Designing a supply chain network for the retail industry with the help of e-commerce can help companies utilize all the available resources most efficiently. Creating a network design in the supply chain will allow the company to see where to locate the manufacturing facility and the distributors to ensure prompt delivery of products to the customer³. An updated omnichannel network (e.g., more and smaller distribution centers with shorter reach) is becoming business-critical, especially as e-commerce is expanding⁴. Supply chain or SCM network design helps enterprises simulate and visualize their supply chains to optimize them. Optimization of supply chains reduces overall costs and enhances service, speed-to-market, flexibility, and risk mitigation⁵.
Role of E-Commerce:
E-commerce has significantly impacted the retail industry, changing consumer behavior and industry dynamics. Some of the effects of e-commerce on the retail sector include: online sales overtook in-store ones for the first time in 2019, the average size of retail stores has decreased, certain types of retail stores are disproportionately hit by eCommerce competition, retail is increasingly omnichannel, enhanced customer engagement, improved shopping experience, reduced sales journey, improved shipping options, increase in conversion rates using voice search and e-commerce has made it possible for products to be sold at a global scale6.
Supply Chain Challenges:
Supply chain management faces many challenges in today’s globalized economy. These include increasing competition, ever-evolving customer requirements, supplier uncertainty, higher transparency, rising fuel costs, raw materials, and labor costs. Implementing logistics solutions can be expensive and challenging to integrate with other supply chain components. Managing logistics data is also complex and time-consuming. Lack of visibility is a common issue for supply chain managers with many responsibilities. Supply chain management systems cannot do everything that companies may hope for, and companies are pressured to provide customers with quick and affordable products7.
Steps involved in designing the supply chain network:
A comprehensive understanding of customer demands is essential for designing an effective supply chain network. Utilize data analytics and market research to identify customer preferences, buying patterns, and order volume. This information will enable you to align your inventory management and distribution strategies with customer expectations.
Develop an e-commerce platform:
In conclusion, designing a supply chain network for the retail industry with the help of e-commerce is a strategic endeavor that enables businesses to adapt to customers’ evolving demands and capitalize on the benefits of online retail. By integrating e-commerce capabilities into traditional brick-and-mortar operations, retailers can create a seamless customer experience while optimizing their processes for efficiency and growth.
Key considerations in this process include defining clear goals and objectives, understanding customer demands, developing an e-commerce platform, implementing robust inventory management systems, optimizing warehouse and distribution networks, establishing reliable last-mile delivery solutions, streamlining reverse logistics processes, integrating technology solutions, fostering collaboration and partnerships, and embracing continuous improvement.
By following these steps, retailers can create a supply chain network that effectively leverages e-commerce to enhance customer satisfaction, reduce costs, expand market reach, and improve overall operational performance. It empowers businesses to meet the expectations of modern consumers, stays competitive in the retail industry, and unlock new opportunities for growth and success. With the right strategies and a customer-centric approach, retailers can navigate the dynamic landscape of e-commerce and build a robust supply chain network that drives their business forward.
(1) What is network design in supply chain and why is it essential? – Edureka. https://www.edureka.co/blog/network-design-in-supply-chain.
(2) Setting the Table: Designing a Supply Chain Network in Grocery Retail …. https://blog.camelot-group.com/2021/06/setting-the-table-designing-a-supply-chain-network-in-grocery-retail/.
(3) Supply Chain Network Design Explained – GEP. https://www.gep.com/blog/strategy/supply-chain-network-design-explained.
(4) The retail supply chain network of the future | McKinsey. https://www.mckinsey.com/industries/retail/our-insights/supply-chain-of-the-future-key-principles-in-building-an-omnichannel-distribution-network.
(5) Complete Ecommerce Supply Chain Guide [Updated 2023] – Shipium. https://www.shipium.com/blog/ecommerce-supply-chain.
(6) The Impact of E-commerce on Traditional Brick-and-Mortar Retail Stores – (17) (PDF) The Impact of E-commerce on Traditional Brick-and-Mortar Retail Stores (researchgate.net)
(7) Challenges Of Supply Chain Management – Challenges Of Supply Chain Management – oboloo