Gone are the times where customers spent days waiting for a delivery. From a bar of soap to the latest smartphone — today, consumers expect to buy everything online and receive their products within hours. And if they can’t find what they are looking for, they are quick to jump ship to another e-commerce store. That’s why a flexible, transparent, and automated supply chain is indispensable for e-commerce businesses — however, it’s a process that’s difficult to master even for the most reputed e-commerce companies.

What are the supply chain challenges for e-commerce companies?

Insufficient warehouses

Online shopping gives customers the freedom to place individual orders for a variety of products. This has led to a surge in the volume of small order sizes — forcing companies to store as many products as possible. Further, the sheer variety puts pressure on picking and packing departments, who must ensure that the right product is shipped safely. Some companies may also need specialized layouts to store a wide range of products, leading to rising warehousing costs.

Ineffective inventory management

Even the most reputed online stores often fail to predict product demand, causing either a stock shortage or excessive buffer. The increased number of stock-keeping units (SKUs) amplifies the problem of inventory management in e-commerce. Tracking different SKUs during the shipping process and even in the warehouse further adds to the stress of managers. Close monitoring of perishable inventory is another unique challenge, especially for e-commerce stores selling fruits, vegetables, milk etc.

Lack of robust logistics

Though there are thousands of orders placed online, return and requests are equally frequent. And online businesses must be equipped to handle these on a daily basis without completely disrupting their logistics — however, many lack the experience, technological expertise, and warehouse networks to do so. This leads to shipping delays, long lead times, and unhappy customers.

How can a 4.5PL logistic partner help e-commerce companies tackle these challenges?

Extensive warehouses - A 4.5PL partner is equipped with distribution centers and the technological tools required to address all warehousing concerns. They also save companies from fixed capital expenditure that goes into setting up their own fulfillment centers. With logistics partners that offer a variable cost model, e-commerce businesses can also limit their warehousing expenses by only paying for the number of units sold.
Effective inventory management - Logistics companies can manage inventory and fulfill orders with help of warehouse management software, tracking and tracing solutions, IoT and blockchain tools, etc. These technologies eliminate the need for paperwork, manual management, and ensure stakeholders are updated in real-time.
Large fleet - They also offer a large network of carriers to support the consolidation of small shipments, significantly lowering costs. Strategically located warehouses also minimize the distance traveled and serve hard-to-reach locations in the shortest possible time.

Supply chain management is a tremendous challenge that many e-commerce businesses fail to overcome. However, an end-to-end logistics company can bring major transformation to by effectively managing warehouses, shipping, inventory, and overall costs.

With H&S as your partner, you can focus on providing the best products, while we work on building and executing the optimal supply chain model. Our future-ready solutions help you improve service performance, minimize costs, deliver superior customer experiences — and scale your business to new heights.

Sources:

● https://www.easyship.com/blog/supply-chain-challenges

● https://www.sccgltd.com/archive/e-commerce-supply-chain-challenges-who-pulling-strings/

● https://multichannelmerchant.com/blog/8-supply-chain-strategies-to-improve-your-ecommerce-business/

● https://multichannelmerchant.com/blog/determine-3pl-system-requirements/

● https://sipmm.edu.sg/8-strategies-successful-ecommerce-supply-chain-fulfilment-centre/

● https://www.thebalancesmb.com/3pl-ecommerce-logistics-1141740