Agility within the e-commerce supply chain: save money and avoid disruptions

In a world that has never been more “on demand”, an agile supply chain can quickly adapt to market changes, anticipate spikes in demand, and meet customers’ delivery expectations. Read on as we explore the full benefits of supply chain agility for e-commerce, and strategies for your business to follow.  

Why is an agile supply chain important?  

Global e-commerce has grown significantly over the last few years, but it has not come without its challenges. During the pandemic, over two thirds (68%) of organizations said they faced difficulties in demand planning due to a lack of accurate and up-to-date information on fluctuating customer demand¹. More recent factors such as the war in Ukraine, geopolitical conflicts, and labor shortages have also had an impact, causing bottlenecks within supply chains that lead to delays and higher production costs. Thus, agility has become an increasingly important feature of Supply Chain Management (SCM).  

The pandemic disrupted global supply chains on a scale never seen before. Many companies have since taken the opportunity to build their operations back better, ensuring their supply chains are more flexible, more resilient, and more agile – all of which means they’ll be able to navigate and overcome future challenges more easily.

Agility in the supply chain is not a new concept – especially for e-commerce brands. Take the rise of “fast fashion” brands like ASOS¹, for example, where the ability to churn out new trends within a short timeframe is a must.

If you’re an e-commerce business owner, you no doubt already understand the importance of speed along the supply chain – from reacting to market changes in real time, to the Express delivery service you offer your customers at checkout. In our on-demand world, an agile supply chain is your best bet at getting your products to your customers without delay.

David M Gilgor looked at the five dimensions of agility for the Supply Chain Quarterly². The five metrics identified are:

Alertness - The ability to predict new trends by listening to customers and exchanging information with suppliers.

Accessibility -  Access to the types of data that will help you decide how to act, shared via the supply chain – not just the IT department.

Decisiveness - Making decisions on how to respond to opportunities. As supply chains become more complex, agile decision-making falters.

Speed - Delivering on a chosen course of action swiftly. “Fast fashion” brands rely on bringing new products online at speed.

Flexibility - Upscaling the way you operate, the markets you trade in, or the service levels of your business partners to take advantage of opportunities.

So, how do these five dimensions translate into actionable steps you can take to optimize your supply chain? Read on for the features you should be considering.

Benefits of supply chain agility for e-commerce 

Businesses can mitigate supply chain risks with agility, responding quickly to unexpected market changes such as problems with a supplier or a spike in consumer demand. Let’s say, for example, an e-commerce business experiences a delay from a supplier. With an agile supply chain, it can switch to a “Plan B”, sourcing goods from an alternative supplier so that its inventory levels are replenished. This means the end customer is not impacted, thus ensuring the brand’s reputation is not damaged. 

Marketing professional David M Gilgor PhD² defined the five dimensions of supply chain agility as: 

Alertness: The ability to predict new trends by listening to customers and exchanging information with suppliers. 

Accessibility: Access to supply chain information and data that will inform your decision making. 

Decisiveness: Making decisions on how to respond. 

Speed: Delivering on a chosen course of action swiftly.  

Flexibility: Upscaling the way you operate, the markets you trade in, or the service levels of your business partners to take advantage of opportunities. 

8 Supply Chain Agility Strategies  

1. Implement demand forecasting  

With AI-powered demand forecasting software, you can tap into historical sales data to identify patterns and better anticipate future surges in demand. This will enable you to maintain optimal inventory levels around busy periods, and ensure customers’ expectations are always met.  

2. Set SKU reorder points  

This is the level at which your business must reorder inventory of a particular item to avoid stockouts. There are apps and software that can help you, but a simple formula to follow is SKU reorder point = (average daily sales x lead time in days) + safety stock.  

3. Research technological advancements for agile fulfillment  

The key to an agile supply chain is knowing what is happening, in real-time, so that you can quickly identify bottlenecks and delays. AI can analyze vast quantities of data across your supply chain to help you make better decisions that keep things running.  

4. Use an Order Management System (OMS) 

An OMS will enable you to track an order from the moment a customer clicks “buy” to the time they receive the goods. If there are any delays, you’ll know instantly and can take steps to negate the issue.  

5. Implement a Warehouse Management System (WMS) 

This will enhance efficiencies across your warehouse – from ensuring you use space in the most optimal way, to maintaining stock levels. For the latter, a WMS can react swiftly to surges in demand, automatically sending replenishment orders through to your suppliers so that you never have a stockout.   

6. Distribute your inventory 

Having all your goods stored in a single warehouse is problematic if severe weather shuts it down. Splitting inventory across different locations would overcome this risk. It means too that you can expand your customer reach geographically.  

7. Communicate regularly with suppliers   

Keeping in contact with your suppliers means you’ll know quickly when there is a disruption further up the supply chain, and you can plan alternative processes accordingly. 

8. Create strategic partnerships  

Outsourcing your supply chain operations to a 3PL provider like DHL means your business will benefit from the logistic leader’s vast international network. This means it will be better protected from global disruptions, ensuring your goods always get to customers on time.    

How DHL can help businesses achieve supply chain agility  

The role of logistics providers in e-commerce agility is more important than ever. As e-commerce businesses face ever-increasing customer demands, DHL Express has strategies in place to support them.  

DHL has partnered with Everstream³, a supply chain risk analytics company, which taps into predictive analytics and “boots on the ground” in every port in the world to spot disruptions before they significantly impact supply chains. It means, for example, that a client in Germany can anticipate a materials shortage in China in record time, and put alternative measures in place. Getting ahead of such disruptions leads to increased services, reduced freight costs and more on-time deliveries.  

Chat to a DHL Express Account expert today to see how your business could benefit.  

Order Management Systems

The growth of e-commerce required systems that automate processes along the supply chain, getting more orders processed with fewer delays.

An order management system (OMS) is the answer. Think of it as the super smart heart of your supply chain, all knowing and all seeing. It can monitor data from your various systems to track sales, orders, inventory and fulfilment so that you can get your orders to your customers cheaper and faster. Essentially it keeps everything moving forward; maintaining customer satisfaction and protecting a company’s reputation.

When orders are cancelled, inventory quantities change, or there are delays with fulfilment, the OMS knows immediately. In the event that a customer’s order is delayed, for example, customer support software can be integrated with the order management system, allowing support agents to have a full overview of the customer account and manually help them resolve their issues. This ensures better overall customer experience, from when users purchase online, to when they receive their delivery.

OMSs are designed to be scalable, so can grow with your business. It just takes a little research to find the one best for your needs.  

Supply and demand: don’t be left short...

For e-commerce businesses, there will always be peak periods of trading to prepare for, including special holidays– Valentine’s Day, Black Friday and Christmas, to name just a few obvious examples. But the very nature of online shopping – ordering anything, any time, from anywhere – means sometimes trends can be unpredictable.

To manage supply and demand volatility, smart software such as POS (point-of-sale) systems can give you access to data that will provide a real-time overview of your inventory.

Ultimately, knowing your customers’ buying behaviors, habits and motivations means you can more accurately predict peak periods and ensure you’re stocked up to meet demand. Utilize customer data from surveys, social media platforms and cookies to project future product demand, and tap into analytics solutions (such as Google Analytics), too.

Partner with an international expert

If you own an e-commerce business, there’s a big chance you already ship internationally – after all, digital innovations mean it has never been easier to connect your online store with markets across the world. Yet, it’s still important to consider the hurdles you may face when selling cross-border. Navigating customs, duties and tax requirements, and border regulations can be complex, and varies by country. Political events – such as Brexit – can disrupt global trading routes, too.

That’s where it pays to partner with an international logistics expert like DHL, which has the global knowledge and local market presence to take care of shipping for you, and ensure your goods get to where they need to be, without delay. 

Remember last mile delivery

Speed is the name of the game for customers – they expect Express, Next Day or even Same Day delivery options at checkout, and they want to be kept updated about the progress of their orders with real-time tracking and notifications.

To meet these customer expectations, businesses are increasingly integrating supply chain visibility solutions. In fact, a recent report by Zebra Technologies5 found that 72% of retailers are working on digitizing their supply chains in order to achieve real-time visibility⁶.

Supply chain management software will enable you to see where manufacturing, warehousing and shipping are in the fulfilment process, so you can be transparent with your customers about when their orders will arrive. Consider too, the proximity of your warehouse(s) to your customers – the closer they are, the faster you can fulfil their orders.

Talk to DHL today about how to optimize your supply chain to ensure your customers receive their orders on time, every time. Remember, satisfied customers come back!