4 Reasons Why Your E-Commerce Supply Chain Doesn’t Work
The e-commerce train has left the station – are you on track or stuck behind because you can’t afford the ticket?
It is almost a given today that in order to thrive in this economy you must have an e-commerce supply chain up and running. The majority of businesses have some type of e-commerce supply chain, but many report that their return on investment is break-even at best. But the whole e-commerce boom was supposed to bring prosperity to everyone in the supply chain – what happened?
If you are struggling to find value in your e-commerce supply chain, look closely at these problems and see if any sound familiar:
- System cannot scale to meet demand – your supply chain was built around an established set of brick and mortar destinations with scheduled deliveries and replenishment practices. The e-commerce supply chain has a new set of delivery expectations and different replenishment processes that has put a strain on your supply chain that was not anticipated.
- Price transparency took away your advantage – if your supply chain was built around delivering products based solely around price, serious challenges arise in the world of e-commerce because comparisons are far too easy and consumers now look for total value including availability, service, convenience along with price.
- Warehouses are not designed to serve – carefully evaluate how your warehouse network is designed. Some distributors and wholesalers have found valid reasons to create a separate distribution network for e-commerce fulfillment while keeping the traditional channel distribution intact. Inventory management, packing, and replenishment can all change dramatically in an e-commerce operation. While there are sound ways to integrate both into one operation, it is important to carefully plan and design a system that can accommodate the needs of both channels.
- Shipping costs have gone out of control – almost without warning shipping expenses from e-commerce transactions can escalate. The destinations vary, packages are smaller/more frequent and the service levels may cause an increase in shipping and transport expenses. A careful review of your carrier agreements should be part of your e-commerce planning process, with renegotiation of the transportation provider contracts if needed.
If your supply chain is struggling to integrate e-commerce and still meet profit expectations, you should carefully consider a supply chain assessment from the professionals at TMG. The experience and skills from TMG will help you to identify key metrics that point out areas of opportunity and then analyze options to enhance your e-commerce supply chain for maximum efficiency and return on investment.
What challenges are you seeing with balancing e-commerce vs. your brick and mortar business?
We would love to hear from you!