E-commerce does not just mean trading and shopping on the Internet. It means business efficiency at all operation levels. Executives know Supply-chain management is critical to effective business operations.
Supply chain is the group of various processes which enables delivery of goods to the customers. Supply-chain management (SCM) refers to the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.
The SCM is the backbone of Ecommerce, a very critical component of E-commerce.
Need for E-SCM:
1. Avoid costly disasters
2. Reduce administrative overhead
3. Reduce unnecessary inventory thereby increasing working capital
4. Speed up production and responsiveness to customers
5. To gain higher profit margins on finished goods
Process:
1. Strategic Planning Process- It involves strategic supply chain design and strategic sourcing. Strategic supply chain design is the design, evaluation and optimization of the SCM. Every part of the supply chain such as location, transportation lanes, resources and products are modeled to execute planning.
Strategic sourcing process helps to identify a minimized set of core suppliers with whom to establish strategic relationships.
2. Demand Planning Process- It involves Forecasting, Lifecycle planning, Promotion planning and Consensus demand planning. It helps in predicting future demands and planning the product life cycle.
3. Supply Planning Process- This process arrives at the appropriate level of safety stock inventory for all intermediate and finished products and calculates the quantities to be delivered to the locations to match customer demand. It also determines the best short term strategy to allocate available supply to meet demand and enables supplier to receive demand and stock information and performs replenishment planning tasks for manufacturer.
4. Procurement Process- It fulfills the direct procurement requirements through sourcing, issuance and confirmation of purchase orders. It informs other departments about the received and confirmed quantity of ordered goods. It also receives and checks vendor’s invoice for correctness.
5. Manufacturing Process- This process supports the process of assigning production orders to resources in a specific sequence and time frame. It also supports production control and costing process.
6. Warehousing Process- It involves inbound processing, Outbound processing, Cross Docking, Warehousing, Storage and Physical Inventory.
7. Order Fulfillment process- It allows order entry, pricing and scheduling order for fulfillment and also considers all activities from issuing the invoice to the incoming payment.
8. Transportation Process- This process involves transportation planning, transportation execution and freight costing processes. It creates an optimized, executable transportation plan for the enterprise and covers the complete integrated solution process to create, execute and monitor shipments. The process also calculates and settles the freight costs.
9. Reverse Logistics- E-commerce industry has an SCM structure which entails reverse logistics as well. Reverse logistics refers to the planning and execution of the movement of goods from the point of consumption to the point of origin. Since almost all e-commerce websites offer the facility of exchange and returns, the need for logistics inevitably increases. Hence, realizing how important a role logistics play in e-commerce industries, many big and established e-commerce websites like Amazon and Flipkart have opened their own logistics service.
The present-day supply chain process has evolved drastically from what the scenario of the supply chain was in the past decades. Retailers are making sure that the supply chain process is optimised with the use of latest technologies
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