Providing a great customer experience and increasing sales as an ecommerce company has to be underpinned by an effective supply chain. It is difficult to properly service customers, evaluate marketing spend and focus on growing your business if you’re worried about flaws in your purchasing and receiving process.
There are many factors to ensuring your supply chain is optimized to meet your customer demands, these are a few areas that we see the best retailers differentiate themselves:
Tip#1 Get your purchase orders out of spreadsheets
The first step to getting a handle on your supply chain is establishing a consolidated purchase order system.
Attempting to manage purchases through spreadsheets, faxes and emails can quickly lead to forgotten or double orders, disputes with suppliers and inaccurate inventory numbers across your ecommerce stores (these are just a few; here are 13 more).
Once you have a proper workflow for managing your purchasing, you can then start to analyze and improve your process instead of battling spreadsheets and firefighting. A connected sales and purchase management system lays the groundwork for using sophisticated forecasting tools like Lokad, Inventory Planner, or SkuBrain.
Tip#2 Understand your Landed Costs
Any cost incurred bringing goods into your business (e.g. freight, duty, etc…) that you would like to track in your cost of goods accounting are represented as Landed Costs. Understanding your landed cost will give you a much more accurate picture of your margins for products. It could turn out that a domestic supplier is more cost effective than your overseas supplier when you consider all the costs associated with transporting the goods!
It is important to consider how you will spread your landed costs across your products. Freight should generally be weighted toward larger or heavier items while insurance should favor the more valuable items. Developing a procedure for consistently spreading landed costs across products will save time and allow you to make data driven decisions.
Tip#3 Track the Quality of Your Supplier
The ability to attribute returns and product defects to your suppliers is key when it comes to evaluating a supplier relationship and negotiation. It is much easier to have an objective conversation about a supplier’s product quality with total returns and reasons consistently tracked than relying on anecdotal evidence. You will be able to have a meaningful conversation with your supplier to define a path for improvement or decide to move to a higher quality supplier. Supply chain management is especially critical as you move toward being a more EDI directed business.
Tip#4 Use Sourcing Marketplaces to Understand your Market
Alibaba.com and other supplier sourcing marketplaces are a great place to start when sourcing a new product even if you have established supplier relationships. It is a great way to quickly identify the average price for an item, as well as similar or related products that could actually perform better. Some of our retailers have significantly decreased their sourcing costs by identifying the same product for a lower cost.
These are just a few of the ways that our retailers and wholesalers are working to improve their supply chain. Using a retail management platform like Brightpearl is a great foundation to creating an accurate supply chain process that will free to up to focus on growth.
Kenny Johnson is a product marketing manager at Brightpearl. He is focused on how ecommerce retailers and wholesalers can continue innovate with brightpearl and other technology. A techie at heart, Kenny studied computer science at Stanford University and isn’t afraid to get into the technical details with a developer or teach someone a technology for the first time.