This post is a guest post, contributed by our partners at Skubana.
During the COVID-19 pandemic, we saw many examples of how supply chain management can fail. The example that affected everyone's life was the toilet paper shortage, which did not result from hoarding as most people thought.
The shortage came about because there are two separate markets for toilet paper: commercial and consumer. When a large part of the workforce moved from working in the office to working at home, commercial toilet paper sat in storage closets while consumer toilet paper usage increased.
What is supply chain flexibility?
In a stable market, you don't have to worry too much about your supply chain processes. Demand will stay predictable and your supply chain partner will always deliver your products on time. But a consistently stable supply chain doesn't exist. Customer demand can increase for seemingly unknown reasons, and key suppliers can be unpredictable because they live in the real world just like you.
A resilient supply chain will adjust to sudden consumer demand changes, differing supplier lead times, new product additions, and other supply chain disruption forms. These disruptions will cause increased costs, longer delivery times, displeased customers, and different chaotic situations that will reflect on the image of your business and your bottom line.
To counteract these fluctuating market conditions, a modern supply chain needs to have micro-flexibility and macro-flexibility. A supply chain with micro-flexibility will detect and manage short-term hiccups, like a late delivery to a customer who paid for next-day delivery. Macro-flexibility means the supply chain can adjust to more significant changes, like adding new products, sales channels, or retail sales to an existing B2B sales model.
Supply chain management begins with supply chain managers coordinating all aspects of your supply chain operations from suppliers and raw material procurement, product design and manufacturing, to the logistics around delivery and returns. Using modern inventory management software to support your agile supply chain strategy will give you visibility into your supply chain network and real-time inventory levels, allowing you to react to changes automatically.
How does a flexible supply chain add value?
A flexible supply chain means that you can quickly adjust aspects of your supply chain dynamically to shifts in the market. This efficiency level is possible through the use of modern inventory and order management software to unify your sales channels, warehouses, and fulfillment operations.
This increases the profitability of your business by keeping inventory balanced with customer demand. You have the right amount of stock on your shelves because your inventory system will calculate accurate reorder points for every SKU and also predict upcoming sales trends before they occur. This translates to less capital spent on inventory and storage space you don't need.
Tracking inventory from the time you receive it to final delivery to the customer's doorstep touches every part of the supply chain organization. Because your business has this valuable data, the right inventory and order management software will alert you when a link in this chain costs you time and money. This IMS will also suggest alternatives to increase profits and efficiency.
Having a flexible supply chain also enhances eCommerce customer value. Having a streamlined supply chain that can change with fluctuations in the market means you have the products that customers want when they want them, can fulfill the order quickly, and use shipping metrics to choose the most efficient delivery method.
Elements of a successful global supply chain strategy
A successful supply chain strategy promotes agility and flexibility that can adjust to changes in the e-commerce environment. An automated inventory management system lends transparency to this environment. It gives you insights into where changes to streamline your supply chain exist, enabling task automation in your strategy.
The consumer is in control here. Therefore, storing inventory closer to where your customers are can enable quicker delivery times. This could also indicate a need to add more warehouses, seek new supplier relationships, or choose a 3PL partner.
Expanding your business to include your products on multiple sales channels will allow you to reach your customers where they shop and give them more choices to purchase your products.
These types of changes will improve customer experience, but with some trade-offs. For example, adding more sales channels to manage will add complexity to your warehouse logistics, supply chain planning, and overall operations. An inventory management system is necessary to manage this complexity, pull in big data from across your supply chain network, and transform that data into actionable insights for more informed decision-making.
You also need to look at your inbound supply chain. Your customers' needs may not be directly affected by this part of your business, but inefficiencies here affect all downstream processes in your company's supply chain. Reorder points need to be calculated accurately and adjusted to handle spikes in sales or seasonal demand patterns. Purchase orders need to be generated automatically and sent to suppliers based on their past performance and order quantity.
The dynamics of a successful supply chain strategy are complex, but they are worth it. It is essential to have an efficient inventory management system in place to simplify the transition to a more efficient process.
How to create a flexible strategy for your supply chain
Creating greater flexibility in your supply chain starts with finding options.
Finding additional key suppliers in strategic locations will allow you to have more choices when it is time to reorder stock.
Listing on multiple sales channels (like marketplaces, social media, or through retailer partnerships) will showcase your products to more customers and give them more options when it comes time to purchase.
Adding additional fulfillment methods will allow you to optimize the fulfillment process and give customers flexibility in receiving their products.
A modern order and inventory and operations management system will track your orders and inventory so that no order gets lost. It will help make stock-out situations a thing of the past while collecting data on suppliers, sales channels, and fulfillment operations. With this data, it will optimize your supply chain, adjust to trends, and ensure products take the quickest route from the supplier to fulfillment for your customer.
Supply chain flexibility has always been an essential component for any company that sells physical goods. Customer demand can increase out of nowhere. Seasonal sales can empty your shelves. Suppliers can have issues you don't hear about until it's too late. Shipper providers can change their policies. And pandemics like coronavirus can really shake things up.
Having a flexible supply chain means having options when one step goes wrong and having the ability to grow your business without retooling the entire process. Putting a flexible supply chain strategy in place and managing it with an automated order and inventory management system is necessary for the modern eCommerce landscape.