One rusted cog can derail your entire supply chain, impacting operational efficiency, resulting in decreased margins, lost revenue, slow supply chain velocity – and above all, decreased customer satisfaction. By optimizing your e-commerce supply chain, you can overcome these buffers, and return to maximum operational efficiency.
Before we get to optimization best practices to deal with supply chain kinks, here’s a brief overview of supply chain optimization.
Optimizing e-commerce supply chain: why it needs to be top of mind
Supply chain optimization is the process of fine-tuning your supply chain to remove any trouble spots so that it performs efficiently.
Although your supply chain might seem like an unsung hero that works behind the scenes, the success of your entire online business literally hinges on your supply chain.
Any disruptions in the supply chain i.e lack of visibility in micro-fulfillment operations, ineffective order processing, delayed or wrong orders, all impact the customers. And customers don’t want the constant worry of receiving the wrong or damaged products or delayed delivery.
Ever wonder what Amazon’s secret to success is?
The e-commerce leader owes its success to its advanced supply chain model. What began in Jeff Bezos’s garage give-or-take 25 years ago, with solely books as products, is today recognized as the largest and most efficient supply chain operation in the world.
Supply chain optimization: best practices to eliminate buffers
With fast and free shipping as a key driver for online and cross-channel purchases for the fifth year in a row, the biggest opportunity for brands and retailers lies in creating more efficiencies in the supply chain. (Walker Sands, award-winning marketing agency)
This is to say, a well-organized and efficient supply chain can expedite nearly all major e-commerce micro-fulfillment operations and distribution processes, ensuring that customers’ expectations are fulfilled. Let’s get straight to the optimization practices.
Automate your supply chain processes
It’s true we’re living in the age of smart machines, however, automating the supply chain does not entail bringing on board the likes of HK-47 (the evil robots from the Star Wars franchise) or a very self-aware Ava (Ex Machina).
Automation will help you increase employee productivity, reduce human error and costs, and increase operational efficiency. A report by McKinsey says automation is capable of accelerating the productivity of the global economy by between 0.8% and 1.4% of global GDP annually.
Here are a few supply chain operations you can automate:
- Order fulfillment
- Inventory management (including updates)
- Payments and invoicing
- Customer service
- Picking and packing
- Defining as well as tracking revenue and expansion goals
- Using bulk actions to handle high-order volumes
As an example, Ohi’s inventory and order management platform gives DTC e-commerce brands actionable insights into SKU-level demand, enabling brands to automate functions for efficiency and savings. Ohi merchant partners have seen increases of up to 120% in repeat purchases, along with 28% higher conversion and 35% increases in lifetime customer value.
During the pandemic supply chain disruptions, brands like Nike realized the importance of automating operations. Nike, for instance, made a few important changes in its supply and decided to use radio-frequency identification (RFID) technology to automatically identify and track its footwear as well as some of its apparel. What’s more, with greater visibility into its inventory levels throughout its supply chain, the brand was better able to meet demand across its many retail/distribution channels.
Improve your delivery performance
Delivery performance is how successful the supply chain is at delivering products and services to customers.
In a competitive marketplace increasingly driven by instant delivery, customer expectations for delivery speed/timeliness are extremely high. People want to have everything delivered fast, and they have little patience for missing or late shipments. They have plenty of options in terms of marketplaces and other brands, so one delayed delivery can cause them to cancel their order and move on to your competitor.
One dilemma for DTC/D2C brands is that many aren’t capable of delivering orders with Amazon Prime Now-type speed. Here at Ohi, we’ve cracked the formula and are helping our brand partners offer ultrafast delivery via our micro-fulfillment centers. Meanwhile, Ohi’s latest delivery scheduling feature makes it easy for customers to schedule, track and even reschedule when needed – home delivery when it is most convenient for them.
All Ohi brand partners, including leading beverage, CPG, and beauty players – Olipop, Alkaline88®, Health-Ade, and SolaWave – now have access to the delivery scheduling option to help boost their conversion rates and customer lifetime value.
Monitor and interpret real-time data for on-going improvement
Only 6% of companies report full visibility on their supply chain. 69% of companies do not have total visibility. (zippia)
Having access to the right data from an analytics standpoint can help you make educated decisions for supply chain planning. Inventory turnover rate, order accuracy, time to ship, storage capacity used, and the average cost per unit for storage, inbounds, fulfillment, and shipment are all critical metrics to track, as they provide insight into which areas of your supply chain are thriving and which require improvement.
In fact, analyzing the right kind of data that can provide supply chain visibility in real-time will also help foster better risk management.
Staying in the dark and avoiding numbers never helped anyone; without real-time information, you will frequently find yourself looking in the rearview mirror and unable to respond quickly to dynamic supply and demand conditions.
Optimize for sustainability
Your first step is to analyze your entire supply chain process and identify which areas can be improved. Some of these elements will be easy to identify; for instance, delivery vehicles that consume a lot of fuel or wasteful packaging materials.
If you aren’t already, make environmentally-friendly packaging and instant delivery a part of your supply chain. Besides saving the planet, sustainability is also becoming an increasingly important purchase factor for customers nowadays.
For instance, here at Ohi, our instant delivery generates the least carbon emissions because we ship products from micro-fulfillment centers that are located very close to customers. Because we use bike/e-bike/scooter couriers and foot couriers whenever possible in densely populated urban areas, instead of vans or cars, our transportation carbon footprint stays small.
In fact, Ohi deliveries were shown to be 22x more eco-friendly than next-day air and 5x more eco-friendly than 3-5 day ground.
As for packaging, for many of our rush and same-day deliveries, Ohi uses eco-friendly reusable totes, minimizing the use of cardboard/plastic waste in our packaging.
A healthy supply chain is crucial to e-commerce success.
E-commerce top guns like Amazon and Walmart are not slowing down on innovation and growth – and the supply chain continues to be one of their most powerful levers to outcompete DTC/D2C stores and smaller retailers. Strengthening your supply chain is therefore all the more imperative if you want to stay relevant and grow your e-commerce brand in these times.
At Ohi, we’ve flipped the script for e-commerce fulfillment, transforming it from what is traditionally seen as a cost center into a growth engine. Brands join the Ohi platform to deliver powerfully fast, brand-focused, and memorable post-purchase experiences that enable them to grow. Want to learn more about how Ohi enables instant commerce? Get in touch today.