What is Supply Chain Management in eCommerce
The concept of supply chain management (SCM) refers to the strategic management of all operations involving a companies suppliers. The goals of SCM are straightforward: ensure products get to the right place at the right time and in the most efficient manner, reducing costs and improving customer relations among other benefits.
Supply chain management relies on each partner, from supplier to manufacturer and beyond, to work in unison to achieve the ultimate goal – getting the finished product to the customer in a manner which is efficient for both the customer and the business.
However, with any supply chain comes risk.
Because of this, effective supply chain management also requires the presence of risk management to create alignment and communication between all partners.
Keeping that in mind, lets talk more about the benefits of supply chain management in eCommerce.
Benefits of SCM
A well-rounded SCM can benefit your business in many ways.
From reducing costs to improved efficiency, the main objective of SCM is to benefit both your business and the customer.
Let’s go more in depth over a few of these benefits so you can ensure investing your time and money into improving your SCM is worth it.
Decrease in costs
SCM works to improve all areas within a supply chain, especially cost wise.
Take a moment to think about your current supply chain, how much does this process cost your business?
Look back at your business plan and review the logistics and operations section to refresh yourself on how your current supply chain functions cost wise.
Do you see any areas where you could cut investments back on while till maintaining efficiency?
More times than not, business invest more than required in areas which could be streamlined.
It’s definitely worth taking a step back to review your supply chain in order to uncover these areas.
Improved customer relations
Businesses are now facing the challenge of creating an excellent customer experience that’s consistent across every interaction.
To achieve this, many companies have started to focus on how they manage their customer relationships.
An effective SCM works to create alignment between all partners, which in turn can create faster delivery times and a better overall experience for the customer thus improving the brands relationship with their customers.
Building strong customer relationships is an excellent way to develop customer loyalty and retain valuable, long-term customers.
Delays in SCM often leads to poor relationships with stakeholders and loss of business.
Some common issues you may experience when working with your supply chain may be: late shipments from vendors, hold-ups on production lines, and logistical errors in distribution channels.
However, SCM works to flawlessly coordinated and execute all activities within a supply chain from start to finish, to ensure higher levels efficiency across the board.
Risks of SCM
After going over the benefits, we think it’s also important that you learn some common risks associated with SCM.
There’s no way to completely eliminate risk but by being prepared you can better plan and accommodate for potential risk.
One of the most common risk that is the same for all supply chains is environmental risk.
All supply chains work in an environment which means changes to the environmental factors like competition, political and legal framework or even in national cultures (trade unions) may pose a threat to the efficiency of supply chains.
In today’s age, technology has become a major part of efficient supply chains.
However, with this advancement and dependence of technology within supply chains also comes the risk for cyber attacks.
Someone with malicious intent could bring down entire supply chain networks and force freight rates to skyrocket.
Cyber attacks pose a detrimental threat to modern day supply chains across the globe.
Risks from the decision maker
The decision maker in each activity in a supply chain is an important link in a chain.
His decision making capabilities and decisions have a major impact on the performance of the supply chain and the overall performance of the business.
Understanding these risks and from where they arise is crucial for the success of any supply chain manager.
Conclusion: What is Supply Chain Management in eCommerce
We hope after reading this article you’ve gained a better understanding of what supply chain management is, along with the benefits and risks associated with supply chains.
As a next step we recommend reading this article going over a seven tips on managing a supply chain.
let’s work together!
In the meantime, check out the eCommerce management company services we offer here at Verdure Digital.