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Supply chain management in e-commerce

January 15, 2024 - 10:49
Supply chain management in e-commerce

What is Supply Chain Management?

Supply Chain Management (SCM ) is referred to as  a very comprehensive and coordinated approach to manage the flow of goods, services, and information from the point of origin to the final customer. The different stages of the supply chain includes procurement, production, transportation, warehousing, and distributionTechnology enhances visibility and communication within the supply chain.

Role of logistics in supply chain management

Logistics performs a pivotal position within the basic fulfilment of supply  chain management with the aid of ensuring the green and powerful motion of goods, services, and statistics from the factor of origin to the factor of intake. It involves the coordination and optimization of numerous strategies to decorate the general overall performance of the supply chain. Here are key roles of logistics in supply chain control:

The supply chain encompasses various stages, including:

Sourcing and Procurement: The necessary raw materials or components are obtained  from suppliers.

Production or Manufacturing: The  raw materials are transported  into finished goods or assembling components into the final product.

Distribution and Logistics: Managing the transportation, warehousing, and distribution of products to various locations.

Retail or Sales Channels: Making the products available to customers through retail stores, online platforms, or other sales channels.

Consumption or End Use: The final stage where the end consumer uses or consumes the product or service.

An effective supply chain management  streamlines these processes, optimises efficiency, reduces costs, and enhances customer satisfaction.The efficient flow of information between  coordination, collaboration, and all stakeholders, including suppliers, manufacturers, distributors, retailers, and customers. Modern supply chain management often incorporates technology and data analytics to improve decision-making and responsiveness to market demands.

Why is Supply Chain Management Important?

Efficient SCM improves operational efficiency, reduces costs, enhances customer satisfaction, and helps in adapting to market changes.Operational Efficiency:

Streamlines processes and reduces inefficiencies, optimising overall operations.

Cost Reduction:

Minimises costs associated with procurement, production, transportation, and inventory management.

Customer Satisfaction:

Ensures timely supplies, reduces stockouts, and enhances product quality, leading to higher customer satisfaction.

Collaboration and Communication:

Fosters collaboration among entities within the supply chain, improving coordination and responsiveness.

Adaptability to Market Changes:

Enables quick adaptation to changes in demand, market trends, and external factors, maintaining competitiveness.

Risk Management:

Identifies and mitigates risks within the supply chain, such as disruptions and geopolitical issues.

Optimised Inventory Levels:

Maintains optimal inventory levels, preventing overstocking or stockouts, improving cash flow.

Increased Profitability:

Contributes directly to higher profitability through cost savings, efficiency improvements, and customer satisfaction.

Global Expansion:

Facilitates the management of complex international supply chains, addressing diverse market conditions.

Technological Advancements:

Leverages technology for real-time tracking, visibility, and data analytics, enhancing decision-making.

Sustainability Practices:

Promotes environmentally friendly practices, optimising transportation routes and minimising waste.

Competitive Advantage:

Businesses with efficient supply chains have a competitive edge, responding faster to market demands and innovations.

What is E-commerce?

E-commerce refers to buying and selling goods or services over the internet, encompassing online retail, electronic payments, and digital marketing.E-commerce, short for electronic commerce, refers to the buying and selling of goods and services over the internet. It involves online transactions and the exchange of information between buyers and sellers, eliminating the need for physical presence or face-to-face interactions. E-commerce has become a significant aspect of modern business, transforming the way people conduct trade and engage in commercial activities. 

What are the Different Types of E-commerce Models?

Models include B2B (business to business), B2C (business to consumer), C2C (consumer to consumer), and C2B (consumer to business).

Business-to-Consumer (B2C)

In B2C e-commerce, businesses sell products or services directly to consumers. Examples include online retailers, food supply services, and digital content providers.

Business-to-Business (B2B)

B2B e-commerce involves transactions between businesses. It includes the exchange of goods or services between manufacturers, wholesalers, and retailers using online platforms.

Consumer-to-Consumer (C2C)

C2C e-commerce enables consumers to sell products or services directly to other consumers. Online marketplaces and auction platforms are common examples where individuals can buy and sell items.

Consumer-to-Business (C2B)

C2B occurs when individual consumers offer products or services to businesses. An example is a freelance platform where individuals provide services to companies.

Mobile Commerce (M-commerce)

M-commerce refers to e-commerce transactions conducted through mobile devices, such as smartphones or tablets. It includes activities like mobile shopping, mobile banking, and mobile payments.

Social Commerce

Social commerce integrates e-commerce with social media platforms. It involves buying or selling products directly within social media networks or through social influence.

Voice Commerce (V-commerce)

V-commerce involves using voice-activated devices or virtual assistants for online shopping and transactions. Users can voice commands to make purchases or inquire about products.

How Does E-commerce Impact Supply Chain Management?

E-commerce has a very big impact on supply chain management (SCM) across various dimensions. The shift towards online shopping has altered the traditional dynamics of SCM by introducing new challenges and opportunities into its realm. One significant change is the demand for quicker order fulfilment and shorter lead times. The direct-to-consumer distribution model has gained prominence in the years, prompting businesses to reevaluate their distribution networks and strategically positioning  various fulfilment centres for more efficient order processing.

The last-mile supply, considered the final and crucial leg in the supply chain, has become a focal point. E-commerce’s rapid growth has heightened the importance of optimising last-mile logistics to ensure timely and cost-effective supply to end consumers. The globalisation of supply chains has also been accelerated by e-commerce, with businesses expanding their reach across borders. This necessitates SCM to navigate complex international logistics, customs procedures, and regulatory compliance.

E-commerce brings forth a demand for real-time visibility and transparency throughout the supply chain. Customers now expect detailed tracking information and accurate supply updates. This shift has prompted SCM to integrate advanced tracking technologies, analytics, and information systems to provide real-time insights and enhance overall transparency.

Returns management has become another critical aspect of SCM in the e-commerce era. With higher return rates compared to traditional retail, SCM systems must efficiently handle reverse logistics processes to manage returns and exchanges effectively. The increased complexity of supply chain operations in the e-commerce landscape requires seamless collaboration among supply chain partners. Digital platforms and technologies are leveraged to enhance communication, coordination, and information sharing among stakeholders.

Moreover, e-commerce has driven the integration of cutting-edge technologies such as the Internet of Things (IoT), artificial intelligence (AI), and analytics into SCM processes. These technologies play a crucial role in improving efficiency, enabling predictive analytics, and automating various aspects of the supply chain.

Key Takeaway

In essence, e-commerce has redefined the priorities of SCM, demanding flexibility, adaptability, and a keen focus on customer-centric operations. Successful SCM in the e-commerce era requires a holistic approach that considers the entire supply chain ecosystem, from manufacturing and distribution to last-mile supply and customer service.E-commerce influences SCM by demanding faster supply times, efficient order fulfilment, and real-time inventory management.







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