The Complexity of Maintaining a Well-Functioning Supply Chain

25.02.22 04:16 PM By Ernest

No one could deny that the past pandemic year brought a multitude of previously unconsidered challenges to e-commerce sellers, not least the complexity of maintaining a well-functioning supply chain. Of course, there were positives: consumer demand increased massively, and expected revenue predictions skyrocketed. Online sales of everything from perishables to household appliances shot up by anywhere from 200% to 600%, and demand continues to be high. For those sellers who had inventory immediately available, business was booming. However, there was also the uncertainty of fluctuating shipping costs as well as widespread disruption to timetables, so a once efficient – and taken for granted – supply chain process became anything but.

The Effect of Shipping Cost on e-Commerce Businesses

E-commerce businesses of all sizes, which in earlier times were able to maximize profit by maintaining a lean operating model, have been required to adapt to the new normal. This means:

  • Higher shipping costs
  • Uncertainty and longer delivery times, partly due to under-functioning ports  
  • Increased regulation, meaning every stage in the journey takes longer  

The implications of maintaining a well-functioning supply chain in these challenging times can be broken down as follows:  

  1. Larger batches of inventory need to be ordered. There’s nothing more frustrating than receiving orders that you can’t fulfil due to being out of stock.  
  2. A longer timeline needs to be considered – from production to selling the products.  

More Products for Longer Periods of Time

Fundamentally, sellers require more products, and to store them for longer periods of time.  Naturally, this creates the need for more upfront capital, which is inevitably followed by a shortage in working capital. This lack of working capital could be a problem for as long as 6 to 8 months – until a return is seen on the investment made.

 

Useful for E-commerce SMB'S

E-commerce sellers across the globe are dealing with this reality, but don’t despair – at least everyone is in the same boat! Having a clear view of the situation means now is the time to see how best to adapt and improve.  

3PLWINNER has been uniquely placed to have an overview of the unfolding difficulties, and our analysis has highlighted a number of services that will be of use to SMBs in adapting to the changing times whilst continuing to scale their business.

Most recently, we have looked into several companies that offer e-commerce sellers working capital to assist with their growth.  A proper funding structure is massively helpful in assisting SMBs to make larger orders of inventory without the associated cash-flow problems, and this can be a practical method of ensuring working capital is available when you need it  

Employing a buyer agent is another way to lessen the load. You can take advantage of their expertise, utilizing their business connections, deals, skills and experience – all of which should help optimize supply chain payments and timetabling issues.

The new requirement to hold larger batches of inventory over a longer period of time means you’ll want to use a third-party logistics company that specializes in e-commerce SMBs – one that provides lower rates, online management of inventory and expertise in the pros and cons of each of the e-commerce platforms.

3PLWINNER

The Holistic Approach  

We realized that we were in a unique position to incorporate all three elements and provide a holistic solution to our clients, and so we have partnered with CapEc. We are now able to offer our clients assistance with capital required to:  

  • Purchase inventory
  • Buy now and pay later
  • Improve cash flow  
  • Minimize the inventory gap

This partnership with CapEc also means our SMB clients will be able to benefit from their assistance in finding supply chain vendors for each transaction, as they are in constant contact with international providers, thus optimizing the supply chain. 3PLWINNER is delighted to be able to streamline the whole process for our clients. By joining CapEc’s expertise with our own, a well-functioning supply chain is one less thing to worry about in uncertain times.