What do you think when you hear the word agility?
A sprinter running for gold in the Olympics maybe. Well in the ecommerce supply chain context, agility relates to how quickly an ecommerce business can adjust to ever-changing expectations in speed and delivery.
Agile supply chains need to be able to react quickly to changes, delays, and unexpected events to maintain customer expectations, stay competitive, and grow their business.
This article will teach you the importance of supply chain agility, what is means to be an agile fulfilment provider, and strategies and best practices to incorporate into your supply chain.
What is supply chain agility?
Supply chain agility refers to how quickly and efficiently an ecommerce supply chain can react to changes in the market and customer demand. It also relates to the ability to anticipate, resist, and bounce back from unexpected, disruptive events.
To build an agile supply chain, an ecommerce business must have the resources to:
- Optimise and improve logistics operations efficiently
- Easily implement the latest technology and automation
- Gain visibility into operations and access real-time data
Why is supply chain agility important for ecommerce?
Having the right processes in place is what keeps customers satisfied
and an ecommerce business financially secure, despite unforeseen setbacks.
Agile business models are essential across all industries but has more of a significant effect for ecommerce businesses. Meeting with customers expectations, optimising operational costs, and adopting new trends in the market, these are all examples of where and ecommerce business needs to be flexible.
Here is an overview of why supply chain agility is so important for ecommerce.
Meets market demands
An agile supply chain enables you to meet customers demand for fast, affordable shipping despite sudden changes in order volume.
However, this does not come easy and requires deliberate supply chain management
Supply chain agility can not be achieved without first considering the different ways to ensure you meet customer expectations despite potential disruptions or unexpected changes in market demand.
Here are some examples of how to meet customer demand and stay agile:
- Storing inventory in several distribution centres
- Integrating logistics automation and technology
- Working with multiple manufacturers
- Leveraging a mix of major and regional parcel carriers
Reduce supply chain costs
Something ecommerce businesses are always trying to optimise are logistics costs. These include:
- Warehousing and storage fees
- Order fulfilment
- Inventory management
There are several ways you can optimise costs while keeping your business agile, such as sourcing products closer to home and optimising inventory based on demand.
Streamlines supply chain processes
Supply chain efficiency is what will establish agility. Always be looking for ways to make your supply chain leaner.
With streamlining comes some benefits such as improved efficiency, reduced human error, and saved time and money in the long run.
To effectively streamline your processes you should think about automating areas of manual work.
Automation doesn't remove all human labour however processes like shipping, order processing, inbounds, and outbounds can be automated and this will aid in streamlining operations and increasing productivity.
Improves customer satisfaction
Over the past decade customers have begun to expect fast, consistent, and reliable shipping.
These expectations have led to the rise of on-demand logistics, which involves the ability to expand customer reach geographically and fulfil orders across multiple channels quickly.
To meet customer expectations think about implementing a robust distribution network, flexible fulfilment solutions, and the latest technology that enables speed and order accuracy.
What does a functional agile supply chain look like: 5 key dimensions
To build an agile supply chain you first need to understand what influences agility, so here are 5 key areas to think about when creating an agile supply chain.
Alertness is the ability to quickly identify changes, opportunities, and threats.
This is a skill online retailers should hone as it gives them a better chance at detecting and reacting to good and bad changes throughout their supply chain, but also the market. Staying alert protects an online brand from promoting the wrong products due to a change in popularity or even missing an opportunity all together for new product developments.
By offering high-demand products and fast delivery, you are more likely to build customer loyalty and continuously meet profit goals.
Alertness enables a business to be proactive, accessibility refers to the total visibility you have over your supply chain. This visibility relies on real-time data.
Having insights into past and present real-time data can make it easier to forecast demand, allocate inventory efficiently, and find ways to improve the fulfilment and shipping process.
This is the ability to make informed decisions.
A growing supply chain comes with some struggles such as making informed decisions becoming harder to make efficiently. This can be counteracted by implementing supply chain technology that automatically records data throughout your supply chain. This technology offers transparency and without could lead to uninformed decisions, now you have no reason not to understand everything within your supply chain.
OnLogistics has a tailored WMS system which brandishes its simple yet effective dashboard. On this dashboard any information you require from order processing to inventory reports, it can be found here. With this technology in place you have complete control over your supply chain.
The right technology makes planning ahead simple and will aid you in improving supply chain management.
Swiftness refers to the ability to implement changes efficiently.
It is all well and good being able to identify changes but if you lack the capacity to implement them quickly it makes no difference. While building your supply chain, leave room for future supply chain optimisation.
Doing this enables you to make small incremental improvements constantly and consistently to reduce inefficiencies that could be costing you money.
This is the ability to modify your supply chain operations based on any changes that arise.
Flexibility gives you the luxury of amending and adjusting to a range of external changes. The ability to alter operational tactics for the whole supply chain to align it on the best path for growth.
An example of flexibility is working with multiple manufacturers or suppliers that can help meet customer demand, introduce new product lines and ensure your inventory stays stocked.
Another way is to work with a 3PL like OnLogistics that can provide operational infrastructure that you may currently be lacking, as well as up-to-date technology that can aid in expanding into new channels, regions, and fulfilment centre locations.
With the right 3PL you can easily expand your supply chain without the extensive upfront costs if you did it yourself overall reducing time and energy.
6 supply chain agility strategies and best practices
Now you understand the attributes you need to strive for, it is time to utilise them with these common strategies and best practices.
1.Implement demand forecasting
Inventory forecasting is the process of modelling out predictive analytics based on historical data to estimate customers’ future demand for a product or service.
Demand forecasting highlights fluctuations from past, seasonality, and patterns. With the proper usage of demand forecasting it can aid you to maintain healthy stock levels at all times, plan for future promotions and flash sales, and ensure enough inventory during busy periods such as Christmas.
OnLogistics software includes real time demand forecasting giving you the ability to see which products should be pushed and ones that aren't doing too well. It also has the ability to cycle back through past months where you can find product lifecycles. Pair this with the optional integration with an inventory management tool and you will have complete transparency and automation over part of your supply chain.
2.Set SKU reorder points
To avoid a stock outage or delays within fulfilment, you can use past inventory and sales data to determine when new inventory is needed to be ordered at each SKU level. With this data you can also predict future growth and order how many SKUs you think you will need.
3.Use real-time data
Real-time inventory levels are a critical variable to measure. They provide more visibility into operations so that you can make informed decisions and take a more proactive stand when implementing changes throughout your supply chain.
For example, the ability to track, view, and manage inventory levels throughout your supply chain in real time can give you ideas of how to optimise inventory to meet current demand, while also trying to keep costs low.
Additionally, operational data can be used to better forecast demand, calculate safety stock quantities, identify inventory turnover rate, and perform tactics that can help you improve your brands financials keeping the supply chain strong.
4.Invest in warehouse technology
As your supply chain expands, demand for inventory will increase and as a result of that you may need to look into more warehouse storage. Without the proper technology this can make ecommerce warehousing a challenging and complex process.
Technology than can monitor and control daily operations within your warehouse can make managing them that much easier, less time-consuming and more efficient.
Warehouse automation and technology, such as a warehouse management system (WMS), helps ensure inventory is received, stored, picked, packed, shipped, and replenished in the most efficient way possible.
The right warehouse technology can also provide insight into fulfilment speed, orders fulfilled on time, error rates, total orders, and much more. With OnLogistics WMS system integrated into your web store, you can have full transparency of this too.
Incorporating warehouse technology can also be cost effective. Although upfront costs can be uninviting, looking past this you will see a major return-on-investment through the new data you can collect and utilise to optimise your supply chain. This is what sets fulfilment warehouses
5.Distribute your inventory
Lets hypothesis here. You have one warehouse in which all of your stock is held and for example something external occurs that inevitably halts all order fulfilment indefinitely, like a power outage or a fire. How would you fulfil your orders?
Splitting your inventory across multiple locations can aid in this hypothetical scenario. Having multiple locations will also help expand your customer reach geographically while at the same time reducing shipping costs and speeding up transit times. A second fulfilment centre can also improve fulfilment delays helping you continue to meet customers expectations.
OnLogistics has 2 main warehouses
as well as partner warehouse locations throughout Europe, America, and parts of Eastern Asia. This allows us to consistently meet demand on an international scale.
Incorporating everything that has been discussed above is what will give you the best possible start to supply chain agility. For a new or start-up business this may be a little daunting as you won't already have these in place and the upfront costs may be too much for you, well this is why partnering with a 3PL would be the best option for you.
A top of the range 3PL will already have everything discussed incorporated into their business and readily available to you, if you choose to partner with them. OnLogistics' system can be integrated into a number of web stores such as Shopify and Woocommerce. Through this system you will receive full access to the WMS system giving you your very own personalised dashboard.
Partnering with OnLogistics will reduce the time and energy you spend on shipping orders, where you can replace this new found time with other initiatives, such as ecommerce customer service, product development, and sales and marketing.