Supply Chain Management and Its Role in B2B eCommerce
Any business needs to have supply chain management in place to be successful. Supply chain management refers to procurement, manufacturing, and distribution of products from suppliers to customers. This is the general one-liner answer on supply chain management's role, but what does it mean?
Also, how does a supply chain management system in place benefit business success and eCommerce? This article will provide answers to these questions, elaborating on supply chain eCommerce's role and benefits on business success for the business-to-business eCommerce model (B2B eCommerce).
The Basics of SCM
B2B supply chain management (SCM for short) covers all stages during commerce, from procurement of raw materials to delivering a product to a customer. Product manufacturing, warehousing, inventory tracking, order entry, and management are parts of SCM and distribution of the right product to the right customer at the right time.
When it comes to eCommerce, SCM is also handling the eCommerce platform's front-end, virtually connecting the dots between the customer and the supplier.
How SCM Helps
A successful B2B eCommerce SCM should be based on an effective strategy and applied tactics, serving both the business and the customers. Especially in B2B eCommerce, efficient SCM is key, as eCommerce takes place among businesses, where delivered goods can be further distributed to customers, or used to produce other products, and so on. This means that a company's SCM system could be interconnected to that of another, creating dependencies.
Synchonize With Your Partners
Each of the activities covered by SCM should be conducted in harmony with the others, especially the directly dependent ones. Think of baking a cake for a friend as an example, you cannot mix ingredients if you have not bought them or measured them, and you cannot bake the cake if you have not pre-heated the oven.
If you realize that something is out of stock while you buy ingredients, you will need to either check other stores, check alternatives for that ingredient, or even postpone baking. If someone comes knocking on your door while your cake is in the oven, you might want to consider keeping an eye on the time while chatting or set up an alarm to make sure the cake does not burn. With the cake being ready, you will have to figure out how to transport it to your friend's house.
Keep Communication Lines Open
These action examples and many more can be translated to a supply chain in B2B eCommerce for activities related to manufacturing or distribution sectors. Several departments of a company or even separate business entities will have to be in constant communication orchestration to lead to successful business transactions. These interactions will be on a high percentage governed by demand, as communicated from the eCommerce customer interface.
Another important parameter for SCM interactions is supply, which can affect cost and time, both factors of extreme importance for business success. An effective SCM system needs to monitor supply and demand constantly and try to adapt necessary stages to find the best balance between covering customers' needs timely and cost-effectively, simultaneously maintaining business profitability.
Supply Chain Management Interactions
Based on the eCommerce supply chain management role described earlier, a significant factor for a successful SCM strategy, maybe even the SCM foundation, is planning. Having a plan is necessary for almost everything within the business sector, and SCM is no exception.
The Trading Environment
Understanding the trading environment is key when planning and foresee supply and demand trends, the effects of unforeseen circumstances (a pandemic, for example), and delays in any part of the SCM. Numerous other examples indicate that having a plan and easily adapting it "on the go" is a key to B2B eCommerce success.
Find the Right Suppliers
Another important factor for SCM that can massively affect eCommerce which B2B sourcing platform (or B2B procurement platform) you use, as that is where everything starts from. Having trustworthy suppliers and knowing how and where to find the necessary supplies at the best time and the appropriate time frame is a key factor for success. Delays with B2B procurement can affect SCM and consequently affect the success of the business.
The Ever-Changing Price of Raw Materials
Also, a usually burning issue regarding sourcing is the pricing of raw materials. It can drastically affect the price of the products, hence the business's success, especially when in a competitive sector.
Logistics and Management
Finally, a joint factor of B2B eCommerce SCM success is logistics and data management. SCM logistics affect the SCM's smooth operation, as they are related to the cost, speed, and reliability of the product manufacturing and distribution process. Data management, collected through logistics, customer interaction, and other sources, can provide helpful information about SCM's effectiveness when analyzed appropriately.
From eCommerce analytics to customer behavior insights and inventory surveillance, collected data is an excellent source of helpful information for improving SCM and B2B eCommerce success.
How Can SCM Benefit B2B eCommerce in the Manufacturing/Distribution Sector?
There are three main ways a B2B eCommerce SCM can benefit a business. These are inventory visibility and stock availability, enhancement of customer experience, and improvement of profitability. Let's see these eCommerce SCM benefits in detail.
Inventory Visibility and Stock Availability
An effective eCommerce SCM can help streamline tasks related to stock monitoring or ensure availability of resources before the "out of stock" point. It can also "connect" customers to the inventory, allowing for transparency and the ability to know if or when the requested product will be available. This can empower customers and build trust, attribute critical for any business, especially B2B eCommerce.
Customer Experince
Speaking of customer empowerment and trust, a good SCM system can do wonders for customers' experience through the eCommerce platform and help a company's reputation tremendously. Happy customers (those who had an excellent browsing journey through the platform and got what they wanted when they requested it) tend to leave great reviews.
They can build a company's reputation, helping towards customer loyalty and securing new customers. In an era where most potential customers are checking reviews before purchasing a product or a service, investing in a refined eCommerce SCM system that can help customer satisfaction is a no-brainer.
Profitability Improvement
Some business sectors, such as manufacturing and distribution, do not allow for big profitability margins due to the market's saturation. A good SCM system can help Identify problematic areas within the business's operations that can cause additional costs, delays, or mistakes, all of the aforementioned affecting profitability.
Solving these problems through an SCM system that offers better SCM interactions, cost-efficient operations, and optimized inventory availability can increase profitability and help a business jump ahead of the competition.
Supply chain management is extremely relevant to the sectors of manufacturing and distribution, affecting both in various ways. An efficient SCM system can make or break a company with business activities related to product manufacturing or distribution. The main reason for that is that both sectors depend on others. Back in the days, there were "monopoly" cases, where a company would produce a product from start to finish, from raw materials on-site to distribution using in-house operators.
Nowadays, this is very rare, if not obsolete, with companies in the manufacturing sector showing significant dependency on suppliers of raw materials and product parts, external collaborators handling quality control or maintenance of equipment, and a distribution network hired from a different company. Communication, streamlined interactions, and collaboration between all associated parties are essential for a successful outcome (outstanding products, excellent customer experience, profitability).
An effective B2B supply chain system that embraces the latest technological advancements towards seamless, time-effective, and cost-effective operations within a company or several companies can tremendously benefit the manufacturing and distribution sectors.