How eCommerce is Changing Supply Chain Management

Reevaluating your eCommerce supply chain solution for agility, scalability, and faster time to market efficiencies
The Importance of Planning, Sourcing, Inventory, and Transportation for SCM

The Base of Successful B2B eCommerce

Back in the days, before the term "supply chain management" even officially existed, it would refer to people procuring vegetables from their garden or maybe asking their neighbors for something they could not grow. Today, lightyears ahead, supply chain management is a well-used term and a vital part of commerce in any form, but especially in its online form (eCommerce). This article will explore how eCommerce supply chain management has evolved and kept evolving.

The role of eCommerce on supply chain management mainly affects the intake of orders for a specific company. Whereas in previous years, the orders would only come in through face-to-face contact, or maybe through telephone. Later on, through a website accessible from the few with access to a computer and the internet, today orders can fly in literally from everywhere. eCommerce has increased the demand for goods since customers can browse online shops from anywhere at the convenience of their homes through several different platforms. Furthermore, search engine optimization, social media, and online campaigns have played a role in highlighting certain eCommerce platforms, increasing their chances of higher product demand. We could argue that the role of eCommerce on SCM has been to improve the whole SCM process, as increasing demand on an already pressed for efficiency, a competitive era is pushing companies to do better.

Supply Chain Management Then

A straightforward definition of what is supply chain management (or SCM in short) is how to get from point A (raw materials) to point Z (finished product to customer) as quickly as possible, with the lowest cost. Amazon does not sponsor this definition, but we should point out that their SCM system is the best out there. Before SCM became as important as today (we will talk more about that in the next section), there were few steps in the process, as commerce was mostly local, or maybe national, and competition was low. All of us have heard stories about the procurement of goods from specific people or companies because back then, there was no other choice to consider. The manufacturer would have standard, loyal suppliers, product manufacturing would occur in-house from start to finish, delivery would also be dealt with in-house, and customers would communicate with the manufacturer either by visiting a (the only) store later on calling and placing an order. If for whatever reason, there were delays with the timeline (if there was a delivery timeline provided), customers would probably not even be notified about them and would have to wait through it. The manufacturer would not have to compete with anyone else, so they would not improve their services.

Supply Chain Management Now

From the situation described earlier to today, things have changed a lot. Nowadays, SCM is an essential part of a business, majorly responsible for its success. With the opening of markets, globalization, segmentation of production to smaller chunks that can occur anywhere in the world, increased competition with many smaller or bigger companies providing the same service, companies had to step their game up and provide better and cheaper products and services faster. When the concept of buying products online (eCommerce) started developing, SCM became even more important for companies, as it provided a way to control all stages of product manufacturing, ensuring that there are no delays that could lead to added cost for the manufacturer, or frustration for the customers. Companies had to develop the infrastructure to connect all stages using a finely-tuned mechanism to allow a streamlined approach to the manufacturing process. This process would include the choice of suppliers, to where parts would be produced, when and how they would be delivered, how customers would place their orders, how (and if) customers would be notified with updates regarding their order, and how all parts of the SCM would communicate efficiently.


How Does eCommerce Affect SCM?

We already discussed the eCommerce impact on SCM concerning increased product demand. This is a direct impact, but is this the only one? Definitely not. eCommerce development has also indirectly impacted SCM, such as improved efficiency, SCM automation, improved SCM logistics, better communication from front to the back end, and improved customer experience. This impact derives from the need of companies to "do better," which is measurable terms. It refers to profits, but it refers to reducing costs while maintaining or increasing their clientele in actionable terms.

This was achieved with supply chain management eCommerce integration, where the different steps of SCM were connected through enterprise resource planning (ERP) systems, avoid unnecessary delays or "middle-men" in this way. ERP-integrated eCommerce has helped both companies and customers in distinct ways. It allows process visibility, which can be beneficial for both parties, building customers' confidence in the company. It will enable the company to pinpoint areas that could be improved. Furthermore, SCM ERP eCommerce integration has led to the automation of processes, as information can flow from one stage to the other without the need of busy employees to oversee certain parts. That has allowed both for the robustness of the process and flexibility, as information can be easily diverted wherever needed with a few clicks.

What Does the Future Hold for eCommerce SCM?

SCM has come a long way since the concept was introduced in industrial and manufacturing settings. The development of eCommerce changed SCM for the better, streamlining tasks, connecting different parts of the supply chain, ensuring good communication across the whole chain, and incorporating customer feedback to improve existing systems further. Businesses moving their operations online and engaging more and more with eCommerce has increased visibility of data and operations and has increased the volatility of businesses. Factors such as social media and marketing across different platforms can create and amplify trends, leading to increased demand upon request. This would mean that SCM must allow immediate responsiveness to trends to accommodate demand and be flexible to adapt as trends evolve quickly. Futuristic approaches for supply chain management improvement would include higher transparency of operations and connections, fully automated systems, use of analytics to make projections for specific markets and opportunities, and transparent and meaningful communication with customers.