What are E- Supply Chain Management (E-SCM) Components, Advantages, and Functions?
E-Supply Chain Management involves incorporating digital technology to manage diverse supply chain activities. Supply chain management involves managing numerous tasks from procurement of raw materials to distribution of the finished products. The use of advanced technology helps optimise every step of the process. It guarantees increased efficiency, improves coordination between all parties involved, expedites the process, lowers total costs, and more. According to a recent poll, 31% of participants stated that they are now in the process of integrating digital supply chain analytics, while 60% of respondents stated they currently use the tool.
In this article, we have shared what an E-supply chain is, its components, advantages and functions. Read on to find out!
Components of E-SCM
The role of SCM in eCommerce is huge. eCommerce stores can run successfully only if they have a robust supply chain management system. Online businesses that have incorporated E-SCM have witnessed tremendous growth. E-SCM runs on certain components. Here is a look at these elements and how they help manage the supply chain process:
Advanced Scheduling and Manufacturing Planning
E-SCM analyses the customer orders and generates a report based on the same. Businesses leverage this report to understand customer demand and plan their manufacturing process accordingly. This report helps in planning at the ground level. It facilitates efficient planning and advanced scheduling of manufacturing activities and logistics.
Demand Forecasting
E-SCM is equipped with advanced tools and forecasting techniques. These tools can be used to forecast raw material requirements. Depending on the demand forecasting, the manufacturers plan the purchase of raw materials and understand the labour requirement well in advance. An increase or decrease in the demand for goods can be assessed using this advanced tool and arrangements can be made to meet the same.
Transportation Planning
Wondering what is the E-supply chain’s role in transportation planning? To begin with, it assesses the mode of transportation suitable to move your products and maps it with their availability. This helps in choosing the most appropriate mode of transportation. With digital supply chain management, you can ensure that the raw materials reach your desired location at the right time. It also ensures that the finished products reach the suppliers and distributors promptly.
Distribution Planning
Distribution of finished products is a crucial step in the supply chain management process. Finished products move through different channels including manufacturers, distributors and retailers before reaching the consumers. A lot of planning needs to be done at the distribution level to ensure a smooth flow of products to the wholesalers and retailers. E-SCM in eCommerce helps in efficient distribution planning. The advanced system integrates distribution channels with demand forecasting, manufacturing and transportation planning for seamless distribution.
Order Commitment
E-SCM allows business owners to predict the delivery dates of suppliers with the use of a demand fulfillment cycle. It helps in meeting the order commitment by ensuring accurate and timely deliveries.
Advantages of E-SCM in eCommerce
There are many advantages of integrating E-SCM in eCommerce. Here is a look at the top ones:
1. Access to Real-Time Data
E-SCM enables the visibility of data in real-time across the supply chain channels. Manufacturers, suppliers, distributors as well as others involved in the process have real-time access to the order status, inventory levels and other information. Access to this crucial information helps in better decision-making at various levels, resulting in efficient supply chain management.
2. Better Inventory Management
When you have complete knowledge about your inventory levels and customer orders in real-time, you can manage your inventory better. It lowers the chances of stock-outs and the risk of overstocking. It helps in improving the cash flow.
3. Improved Coordination
The use of E-SCM in eCommerce improves communication and coordination among supply chain partners. This helps in streamlining processes and reducing lead times.
4. Reduction in Errors
Since E-SCM is automated, it helps in managing everything from order processing to the fulfillment process in an accurate manner. The chances of human error diminish with the use of digital tools and the level of accuracy increases.
5. Enhances Customer Satisfaction
Since you have access to real-time information about the order details and shipping status, you can answer customer queries better. This enhances customer experience and helps in building a loyal customer base.
6. Cost Reduction
E-SCM facilitates better hold on the supply chain management processes and thus is instrumental in reducing the logistics, production and distribution costs.
The Key Functions of E-Supply Chain Management
Check out the following points to know what is E-supply chain’s key function:
Inventory Management
E-supply chain management enables real-time exchange of information related to the inventory and thus helps in managing it efficiently. The order invoices, receipts and other important documents can be shared quickly among the trading partner, enabling better management.
Channel Management
E-SCM allows organisations to share information about any changes in operational activities with the distributors, suppliers and retailers. They do not have to seek such information through calls or emails. This enables them to make better decisions related to sales and distribution.
Payment Management
E-SCM is embedded with electronic payment systems. It helps in generating invoices quickly. It also decreases the chances of errors in the bills. With this system in place, more invoices can be processed in one go which lowers the transaction fees and processing cost.
Productivity
The use of digital supply chain management helps improve communication among various trading partners including manufacturers, retailers, distributors and salespeople. Improved communication at various levels enhances coordination and leads to greater productivity.
Access to Important Data
One key function of E-SCM is providing access to important data that helps drive the supply chain activities efficiently. Advanced digital tools help organisations collect as well as analyse crucial data. Demand forecasting is done based on this analysis and business owners can make informed decisions.
Conclusion
E-supply chain management has brought about a positive shift in the market. It has benefited the eCommerce industry and facilitated the growth of several businesses. Advanced digital tools are being used to streamline the supply chain management processes. It enables access to real-time information related to order status and shipping across trading partners. Businesses can manage their inventory more efficiently and generate invoices quickly using E-SCM. Moreover, it helps in reducing the overall supply chain cost and enhances customer experience.
E-supply chain management (E-SCM) makes use of advanced digital technologies including big data analytics, the Internet of Things (IoT) and cloud computing.
E-SCM promotes sustainability in supply chain management. It does so by optimising routes, reducing excess inventory through better demand forecasting and minimising waste in various supply chain processes. Research reveals that 12% of logistics-related emissions will come down by 2025 with the help of digital transformation.
E-SCM is suitable for all kinds of businesses across industries. However, businesses that have complex supply chains can benefit by incorporating digital technology to manage their supply chain activities.
