Supply Chain Management: Know How to Optimize the Fulfillment Processes

In the era of Amazon, optimizing the supply chain leads to increased customer satisfaction and enhanced profits that result from prioritizing the customer experience. Supply Chain is a concept that encompasses the entire process of distributing a particular product or service, from the extraction of the raw material for its manufacture to delivery to the final customer.

However, this movement is not unidirectional; that is, it is not enough to just cause the product to leave the factory and reach the consumer. There is also a counterflow of data, which is the information on the customer’s demand.

Supply Chain Management aims to manage these relationships and integrate the links that are formed along this chain.

But what are the difficulties of this management in retail, and what tools can be used to optimize the processes? Let’s understand further!

Supply Chain Management and Fulfillment Processes in Retail

The supply chain by itself already brings some difficulties. It turns out that this scheme is not as linear as it seems. The projected market size for the supply chain management market in 2027 is $45.2 billion, as reported by GlobeNewswire.

In addition to needing to anticipate the demand of the consumer market, the supply chains are formed by several companies that are related to multilateral flows. This complexity is even greater in retail since, in this marketing model, there is a continuous cycle of buying and replacing goods. This process needs to be nimble, supplying the stores with the right goods.

The idea is that everything the store was able to sell in one day is already restored the next day. Therefore, it is important to have tools that allow real-time counting of sales and demands so that the new order gets made to the supplier.

Models of Supply Chain Management 

1. Supplier Optimization: When optimizing your suppliers, it’s important to recognize that your manufacturers have their own suppliers for raw materials. In this two-tier system, negotiating at both levels is crucial, as any savings your suppliers achieve in sourcing raw materials can ultimately benefit your bottom line.
2. Supplier Inventory Management: This model involves balancing your demand with your supplier’s inventory levels. Ensuring the right balance prevents excess stock that either you or your supplier would need to store. With the right inventory management tools or plugins on your WooCommerce store, you can prevent inventory shortages that could lead to lost sales and delayed orders. 
3. Cost Control: Controlling production costs significantly impacts your revenue. Negotiating and renegotiating with suppliers to strike a balance between quality and affordability is essential. Some regions, like Asia, often offer cost-effective solutions due to lower labor costs.
4. Logistics Management: Effective logistics management can lead to reduced shipping costs, optimizing the delivery of orders to customers. Utilizing third-party logistics and warehousing, especially for international sales, can be beneficial for cost-effective shipping and timely delivery.
5. Resource Optimization: To streamline your supply chain, it’s crucial to efficiently manage your in-house resources. This includes ensuring that your staff, systems, and technologies are all contributing effectively to your business growth. Outdated technology or untrained staff can lead to lost customers and orders, regardless of how well you manage inventory and fulfillment.

Understanding the Dropshipping Order Process

Dropshipping operates uniquely compared to similar services. Here’s how it works:

1. Customer Places an Order:

• The customer selects and orders their desired product from the store.
• Both the store and the customer receive order confirmation emails generated by the store system.
• Payment from the customer is processed and transferred directly to the store’s bank account.

2. Store Initiates the Order:

• After the store receives payment in its bank account, it proceeds to place the product order with its suppliers.

3. Order is Shipped:

• Assuming the ordered product is in stock, the supplier charges the store for the product’s cost.
• The designated drop shipper responsible for fulfillment prepares and ships the order to the customer.
• The package label and details reflect the store where the customer made the purchase.
• The store receives comprehensive package information.

4. Store Communicates with the Customer:

• With all package and shipping information in hand, the store informs the customer via email.
• The store also shares tracking information, allowing the customer to monitor the product’s journey until it reaches its destination.

Logical Strategizing of Supply Chain Management

In the past, logistical strategies primarily centered on operational streamlining and cost reduction. However, over the last decade, businesses have strategically integrated supply chain management into their overall corporate strategy to gain a competitive advantage.

This strategic alignment involves making deliberate choices regarding suppliers and buyers to ensure the efficient flow of information and materials. The ultimate objective is to fulfill customer demand by formulating precise business strategies and performance objectives for all facets of the supply chain.

The attainment of such performance levels hinges on collaboration with partner companies. It is imperative that all entities within the supply chain synchronize their strategies to work collectively toward a shared goal.

Upon defining the strategy to enhance supply chain efficiency, long-term planning becomes a critical component to ensure that industry actions align harmoniously with the company’s overarching strategic vision. Optimization tools play a pivotal role in this process, and an in-depth exploration of their functionality will follow.

Also Read: Speed Optimization Techniques to Turbocharge Your WooCommerce Store

10 Tips for Optimizing Your Supply Chain Process

1. Consider Outsourcing: To streamline your business, think about outsourcing specific tasks such as procurement, logistics, or customer service. This can enhance your efficiency and lead to greater success.
2. Foster Communication: Establish transparent communication between retailers and suppliers. Effective communication ensures timely fulfillment of demand and minimizes confusion, especially when dealing with multiple suppliers.
3. Leverage Technology: Utilize mobile and internet technologies for marketing, direct sales, and communication. Social media and online platforms can assist in identifying trends and offer location-based promotions to boost sales.
4. Centralized Management Software: Invest in centralized management software to integrate different departments within your business. This facilitates collaboration among systems like sales, inventory, and finance, streamlining processes.
5. Multichannel Approach: Adopt a multichannel strategy for managing demand and supply. Efficient inventory management and prompt communication with suppliers are key in eCommerce. A multichannel marketplace aids in trend forecasting.
6. Quality Assurance: Prioritize high-quality products at competitive prices. Thoroughly understand your suppliers’ strengths and limitations, shop around for suitable partners, and request quotes to find the right match.
7. Effective Planning: Plan ahead for timely order fulfillment to avoid costly logistics issues. Proactive planning ensures appropriate inventory management and order fulfillment without resorting to expensive expedited shipping.
8. Customer-Centric Approach: Align with your customers’ demands by analyzing sales data to predict future trends. Communicate these insights to your suppliers to optimize inventory management.
9. Utilize Analytics Tools: Employ analytics tools, like Google Analytics, to analyze market and customer data effectively. Understanding customer preferences, shopping behavior, and seasonal sales patterns is vital for informed business decisions.
10. Negotiate Strategically: Negotiate with suppliers to secure competitive rates and revisit negotiations as needed. Cost-cutting is a central goal in the optimization process, as reducing inventory costs can improve profit margins.

Supply Chain Optimization Tools

• Inventory automation: The implementation of inventory automation through electronic inventory management tools like Unicommerce is a pivotal step in enhancing supply chain management. These software solutions possess the capability to autonomously execute several crucial functions. 
• Electronic Order Processing: These tools, like Browntape, assess the optimal timing for supplier orders, considering inventory requirements. They create ordering schedules and facilitate the automatic capture of electronic invoices.
• Automated Merchandise Relocation: The software aids in streamlining supply chain processes among stores by analyzing product re-management data. It offers suggestions for transfers, replacements, distribution adjustments, and solutions to address stock imbalances.
• Merchandise Receipt Automation: These systems identify invoices and employ robotic automation to import them seamlessly. They are adept at reading email-based notes and identifying disparities between physical logistics and invoice contents, triggering electronic correction orders. One of the most common ones is Finly. 
• Integration with ERP (Enterprise Resource Planning): Automation within an integrated management system or ERP standardizes processes and presents managers with a comprehensive overview of the entire supply chain, enhancing decision-making capabilities. You can make use of Absolute ERP for streamlining your processes. 

Benefits of Cloud Software in Supply Chain Management 

1. Real-time Visibility: Cloud-based systems provide real-time visibility into the entire supply chain. This enables better tracking of inventory levels, order statuses, and shipments, helping companies make informed decisions.
2. Scalability: Cloud solutions can easily scale to accommodate changing demand, whether it’s an increase in orders or expanding to new markets, without the need for significant infrastructure investments.
3. Collaboration: Cloud platforms facilitate collaboration among various stakeholders in the supply chain – retailers, suppliers, manufacturers, and distributors. They can share data and collaborate seamlessly.
4. Data Analytics: Cloud-based supply chain software often comes with built-in analytics tools. These tools can process large volumes of data to provide insights, predict demand, optimize routes, and improve overall efficiency.
5. Cost Efficiency: Traditional on-premises software requires upfront hardware and maintenance costs. Cloud software, on the other hand, operates on a subscription basis, reducing the initial financial burden.
6. Security and Compliance: Reputable cloud providers invest heavily in security measures, often exceeding what individual companies can achieve. They also assist with compliance with industry regulations.
7. Disaster Recovery: Cloud services typically offer robust disaster recovery options, ensuring data and operations remain accessible even in the event of a catastrophe.
8. Mobile Accessibility: Cloud-based systems are accessible from anywhere with an internet connection. This means supply chain managers can monitor and manage operations from mobile devices, which is especially valuable for global supply chains.
9. Automation: Cloud-based supply chain software can integrate with various automation technologies, such as IoT devices and AI-driven processes, to streamline operations further.
10. Reduced IT Burden: With cloud software, the burden of managing hardware and software updates falls on the service provider, freeing up IT resources within the organization.

Also Read: Exploring Public, Private, And Hybrid Cloud In 2023: Picking The Right Cloud Deployment Model

Expert advice

The specialized consulting service in supply chain management supports the company’s managers in overcoming obstacles in their planning and execution of supply chain strategies. The goal is to generate satisfactory and tangible results.

A consulting firm will be able to perform a professional intervention and determine which methods or practices can assist in the innovation of the company’s logistics and business processes.

Evolution in Supply Chain Strategies

To address these challenges, supply chain strategies have evolved. Some notable trends include:

1. Digitalization: The adoption of technologies like AI, IoT, and blockchain is transforming SCM, enabling real-time visibility and predictive analytics.
2. E-commerce Revolution: The growth of online shopping has forced companies to revaluate their supply chain strategies, focusing on last-mile delivery and omnichannel fulfillment.
3. Sustainability Focus: Companies are incorporating sustainability into their supply chains, reducing waste, and embracing eco-friendly practices.
4. Resilience Building: Businesses are diversifying suppliers, increasing safety stock, and developing risk mitigation strategies to ensure continuity during disruptions.

Optimization and results

Undoubtedly, technology gives greater agility to the supply chain processes. Optimizing supply chain management processes enables managers to analyze departmental and store sales performance, measure where improvements can be made, and make better decisions for overall business growth. Despite the complexity of the retail supply chain structure, it is possible to organize and enhance this management through appropriate control tools.

FAQs 

Which key performance indicators (KPIs) are needed to measure supply chain performance?

Key performance indicators in supply chain management include metrics like on-time delivery, inventory turnover, order accuracy, transportation costs, and customer satisfaction.

How do you differentiate between a supply chain and a value chain?

A supply chain is a broader concept that includes all the activities involved in producing and delivering a product or service, while a value chain focuses specifically on the activities that add value to the product or service.

What are some key sustainability practices in supply chain management?

Sustainability practices in supply chain management include reducing carbon emissions, minimizing waste, sourcing materials responsibly, and ensuring ethical labor practices in the production process.

What are the benefits of demand forecasting in supply chain management?

Demand forecasting helps businesses anticipate customer demand, optimize inventory levels, reduce stockouts and overstocking, and enhance overall supply chain efficiency.