Building a Responsive Supply Chain

In an industry where customer demands are always evolving, supply chains need to evolve with them. A responsive supply chain can help you meet changing requirements through flexibility and accuracy. Optimizing your supply chain can improve eCommerce offerings, profitability, and reputation. Let’s take a look at how to build a responsive supply chain.

What Is a Responsive Supply Chain?

A responsive supply chain has the agility to respond to customer needs through a flexible model. They typically use modern technology and data to create connections across the supply chain.

Supply chains need to be as efficient as possible, but flexibility and efficiency can often seem at odds. If you’re too efficient, you may have lost the ability to adapt to changing demands and customer requests. If you’re too agile, you may be lacking efficiency. A strong supply chain needs to balance responsiveness and efficiency for the best of both worlds. Thankfully, they can work together.

• Inventory accuracy: Accurate and up-to-date information is essential for building customer confidence, especially in omnichannel environments where customers might be buying online to pick up at a store. For 40% of U.S. consumers, a brand’s authenticity and honesty are extremely important in their purchase decisions. Inventory visibility is key to offering this transparency, and 84% of Chief Supply Chain Officers say it’s their biggest concern.
• Cost of chargebacks: A responsive supply chain also minimizes chargebacks, which occur when a shipment is noncompliant with a partner’s requirements. These might include inaccurate quantities or documentation.

How to Build a More Responsive Supply Chain

Improving the responsiveness of your supply chain calls for changes throughout the organization — but it’s worth it. The costs of interrupted supply chains can be considerable, with one estimate putting the cost of stopping an automotive assembly line at $60,000 per minute. Another example comes from out-of-stock scenarios. In the second quarter of 2021, we found an eCommerce pet supply retailer that saw a $40 million deficit from these situations.

Here are some tips for building a more responsive supply chain and avoiding these high costs.

1. Practice Vigilant Inventory Accuracy

Maintaining accurate inventory counts takes preparation. One of the best ways to achieve precise on-hand inventory and on-order quantities of products and components is via integrated technology and consistent attention by your team. Ensure employees take inventory accuracy seriously at all levels, from your warehouse floor to your eCommerce managers. Everyone should understand how their work impacts inventory accuracy and what that means for the company and customers. Keep inventory top-of-mind at all times. This accuracy must be an ongoing initiative, not just a one-time project.

2. Implement Error Correction and Review

If you have differences in quantities, error correction and review processes can create a record of any modifications and ensure that changes occur across all systems simultaneously. These processes are necessary for real-time visibility into product quantities, even when you make manual changes.

3. Train Point-of-Sale Employees

For brick-and-mortar stores, knowledgeable point-of-sale (POS) workers are a crucial part of a reliable supply chain. Educating employees on the importance of accuracy and proper procedures can help minimize errors at the POS. For example, a trained employee might understand that different sizes of clothing items count as separate products and will process them appropriately in the system.

4. Improve Advance Shipping Notice Processes

Estimates place the cost of chargeback between 0.3% and 1.5% of a brand’s sales and invoices, and these chargebacks often come from inaccurate advance shipping notices (ASNs). Minimize errors by developing a process that checks shipments against your ASNs to ensure you have received the correct number of items. You can also opt for a platform that does this for you — TrueCommerce has a three-way matching process for this purpose.

5. Consider Cart Abandonment

When you update your inventory counts, consider the effects of cart abandonment. Say items are pulled from inventory when a shopper places them in their cart. If they then abandon their cart, those items need to return to your inventory promptly.

6. Use Advanced Technologies

You can also research more advanced methods of inventory management, like radio frequency identification (RFID), warehouse execution systems (WES), advanced automation, and autonomous mobile robots (AMR). VMI solutions can also help here, with advanced features like allocation and available-to-promise tools, and algorithmic inventory forecasting models.

Responsive Supply Chain Tools From TrueCommerce