How eCommerce is Changing Supply Chain Management

Even as the ground beneath our feet has shifted over the last year, one aspect of reality remains undeniable: we’re driving full-speed ahead into a digital world. eCommerce is a prominent feature within that landscape, and one worth taking seriously. Rather than a passing phase, eCommerce has revolutionized every aspect of the retail experience for customers and companies alike. It’s one of 2021’s mega trends, but it’s poised to change the future of supply chain management well after the year is through. 

Supply chain management in the digital world operates on a different wavelength than the brick & mortar type. While some industry practices hold steady regardless (think: prioritizing risk management and building resilience), the nuts and bolts of the supply chain are simply different in digital. Successful eCommerce brands have seized the moment, launching fully online or translating outdated systems to fit the modern era.

So how exactly do the two mediums differ and what does this mean for supply chain managers? Let’s break down what separates eCommerce from the standard brick and mortar model, and how it rearranges the playing field across industries. 

A Shift in Strategy

Large-scale events, like the recently held Ecom World, have featured an array of speakers specifically geared towards supply chain management (fulfillment and sourcing for eCommerce, for example). 

That’s because navigating the supply chain from an eCommerce perspective takes a brand new skill set. Just because you’ve fine-tuned your brick-and-mortar strategy doesn’t mean you can expect to reap the same rewards crossing over to digital. Just like learning a new language, becoming fluent in supply chain management for eCommerce takes dedication and practice. 

It’s time to shift those priorities. The role of the supply chain is actually elevated in the world of eCommerce, since the delivery experience is one of the few opportunities customers have to engage directly with a brand. 

After navigating through a website, cart checkout, and receiving email confirmation, customers receive shipping information and next encounter the brand during delivery. The triple threat of convenience, availability, and speed determine customer satisfaction and loyalty. A successful supply chain strategy for eCommerce takes this into account. 

Revamped Cost Structure

Brick and mortar establishments demand cash flow towards rent, store payroll, maintenance and design, and more. Now imagine slashing those expenses. Suddenly, there’s more room in the company budget to move those funds elsewhere.

For the supply chain, a new financial strategy comes with the digital territory. Funds that were once channeled towards rent might be diverted to shipping and returns, operating costs, or warehousing. 

Patrick Rigoni’s Demand driven tools, such as optimization can help supply chain managers identify where to most efficiently allocate resources as they make the leap to eCommerce.

Inventory Allocation is Key

Location, location, location. Customers want goods delivered as quickly and cheaply as possible. The best way to meet those demands: structure your inventory so it’s located near consumers, creating a win-win for everyone involved.

Of course, in the brick and mortar world, inventory allocation matters. But it takes on a whole new magnitude of importance for eCommerce. While one fulfillment center in a supply chain network would make life a lot simpler, it blocks the possibility of free and fast shipping for a large slice of the market. Supply chain planning has to prioritize inventory allocation to stand a chance in the cutthroat era of digital retail. 

Availability

Nothing is more frustrating than reading on screen that the article you just want is unavailable – DDMRP offers the best available option to maintain the right stock in the right location and maximize availability for online customers.

Delivery Matters

The reason why? Delivery is a major component of the customer experience. This is a pivotal stop along the supply chain journey that has to be carefully curated and tailored to consumer needs.

Supply chain management for eCommerce prioritizes speed, accuracy, communication, and cost. It’s no easy feat to pull off, but optimizing these four variables is critical to a successful strategy that puts a company in the eCommerce game for the long haul. 

Looking to test drive your delivery strategy before committing to a major overhaul? Digital twins are the perfect tool for comparing options and refining supply chain planning, and Patrick Rigoni can support you in making the most of them.

Rethink Metrics

When you reframe your supply chain to align with a fully digital experience, key data points shift. In the brick and mortar world, you may have prioritized click-to-ship or time-to-pack, optimizing these metrics to the extent possible.

When it comes to eCommerce, order-to-deliver is where the magic happens. Sometimes known as “click-to-deliver,” this is the metric that best reflects the health of the supply chain and customer satisfaction. 

Prepare for Tomorrow’s Supply Chain 

A digital future demands a new approach to supply chain planning. Relying on familiar strategies and protocols won’t get you far with eCommerce. Rather, it’s time to revamp your approach to suit an entirely new framework. Need some support navigating this new territory?

Reach out to Patrick Rigoni to set up a free Demand Driven supply chain consultation.