By: Linh Nguyen, Specialist - Consulting (CX), LTIMindtree

Have you ever wondered what happens after the customer clicks the purchase button completing the payment process on a website?

A complex e-commerce order fulfillment process is triggered to deliver the goods at the right time, right place, and with right quantity and quality to customer.

The global pandemic acted as a catalyst accelerating the growth of e-commerce. According to research conducted by Digital Commerce 360, e-commerce has increased by 28% post-pandemic with 58% of consumers stating they expect to do more online shopping in the future. In addition to the rising demand for e-commerce, there is also increasing customer demand for a smooth e-commerce customer experience that encompasses providing the desired product at a good price, and also creating a convenient and seamless experience for order fulfillment. 62% of online shoppers expect free shipping orders to arrive within three business days. Thus, the last mile of delivery has become extremely important.

However, in the world of e-commerce, the online customer journey and order fulfillment have become increasingly complex. There are many touchpoints along the way that can impact customer experience. To stay competitive and profitable while enhancing customer experience and satisfaction, it is crucial for modern businesses to understand and optimize operations behind the scenes.

In part one of this blog series, we will explore the supply chain process flow of e-commerce and highlight pain points that can impact customer satisfaction. We will also cover a few recommendations on how to improve the process and ensure a smooth customer experience.

Understanding the supply chain process flow

In general, the supply chain process starts with the product design and creation stage where all the detailed information about the products such as product specification (e.g., materials, size, and color) or product lifecycle will be defined. Then the demand will be forecast based on historical data, sales records, or market trends to define when, where and how much we should produce or source for the goods. Demand planning is followed by planning for potential sourcing, purchasing and manufacturing schedule.

Once the goods are produced and pass the quality control criteria, the inbound transportation commences to bring the shipment to the distribution center or directly to the wholesale customer. The product is sorted and stored at the fulfillment center prior to the order fulfillment process for e-commerce customers. Each stage in the chain is closely linked to the other stages and the disruption that occurs at any stage can disrupt the entire supply chain. This could lead to a significant delay in customers receiving orders and poor customer experience. Therefore, a streamlined supply chain process plays an important role for the  efficiency, profitability, and sustainability of the business in order to ensure a great customer experience that keeps customers coming back for more.

Challenges in the supply chain process

Due to the macroeconomic situation, new geopolitical conflict, and rising inflation in the last year, businesses are likely to face several challenges and disruption in the supply chain process. These challenges include material shortage, forecasting accuracy, and digital transformation. Hence, businesses must prepare a risk mitigation plan to handle such challenges.

1. Material shortage: Insufficient availability of raw materials and the increase in cost of raw materials are the biggest supply chain threats in recent years. This is largely due to due to rise in consumer demand and external factors such as economics, politics and the environment. Limited access to the critical raw materials for production and packaging can impact the availability of the finished goods.
   Solution:
   • Diversify sourcing strategy in terms of geographical location, pricing, alternative choices, and offshoring versus nearshoring production.
   • Focus on supplier relationship management by fostering collaboration and provide more visibility and transparency on changes in demand planning and forecast sensing.

2. Demand forecasting: The volatility in customer demand, market trends and omnichannel presence have increased the complexity of demand forecasting. Predicting the amount of inventory to produce and stock is becoming harder than ever with fluctuating customer demands and market competition.
   Solution:
   • Leverage the power of digital technology, AI, and data analytics in planning and optimizing supply chain networks.

3. Digital transformation: Recent digital technological developments can help organizations to automate operational processes and accelerate business growth. With the trends of digitalization and digital transformation, businesses risk falling behind their competitors if they fail to adopt and use the new technology in the right way.
   Solution:
   • Investing in process automation, starting from simple repetitive task that are easy to automate but prone to human errors when performed manually.
   • Prepare your organization for digital transformation and train your teams to adopt the latest technology trends such as data analytic, robotics process automation or AI/ML in the supply chain process.

As we dive into the intricate ways modern e-commerce businesses can optimize their supply chain, we are one step closer to meeting customer expectations. However, the journey to mastering e-commerce excellence continues. To uncover the comprehensive picture and discover how order fulfilment plays a pivotal role in enhancing customer experience, read part two of this blog series.

References

• https://www.digitalcommerce360.com/2020/10/30/shopping-behavior-keeps-evolving-as-the-pandemic-continues/
• https://xdelivery.ai/2022-shipping-report/

Part 2