How to Build a Resilient Supply Chain Management Process

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To effectively manage a supply chain, products must move through the various steps of the process quickly and efficiently—from the component manufacturer to the distribution center, to retailers, and finally to end consumers.

Using the right tools and software, as well as an effective supply chain model, is essential to achieving optimal efficiency. This will allow you to provide maximum value to your customers while remaining competitive in all areas of operations management.

Supply chain management includes all of the processes that change raw materials into finished goods, coordinated throughout various stages.

Brand success over time is contingent upon supply chain management because it assists retailers in quickly, efficiently, and cost-effectively delivering products.

The Importance of Supply Chain Management

E-commerce retailers of all shapes and sizes can benefit from supply chain management (SCM). The most crucial advantages of SCM are its potential to improve the customer experience, lower operating expenses, and increase your brand’s bottom line.

Enhances the Customer Experience

Customers are the root of any product-based business. To improve customer experience and encourage brand loyalty, focus on streamlining your supply chain management. Optimized SCM leads to accurate orders and timely deliveries.

By making supply chain management a priority, you can better control inventory levels and product availability. This way, you will always have what customers want in stock. Also, having fully stocked SKUs that are ready to ship speeds up order fulfillment and cuts down on delivery time for your customers.

Decreasing Operating Expenses

Your business can always save money by reducing overhead expenses. A great way to do this is through supply chain management, which can decrease your purchasing, production, and total supply chain costs.

An effective supply chain network helps you keep track of your inventory so that you can avoid issues with lost, stolen, or wasted items. SCM also helps retailers avoid holding onto inventory for too long, which means more sales and less dead stock.

Boosts Your Bottom Line

It's no surprise that when your business lowers its expenses, it will improve your bottom line. In other words, if you manage (and lower) the costs of your entire supply chain process, then you're likely to see a jump in profits.

By speeding up your supply chain workflows, you save money by avoiding longer production and fulfillment timelines. Simply put, the more time it takes for your product to reach the customer, increase common fees along the way.

Fundamentally, SCM protects your profits and ensures that your business is as efficient as possible at every stage of the supply chain process.

How to Build a Resilient Supply Chain Management Process

Are you wondering how to construct a dependable SCM process for your retail brand? Here are five steps you can take to implement supply chain management and start experiencing the benefits.

1. Clarify Your Supply Chain Models  

You'll need to establish your supply chain models if you want to keep track of every part of your supply chain. The right model for your business will depend on various factors, such as the size of your company and the type of product you sell. Fortunately, there are many different models available—some prioritize speed, others emphasize agility, and some focus on operational efficiency.

In order to build an effective supply chain model, consider these five components:

  • Planning
  • Sourcing
  • Manufacturing / Assembling
  • Delivering
  • Returning

A third-party logistics (3PL) provider could help with some of these aspects, or you could go even further by using a fourth-party logistics (4PL) or fifth-party logistics (5PL) provider to supplement your own capabilities.

2) Build the Right Supply Chain Management Systems 

In order to get your supply chain running efficiently, the second step is putting your SCM system(s) in place. Most e-commerce companies nowadays require software for all aspects of supply chain management.

A quality supply chain management system will monitor and organize your product's journey from storage to arrival, communicating with suppliers along the way. By keeping an open dialogue between all parties involved in the process as well as through providing updates and forecasts, optimal inventory levels can be maintained to avoid common disruptions.

Your system should also have the ability to connect with retailers, including DTC, B2B, dropshippers and any other online marketplaces you’re utilizing. In addition, you should be able to track your inventory as it moves through the warehouse (whether it’s being managed by a 3PL or by your own team).This means you always know the status of your inventory, whether it's in transit or being returned to the distribution center.

3. Forecast Demand and Build a Supply Chain Plan 

In order to become a successful supply chain leader, demand planning must be your next focus. This is because good planning is vital in achieving any goals you have set for managing your supply chain as well as assessing and minimizing risk.

There are crucial timing aspects to take into account at each stage of the supply chain that need thoughtful preparation and strategic planning. In other words, you'll need to forecast and manage demand to meet customer requirements. Although it can be tough to make precise predictions, it's necessary to keep a harmony between supplying and demanding your products so you can relay your needs clearly to manufacturers.

If you want your forecast to be as accurate as possible, you will need to include your historical sales data along with current consumer buying trends. You don't want too few products that you sell out and cause backorders, but if you have too much inventory, then warehousing storage fees begin to cut into your profits. An enterprise resource planning (ERP) tool simplifies forecasting and inventory management by keeping everything in one place instead of relying on multiple spreadsheets.

A high quality ERP will provide you with real-time updates, allowing you to connect your forecasts to your warehouse. This will ensure that incoming shipments match what is already in stock, and takes the guesswork out of it all so you can focus your time and energy in more other places.

4. Rolling with Sourcing and Procurement

The sourcing process begins when a retailer needs to find potential suppliers and manufacturers in order to gather the raw materials required to make or assemble their products. Vetting these sources is essential to making sure they will have what you need for your product line.

You'll need to establish your metrics for quality and quantity, as well as the standards you want your partners to adhere to, no matter who you choose. This will allow for a solid foundation in this crucial first step of supply chain management.

On the other hand, procurement is mainly acquiring the smoothest-running products, goods, or services. While sourcing has to do with hiring those that will actually construct your desired objects , procurement focuses more on the items themselves--that is gaining access to needed materials in order to continue production down the supply chain. When there's a critical problem like shortage of parts or issues with suppliers, then that's when procurement gains importance and emphasis. A high quality ERP will help you eliminate these types of issues.

5) Forge Supply Chain Partnerships

If things go wrong, you'll want to make sure you have reputable partners who can help. So much of supply chain management is about building a resilient network of support for your business and your business strategy. While forging relationships with supply chain professionals can elevate your business and help you grow—ultimately, those relationships will help resolve issues when things don't go as planned.

Good partnerships are essential for risk management and keeping your company afloat when difficult times come. For example, if parts are scarce and the manufacturer is allocating them based on need, a close relationship will help you get priority over other brands.

The entire supply chain, from freight carriers to 3PLs, operates in a similar manner. If you want your company to be successful, it is essential that you partner with reliable companies instead of working with random vendors on a transactional basis.

Your supply chain manager is responsible for the coordination and implementation of your company's supply strategy. They will work with suppliers to ensure that you have the right products at the right time, while also considering cost, quality and delivery schedules. A good supply chain manager has a deep understanding of all aspects of Supply Chain Management (SCM), from transportation and logistics to inventory management and warehousing.

Working with Luminous to Automate Supply Chain Management

In order to stay ahead of the competition, it is essential that your company's supply chain management be flawless.If you want to be successful in e-commerce, you need to find the right partners to support product development and logistics management along the supply chain.

Utilizing a proficient and easy to use management software will do wonders for your company's sustainability. Modern, easy to use software, like Luminous, can automate a range of retail operations and business processes (e.g., inventory and order management systems) so you don't have to! 

Automations will not only save you time, but also lower the possibility for human error and increase accuracy in your business tasks. In addition, automations can decrease overhead costs related to manual labor and speed up purchasing and replenishment cycles.

At Luminous, we offer a comprehensive software solution to support your supply chain management needs. Our full suite of inventory and fulfillment services allows your brand to scale without sacrificing flexibility, quality, or customer satisfaction. Contact Luminous today to schedule your free demo.

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