A very apt presentation on Operations Management.

1. Supply Chain Management & E-commerce Industry
Presented by
Partha P Saikia
New Delhi
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2. Business efficiency at all operational levels is critical for the
success of e-commerce. Supply chain management is an
essential component of e-commerce. Supply chain
management in e-commerce focusses on procurement of
raw material, manufacturing, and distribution of the right
product at the right time. It includes managing supply and
demand, warehousing, inventory tracking, order entry, order
management, distribution and delivery to the customer.
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3. Supply Chain and Logistics Process in E-commerce Industry
The e-commerce industry is not just limited to setting up a
website and selling products online. It includes product
configuration, suitable infrastructure, logistics, secured
payment gateway, and supply chain management. An
efficient supply chain accelerates e-commerce processes to
meet customers’ expectations.
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5. Vital Components forming the Supply Chain and Logistics
Processes of E-commerce Industry
Inventory Management: Inventory is a critical component of supply
chain management. According to the traditional inventory model,
businesses used their own warehouses to sell the products directly to
customers. But, now as per the risk-pooling strategy, e-commerce
businesses do not hold their own inventory and rather outsource their
inventory to a larger wholesaler. It enables e-commerce businesses to
reduce the risk of keeping their own inventory.
Several businesses are adopting the drop-shipping model for inventory.
According to this model, a store does not hold the product it sells on
the website, rather it purchases the product from a third-party and
ships it to the customer.
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6. Reverse Logistics: E-commerce businesses also have an SCM
structure which entails reverse logistics. Reverse logistics is
defined as the planning and execution of the movement of goods
from the point of consumption to the point of origin. Almost, all
e-commerce businesses provide the facility of exchange and
returns. This increases the need for logistics.
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7. Optimized Inventory Management-Product Availability &
Service Level
The success of an e-commerce website depends on customer satisfaction. If
customers cannot buy the right product at the right time, they will immediately
switch to other e-commerce stores. A service level of 95% of products is ideal for e-
commerce success. The slow delivery process increases the risk of losing potential
customers and can even cause a negative impact on the reputation of the business.
From inventory to logistics and purchase to supplier management, processes should
be well-coordinated and optimized. Even if one link of the supply chain doesn’t
function well the entire supply chain management will fail, resulting in loss of
revenue.
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8. Customer Reviews
The reputation of an e-commerce business is measured by
customer reviews & experiences. It is a critical factor that
impacts the growth of an online store. Price comparison search
engines are the first point of contact for online shoppers. The
search engine ranking is also done based on customer reviews.
To receive good reviews, the delivery of the right product at the
right time is necessary.
Platforms like Amazon and eBay use internal key figures to
assess the credibility of distributors. These platforms have
supply chain key performance indicator (KPI) targets. If the KPI
is below certain minimum values, then penalties in the form of
account suspension can be imposed.
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9. Excess Inventory Increases Costs
E-commerce businesses are expanding rapidly due to which
they reach their limit on inventory management. With the
growth in business, product portfolio, supplier base and
surge in returns also grow at a rapid pace.
Increasing inventory drastically is common mistake e-
commerce businesses make to meet the demands of
customers. Inventory represents a significant portion of the
total investment of e-commerce businesses. Excess
inventory can mutate into obsolete stock (dead capital)
which can lead to increased costs.
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10. Supply Chain Management in E-commerce
E-commerce is about selling and buying goods over the
internet and the movement of goods between two parties.
The dispatch of right quantity products at the right time to
the right person is essential and hence efficient supply chain
is required. A quick, uninterrupted and secure supply chain
is a critical aspect of the e-commerce business. Efficient
supply chain management in e-commerce can reduce costs
and enhance cash utilization. When a customer purchases a
product from an e-commerce website, he/she wants the
product in a short time. New e-commerce websites are
evolving every day. But, customers prefer only those sites
that have an efficient supply chain to deliver the right
products at the right time.
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11. Key benefits of SCM in E-commerce
Reduced Costs: SCM in e-commerce removes various stages of distribution,
retailers, and outlets. The elimination of these stages reduces the overall cost
of products. The reduced costs give customers a direct advantage when
compared to the cost of products available in physical stores.
Trade Globally: SCM enables e-commerce businesses to trade globally. An
efficient SCM enables e-commerce businesses to import raw material from
anywhere and export their finished product to any country easily.
Enhanced Customer Satisfaction: Customer satisfaction is an important factor
for the success of an e-commerce business. With an efficient supply chain
management in e-commerce, enterprises can easily track demand, the time
suppliers will require to fulfill the orders and order goods from suppliers to
keep the inventories replenished.
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15. Concluding Thoughts…
An efficient supply chain is critical for e-commerce
businesses. It reduces production costs and shortens
demand response time. E-commerce development
solutions use technologies like POS, file transfer, video
conferencing and electronic mail to improve the efficiency of
logistics and supply chain.
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