer expectations with your budget and resources. If you aren’t sure how to do this, it is worth working with an experienced 3PL partner.

4.      Managing returns

After order fulfilment, you enter the reverse logistics phase of ecommerce. This is often a challenging aspect for many ecommerce businesses and can be make or break when it comes to customer loyalty. A solid returns policy can help incentivise potential buyers to buy from the store as well as give them the confidence that they won’t be stuck with products that don’t suit their needs. You should consider any customer returns to be “reverse purchases” and each request should be handled with the same care and consideration that goes into standard purchases. 

When outlining your returns policy, it's important to discuss a few different questions:

Who pays for the return’s shipping?

Is there a restocking fee?

Will the items be resold or passed on to a wholesaler?

 5.      3PL Partnerships

It’s no secret that fast-growing eCommerce businesses will outsource some of their logistics to a third party provider. A 3PL will help businesses compete with eCommerce giants that were previously untouchable in their sector. A 3PL will assist you in managing all aspects of inventory management such as shipment and fulfillment, allowing your business to concentrate on what it does best.

iForce can come in with our logistics management software which is developed with our retail clients and informs each iForce colleague what to do with each returned item. That way, you can ensure that both parties are on the same page. Each layer of the process is designed to maximise the recovery value as well as removing operator subjectivity from the process. 

Maximising the efficiency of customer returns makes a tangible commercial difference to our clients as well as helping them meet their environmental commitments. Give iForce a call today to discuss your ecommerce returns management needs.