The Importance of Planning, Sourcing, Inventory, and Transportation for SCM
The Base of Successful B2B eCommerce
Supply chain management refers to the total
production and distribution of products to customers, from raw materials to delivery and returns. Whereas
several years ago, these activities were taking place without too much thought into the actual deed. With the
development of eCommerce and competition, these activities had to be refined to help businesses make a
difference in the way they operate and promote growth. This article looks into the development of eCommerce
supply chain management to what it stands for today, focusing on the business-to-business eCommerce model (B2B
eCommerce).
A word that is inseparably connected to supply chain management is efficiency. Since time is a valuable resource
in the business world, supply chain management is trying to save as much time as possible from the activities
related to the supply chain of products, from start to finish, saving (or making) money along the process. When
it comes to B2B eCommerce supply chains, where
businesses are supplying products to other companies, competition can be high, especially in sectors such as
manufacturing and distribution or marketplaces. On such occasions, the supply chain can include all activities,
from planning and designing products, procurement of raw materials, creating the product, storing, monetary
transaction realization, distribution to the correct customer, handling of returns and complaints, and even
aftersales policy. With the rapid development of eCommerce, hence the competition, supply chain management
became "a thing" and gained extreme importance regarding the efficiency of transaction realization and product
delivery that led to business success.
Back in the days, the supply chain was based on local contacts, national at most, as businesses engaged in local
activities. Especially for big companies with no high competition, the supply chain was not critical, as they
did not have much to lose. With globalization and the rapid development of eCommerce, local business monopolies
lost their market power to competitors who could deliver the same –or better– product faster and cheaper. This
led to a switch in operations, focusing on identifying areas of improvement and streamlining the procedure
followed from order to delivery. In other words, SCM, in short,
supply chain management, became a very well-used
term in business vocabulary and a game-changer for those who invested in it as a means to take their business to
the next level.
Globalization and eCommerce development did not only lead to the realization of SCM importance for business
success, but also to the realization that SCM might not be a "personal" issue for a company, with every stage
being realized in-house but a collection of several companies, each responsible for a different stage of the
supply chain, working together towards a common goal. For that supply chain to be successful, all parties
involved must be in sync, which can happen using online tools of communication.
The majority of companies today outsource parts of SCM, either because they do not have the facilities or
capacity for certain activities or because it is more efficient to outsource on certain occasions. That leads to
a cohort of suppliers, manufacturers, distributors, marketing and advertising experts, and finance experts
handling certain parts of the supply chain for a specific product or project on behalf of the "main" business
contractor. A successful supply chain always starts with adequate planning. Identifying all the necessary stages
and where external support is needed, conducting thorough market research for specific activities and products,
trying to foresee demand, exploring "what if" scenarios, and creating a bulletproof strategy is always a good
plan. The second essential step is sourcing. Collating a list of potential suppliers or service providers for
specific actions, liaising with them, and creating relationships based on mutual trust is one way to go.
Another is the use of suppliers ad-hoc, based on availability and pricing. In both cases, communication is
critical, as it can make or break the relationship and potentially result in huge losses due to missed deadlines
or inadequate product quality. Equally crucial to planning and sourcing is inventory check, as either too low or
too high an inventory can create problems in a business. Inventory should be monitored and checked against
projected demands and
factors that could affect supply chain management, such as national or international disasters or emergencies (COVID-19 serves as a great example here). Last
but not least, transportation is a common bottleneck in B2B eCommerce SCM, as it is a key "middle" process
between suppliers, distributors, retailers, or even end-users, so miscommunication with regards to
transportation activities can be devastating, leading to easily avoidable delays, hence added cost. These four
areas are significant under the umbrella of SCM logistics and require close monitoring and adequate
communication and flow of relevant available information.