To put a complex process into simple terms: supply chain management serves as the foundation on which to lay both your offline and online operations.
What is Supply Chain Management (SCM)?
At its core, allows manufacturers, wholesalers, and distributors to optimize supply-side activities to produce, sell, and distribute products to end users. This maximizes value for their buyers with faster production cycles and solidifies a competitive edge for their business. It involves gaining and maintaining visibility across your full supply chain, and then using that visibility to streamline processes, cut costs, and minimize inefficiencies (whether that’s across your warehouses or due to haphazard inventory management).
SCM’s Biggest Challenge and Opportunity
Today, most organizations have “only 20% visibility into their supply chains, compared to the 70% to 90% percent needed to address key points of volatility where revenue and costs are at risk.”
In addition, as many as 84% of Chief Supply Chain Officers feel supply chain visibility is their biggest hurdle, and that it’s caused inefficiency across their business (IBM). Most don’t know how to address this challenge. What’s worse is that SCM is also getting more complicated as organizations see digitization cause disruptions and changes to the status quo.
But beyond just cutting costs and simplifying fulfillment logistics, proper supply chain management also presents a significant opportunity: the expansion of your sales channels, particularly online.
“The reality is that [manufacturers,] distributors and wholesalers with e-commerce in place are managing better than ones without. The high demand is making it challenging for companies that underinvested in the digital channel in the past. Even digitally mature companies are having to make changes to adapt to demand,” shared Karie Daudt, a senior commerce consultant, with Digital Commerce 360.
The Role of Supply Chain Management in E-Commerce
For B2B organizations prioritizing and optimizing their supply chain management, e-commerce is the key to going beyond reducing existing costs and into capturing new, limitless online and cross-channel revenue (as well as achieving other leading business goals). Here’s what our research tells us:
But both initiatives go hand-in-hand, and you can’t reap the maximal benefits of either approach without the other.
Supply chain management should always start with an overview: map out your supply chain network and gather as much data as possible about what your business is currently doing, what’s working, where you don’t have enough data or visibility, and where your areas of opportunity are.
Supply Chain Management’s Top Areas of Opportunity
According to recent data from Peerbits, you should be looking at insights that will also help you map e-commerce logistics and optimize your online sales channel, such as:
- Costs of distribution and order fulfilment
- Inventory matching based on SKU location
- Shipping timelines, etc.
You should also consider focusing on crucial areas of improvement, based on what your buyers are looking for. For example, our 2019 research tells us that 42% of B2B buyers prefer online channels solely due to the ability to get better insight into available inventory and delivery times. By optimizing only last-mile delivery, you can retain, on average, 60% more customers and transform 40% more of them into advocates for your business (Peerbits). Now imagine the impact of tackling just few more problem areas of your supply chain management; the advantages can be even more impactful, and longer lasting.
Ultimately, having flexible, lean supply chain operations that leverage digital and embrace automation puts your business in a position to better adapt to disruptors and changes in the market or in buyer demand. But, when done right, it also means an online sales channel and strategy that stands out from the rest.
Why (and How) Supply Chain Optimization Means Better E-Commerce
Effective supply chain management in e-commerce means optimization, and that can mean anything from keeping better contact with your manufacturers, to planning for surges or dips in demand ahead of time, to automating or using “smart” inventory management, and more. Successful optimization means you can mitigate known issues your buyers face, especially online. For example, if you succeed in improving visibility across your supply chain and in ensuring accurate data on which to rely across your organization, your e-commerce strategy becomes a breeze (especially with a solution like Sana Commerce).
With a well-managed supply chain and the right data, you can offer your customers an online sales and revenue channel that maximizes transparency and communication (and thus, profitability and success). It will also serve as a way to cut costs for your business and to capture more new revenue.
Supply Chain and E-Commerce: The Sana Commerce Difference
When integrated with your ERP system, your e-commerce experience or web store can populate real-time data when your buyers need it most, including up-to-date inventory availability information, product details, pricing, and delivery tracking (which is particularly crucial in communicating potential delays). This is all possible with a solution centered around organizations’ central data hub, their ERP system — and it doesn’t mean a further-complicated tech stack or more data silos. In fact, with an ERP-integrated solution, like Sana’s, it’s quite the opposite.
On the flip side, orders placed via the web store are also integrated back into the ERP in real time: mitigating and even addressing a common issue in supply chain management for e-commerce: errors in manual data entry. For supply chain vendors, as much as 50% of procurement functions run on static spreadsheets, leaving processes prone to manual human error (LevaData). Thus, not only is ERP e-commerce an additional revenue opportunity, but it can also help tackle existing SCM issues.
With a Sana Commerce B2B web store, not only can you further leverage improved supply chain management to master e-commerce, but you can do so in a way that doesn’t require a large workload from your internal teams. You can also supplement your supply chain optimization and e-commerce approach with additional customer-centric strategies, such as dropshipping or embracing direct-to-consumer (D2C) sales.
For more insight into how supply chain management and e-commerce go hand-in-hand to create new business and revenue opportunities for B2B organizations, download our 2020 whitepaper — Supply Chain and E-Commerce: The Essentials Guide for Manufacturers, Distributors, and Wholesalers.
23 April, 2020