How to Outsource Supply Chain Management for Ecommerce Stores
As an online business owner, you want to operate as efficiently and smoothly as possible. There is a long list of factors to consider, but optimising the supply chain is one of many key business processes to growing your business and maintaining success.
Supply chain management is the backbone of any eCommerce business. It involves the entire process of production flow. It’s time-consuming to handle alone, and many eCommerce stores hire a supply chain manager to take control of the operation.
An alternative to managing the supply chain in-house is outsourcing supply chain management. There is a growing popularity for fast and efficient supply chains for any growing eCommerce store. Many companies can provide a solution to busy business owners who want relief from the headaches of handling the all-important procedures.
With many benefits, it’s a difficult option to ignore. But how do you do it? This article gives you a comprehensive understanding of modern supply chains and discusses outsourcing supply chain management.
What is Supply Chain Management?
Supply chain management (SCM) refers to the flow of goods and services through management systems. The entire process involves several steps, from the raw materials to the finished goods. When an organisation’s supply chain is smooth and successful, it can give your business a competitive advantage over other brands in the market.
A network of suppliers is required to keep the chain going, covering everything from planning and production to storage, delivery and return of goods.
Many eCommerce stores have a tailored business model which works effectively. Still, for others, outsourcing management from industry experts is an excellent opportunity to take control of operations and benefit from the essential services of logistics providers.
What is Outsourced Supply Chain Management?
Outsourced supply chain management means hiring a 3PL company (third party logistics) to run the supply chain. It is an approach taken by many small businesses that are growing and seek the support of those trained in this area.
Why is Supply Chain Management Important?
Effective supply chain management ensures goods and services reach the final destination in a smooth and timely manner for the customer. Without a good supply chain, customer satisfaction is low as the services provided do not meet expectations. It provides a competitive edge over other businesses with a supply chain that fails to deliver.
Having a product to sell is one thing, but it has a long way to travel before reaching the consumer. Modern supply chains begin with the extraction of raw materials, followed by the components, the manufacturing process, the retailer, and lastly, the consumer.
As well as luxury goods and services, supply chain management ensures the delivery and movement of necessities like food, water and medicine to the public.
How Does the Supply Chain Work?
The supply chain is rather complex, particularly to those just starting out in eCommerce. When consumers purchase a product or service, chances are the supply chain is at the back of their minds. However, the supply chain ensures the availability and delivery of the goods purchased.
A lot goes into the supply chain. It requires people, resources, and excellent organisation. To give you an overview, the chain typically works like this:
- Planning - the initial step in the supply chain is to plan the venture that your product will take. The planning phase must be well thought out for a clear and consistent strategy
- Raw materials - this is a key part in which materials are sourced, and suppliers provide the materials for the goods
- Manufacturing - the manufacturing process is when the materials transform into products ready for the market
- Distribution - the distribution process is the step in which businesses get the finished goods to the consumer
- Retail - the finished products are sold to end-users
- Customer - the finished product arrives in the hands of the customer
Another aspect of the supply chain to think about is returns. An eCommerce business requires a returns policy to ensure customer satisfaction at all times, even when returning unwanted products. The reverse process should be just as straightforward as the rest.
Benefits of Outsourcing Supply Chain Management
There are several benefits to outsourcing supply chain management. To keep it simple, here are three significant advantages.
More Energy for Other Things
Outsourcing supply chain management gives you the time and energy to focus on other aspects of the business. Without supply chain activities consuming your time, you can turn your attention to other operations like marketing, branding and bettering customer relationships. As time progresses, you will better understand how your business model is running.
Increase Customer Loyalty
With effective supply chain management, the results not only benefit you but your customers. Many consumers won’t recognise the supply chain in detail, but they will recognise good service.
With industry experts taking control of the process, your customers receive better delivery and order fulfillment, keeping them returning time after time. Satisfying your customers will reward you with loyalty and a stronger reputation.
Bring More Value
External supply chain management brings a fresh perspective to your business, from expert knowledge of operations management professionals. It could take several years to build up your company single handedly. As customer demand grows, it can become even more challenging to keep up. The right partners will bring solutions based on their expertise, and this kind of support is invaluable.
How to Outsource Supply Chain Management
There’s no doubt that tackling the supply chain is difficult, especially if you’re doing it alone. The entire process can be overwhelming with little expertise, particularly for small businesses.
If you want to upgrade or improve your supply chain performance, many supply chain management companies are ready to help. Here is how to outsource your supply chain management.
Find the Best Company
The first step to partnering up with supply chain managers is to research and find the right 3PL company for you. You should take care to choose the right partnering company for your business. You want a company that is reliable, consistent and rich in knowledge.
Putting your supply chain activities in the hands of others is a big step and one which you shouldn’t take lightly. The ideal company will effectively handle live inventory management, order processing, and offer optimal storage solutions.
Come up With a Strategy
Be strategic in your efforts to outsource supply chain management. Your business is special to you, and you don’t want to hand over the vital stuff to anybody. Begin by putting together a plan of action, detailing what you want from a partnership, and defining the work that is required.
Know your Budget
As a small eCommerce store, outsourcing logistics can be scary financially. Any supply chain comes with costs, as the process requires multiple operations to function. Outsourcing supply chain management saves a lot of time, and it can save money too. Reducing costs is always a positive for any independent business.
When handling the supply chain alone, you incur costs through labour, manufacturing, office and warehouse space, and other fees.
Logistics providers will generally provide a model that includes all costs, but it’s important to check for hidden fees and extra charges.
It’s essential to be clear on your budget and the services you need to source the best possible solution for your organisation’s supply chain. Once you’re clear on your options, searching for the ideal company will be easier.
The Bottom Line
The bottom line is, good supply chain management is a critical aspect of any eCommerce business. You can upgrade your supply network, meet customer demand and build long-term relationships with your new supply chain partners.
Whatever process approach you take, you can expect to cut costs, save time, and place your own expertise where it is most valuable.