How E-commerce Companies Can Make Their Logistics More Efficient?

🔍Insights

Preeti Karna

May 27, 2022 — 5 min read

Prodipto Roy, Co-Founder, Quickshift

This article is attributed to Prodipto Roy, Co-Founder, Quickshift.

With technology evolving faster than ever in modern times, e-commerce is no different, changing invasively, striving to provide lightning-fast delivery and providing enhanced services to its clients. The market that was less than $1 trillion in 2011, grew to about $ 9.00 trillion in 2021, a volume of 22% being online purchases from the total retail sales, and expected to be over 50% by 2031. E-commerce has seen a growth trajectory of 13-17% during the pandemic and is sure to stay with continuing shopping trends.

While Tech forms the platform for E-commerce, the foundation is largely based on efficient logistics. E-commerce companies are integrating effective strategies into their supply chains that can help them make promises that improve sales and create customer excitement. It helps in mitigating shipping delays and inefficiencies in order to provide better service, increased margins and customer satisfaction.

What makes e-commerce logistics efficient?

Technological advancements are required from order fulfilment to demand. The call of the hour is to have decentralised distribution and fulfilment centres, to meet growing order volumes, customer expectations and complexities in deliveries.

Here are a few supply chain strategies for eCommerce companies:

Implement information systems: By introducing warehouse management systems (WMS) companies can manage most of the activities that take place in a fulfilment warehouse. Products that traditionally sell out more rapidly can be stored in easily accessible warehouse locations, and employees can adapt to unexpected demand for certain models.

Decide on the right third-party logistics and internal fulfilment: An easy way to cost reduction is outsourcing fulfilment costs to third-party logistics (3PL) provider. This eliminates huge infrastructure costs, workload and manpower management, and ongoing maintenance costs among others. Third-party providers will procure warehouse space, restock shipping supplies such as labels, cartons, and pallets, and handle overhead costs.

Warehouse strategy: Warehouse costs are about 15-20% per order and an extensive study should be conducted to increase efficiency. Certain orders need specialized storage, like cold storage or climate control, approaching logistics from a warehouse strategy could provide better efficiency. Warehousing costs can be reduced by renting out local spaces.

Voice-enabling Systems: This system uses voice direction for scans and key entry, which reduces the time employees spend reading devices, manipulating barcodes, and re-keying in data. Although this strategy incurs up-front costs, but voice-enabling can save 1 to 3 seconds per pick.

Effective Training Programmes: It is not always possible for companies to invest in warehouse management systems. In such cases, companies can still reap benefits from effective manual labour training programmes, to help employees work safely and rapidly, by introducing simple technology that can make it easier to pick and pack. These small upgrades can lower costs per line, unit, and order.

Using barcode and RFID: Companies can easily track goods in transit and collect data using barcode and RFID systems. Also, the pick and pack, return cycle, tagging and other processes can be handled more efficiently.

Optimal use of warehouses: By using the existing warehouse facility to its full capacity, companies can increase worker productivity, and reduce inventory errors. Ways of doing so are utilizing every square inch of the capacity available, forming separate sections for goods coming in and going out, forming cross-sections, shortening aisle width, and stacking up vertically. This also reduces the pickup and processing time.

Reduce delivery times: By shifting operations to decentralized locations, the companies can reduce delays caused due to geographic locations. This helps shipping faster and closer to the target market.

Efficient supply chain vendors: Collaborate with vendors that have high standards of customer service, timely delivery, packaging and communication systems. This will ensure timely delivery and increase customer satisfaction.

Quick transportation system: Inventory needs to move fast to give a good turnout. Having a transportation management system can tackle all the known complexities of routing deliveries. This type of software can figure out the best route and ensure that all stops are accounted for. This technology is also known for cutting costs.

What do efficient logistics systems look like?

An efficient logistics process in a business offers unmistakable advantages. It streamlines operations, minimizes downtime, gets products from place to place quickly and adds tremendous overall value.

Below are some main benefits of efficient logistics:

Reduced costs: businesses are efficient because they trim wastage, overheads and extras in the process. More efficient transport routes offer reduced time and fuel costs, and efficient warehousing strategies allow you to fit more inventory into space and reduce your storage costs.

Increased customer satisfaction: Increased logistics efficiency comes with improved fulfilment. customers who receive orders as promised are more likely to be pleased with the services and there is a higher retention rate. This helps you build a loyal customer base.

Strong relation with suppliers: While onboarding, the suppliers are always keen to know whether you have the necessary infrastructure and systems necessary for their business and can deliver their products as promised or not. By exhibiting your command of logistics efficiency, you make yourself an appealing partner for suppliers and ensure a steady supply of quality products for your clients.

Better industry reputation: Strong logistics efficiency manifests your overall reputation in your industry. E-commerce companies gain confidence with clients, become more attractive business partners and attract more qualified and capable employees.

Conclusion

Logistics and e-commerce are two sides of the same coin and are inevitable to create a seamless and smooth shopping experience. The nexus with 3PL comes highly recommended for e-commerce businesses with complex supply chains. They have automation technology that helps you have a better outlook and take informative well-planned decisions, ensuring growth and higher productivity. Working with a 3PL saves complex engagements such as training, recruitment and development. Logistics are inevitable to any business.