E-commerce, Globalization Drive the Need for Supply Chain Optimization

Dustin Caudell
Tue, Jul 16, 2013

Before the emergence of e-commerce, small and medium-sized businesses did not need to be overly concerned with the challenges of supply chain management. Consumer bases were relegated to their immediate vicinity, meaning the transportation of products was a rare occurrence. However, today's market has moved away from a brick-and-mortar paradigm and shifted toward an e-commerce model. According to a recently released eMarketer​ report, global business-to-consumer e-commerce sales reached more than $1 trillion for the first time in 2012. Researchers predict business-to-consumer online sales to increase another 18.3 percent by year's end as well. The pool of customers available to e-commerce vendors is also expected to expand substantially over the coming years. At the close of 2012, there were more than 903 million digital consumers across the globe. By 2016, that figure is expected to rise to more than 1.3 billion.

Because e-commerce technology allows businesses to market and sell their products to virtually any country on the planet, the global supply chain has become a matter of great importance for many online companies. MetraTech Corporation CEO Scott Swartz explained in a recent Supply Chain Digital article that optimizing supply chain management efforts is essential in order to effectively navigate the global marketplace as businesses begin to absorb new operational components and shipping networks become more complex. Gaining oversight across the entire enterprise from production to delivery requires robust supply chain management software so business leaders and warehouse managers can identify any latency issues or performance bottlenecks that might disrupt operations.

Reducing the Likelihood of Costly Service Delays
Even if a business confines its reach to a national level, it may still encounter challenges running an efficient delivery model. The Australian Financial Review noted that this was particularly true in larger countries where inventory warehouses may be located thousands of miles away from their delivery targets. Any hiccup could result in massive delays and a disgruntled consumer base. The news source argued that because of the breadth of options available to e-commerce customers, a single negative experience may be enough to cause consumers to end their relationship with that business and turn to a competitor.

As important as front-end efforts are to marketing wares and drawing in new clientele, the actual delivery of goods and services is what keeps consumers happy and turns them into repeat customers. A healthy supply chain management system can remove many of the potential challenges involved with operating an expansive e-commerce operation, including harmonizing disparate components, identifying performance bottlenecks, ensuring that deliveries are made on time and maintaining an accurate inventory catalog. The larger a digital operation becomes, the easier it is for company leaders to lose sight of the enterprise as a whole. An effective supply chain management solution can rectify that problem and provide greater monitoring capabilities across all operations.

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