Managing supply chains feels like a never-ending balancing act. Some materials or products are time-sensitive, others can take their time. But when it comes to certain industries such as eCommerce, logistics and regional eCommerce managers run into increasingly high expectations to make deliveries as fast as possible while keeping costs to a minimum.
In a general sense, supply optimisation refers to ways and means of getting a business’s operations, be it manufacturing and distribution, as efficient as possible. A Deloitte1 study found that 79 percent of its respondent businesses with highly efficient supply chains enjoy larger than average revenues compared to ones without.
This puts a lot of pressure on those in charge of supply chains, such as logistics managers of most companies or eCommerce managers in e-retailers to get supply optimisation right in order to maximise sales, revenue and profit. They need to balance the 5Rs: providing the right material at the right place at the right time, at the right quality, and ultimately at the right cost. This is usually done in a couple of ways:
Supply chains consist of many upstream partners such as manufacturers and wholesalers along with downstream partners such as distributors and retailers.
One communication issue that arises between these partners is siloed information, which can cause a lack of end-to-end visibility.2 Another major issue that could arise is having enough resources to keep communications strong with a large number of partners.
While there isn’t a one-size-fits all solution to strong communications, having regular, structured and transparent meetings with clear metrics and definitions forms a strong foundation. Having a data reporting system in your supply chain management software which can help map data from various partners into a single source of truth also goes a long way in breaking down data silos between various partners.
Once upon a time, terms like ‘Just-in-time’ inventory management was all the rage. Having exactly the right amount of resources for the right number of products to be rolled with the sweet goal of zero waste seemed at hand. With this, holding costs were kept to a minimum and there was little need to scrap inventory which resulted in cost savings.
But when COVID-19 in 2020 caused a domino effect in the supply chain world that is still being felt to this day. 2020’s extended Chinese New Year celebrations in China caused many blank sailings from Chinese ports,3 which led to container prices rising as many containers were stuck in ports due to manpower shortages at ports to process cargo.4
With the chaos of the world almost becoming a norm, how we think about inventory needs to factor in this volatility. Having multiple countries to source materials from could make or break your bottom line considering how volatile the world is increasingly becoming. Holding more buffer stock may be a sensible option to tide you over if and when one of your sources around the world becomes unavailable.
Having multiple partners goes beyond just sources, the same holds true for shipping partners as well. In regions with fragmented geography like Southeast Asia, one would need to partner with multiple logistics partners to get full coverage. Indeed, even logistics partners themselves at times outsource some parts of their volumes to partners who can handle certain parts of the delivery process better than the original contractor.
Having multiple shipping partners offers multiple advantages:
Different delivery locations, different weight breaks and different product types means that no one service provider can be the best at all your shipments. In Southeast Asia, even the largest eCommerce players such as Lazada and Shopee have a large network of shipping partners that they split their volumes between.
Having multiple network partners lets you “rate shop” new quotations you may have between combinations of network partners to find the best rates. Having multiple carriers with overlapping specialties also means that you can swap volumes between them in the event that one of your carriers runs into issues.
No two carriers are alike. Large household names like Fedex and DHL have well established proprietary fleets and assets which makes them fast and reliable, but at times this could make them expensive options. Local carriers may have more limited range, but could be cheaper and faster in their home-turf compared to established international third-party logistics providers. Some like CEVA and Maersk specialise in freight transportation as opposed to loose parcel deliveries.
While most of the specialties of your selected network partners would have been tested during your request for quotation process, more data on their specialties and reliability comes with time.
Once you’ve collected sufficient data and analysed where each partner’s strength lies, you’ll be able to settle on shipping partner specialists for different combinations of the above product/location matrix mentioned above, which can translate to eCommerce shipping savings for your company and online shoppers.
Depending on your online store’s requirements, you may be offering the option of choosing cheaper shipping such as through post or express delivery options which cost more. Considering consumers’ increasing demands as of late, providing options could be prudent.
A Capgemini report in 2019 found that 76 percent of respondents were willing to pay extra for faster delivery. Meanwhile,a consumer trends report from JungleScout found that 80 percent of its respondents want free shipping. By having multiple carriers to choose from, you can satisfy both those who are willing to save more money by waiting longer and those who are willing to pay for faster delivery.
Considering today’s climate, having multiple options be it for suppliers and also shipping providers is prudent in terms of both costs and performance. But, at least in terms of shipping providers, having too many carriers itself could make managing them costly and complex.
Janio has many years of experience managing shipping providers at most legs of the eCommerce supply chain from first mile to customs clearance and last mile delivery. Our wide partner network stretches throughout Southeast Asia’s major markets and even other international markets such as the United States and Australia.
Janio can provide you with all the benefits of a multi-carrier strategy through a single touchpoint. As we consolidate our volumes, we are able to negotiate better price points and service level agreements (SLAs) with our partners should you choose to work with us. Our experience in tracking partner performance lets us provide you with dashboards and monthly business reviews to give you all your eCommerce delivery performance right at your fingertips along with the steps we’ve taken to further optimise your deliveries.
Supply chain optimisation feels like being paid to spin plates during an earthquake. But fortunately, you won’t need to spin those plates alone. Having the right partners, or a partner who can manage all those partners for you, can help to take the load off so you can focus on other areas of your business.
To find out more about what Janio does or how we can tailor delivery solutions to your business, contact us via the banner below:
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