smartecommercesupplychain

Building a Smart E-commerce Supply Chain

By Jim Sharkey

When I launched Mochila Fulfillment in 2013, I was guided by one, simple conviction: the existing supply chain solutions for e-commerce brands could be vastly improved. I had spent the nine years prior helping to build and manage order fulfillment operations at Amazon.com. When I struck out on my own, I thought I knew how advanced Amazon was in the order fulfillment and supply chain arena. I was wrong – Amazon was not just advanced; Amazon was light years ahead of the existing e-commerce supply chain solutions.

Flash forward to today, and I am amazed how much Mochila has grown in such a short period of time: we’ve expanded our warehouse space over 6x with locations on both east and west coasts; we’ve been privileged to work with many leading e-commerce companiess; and we’ve developed a purpose-built, flexible, warehouse management system to handle the complex requirements of today’s modern brands.

Along the way, we’ve learned a lot about what works and what doesn’t. Here’s our advice based on our collective 28 years of e-commerce experience.

Invest in a software solution that can grow with your business. Fortunately, all of our clients have grown steadily over time. And while we know there are many factors that drive that growth: savvy marketing, superior products, and excellent branding, we also know that product innovation and increase selection are important drivers. If your fulfillment partners rely on simple software solutions that are inflexible and are difficult to scale, they will find it difficult to grow with you as you introduce more products, more complex packaging requirements, additional distribution channels, and higher volumes.

Although your needs may be simple today, a fulfillment provider that doesn’t have a standard and extensive collection of open APIs should be a red flag. You may be able to rely on a standard Magento or Shopify integration in the early days of your business, but as you grow you want to ensure your partner has the technical background to handle new fulfillment offerings.

Create a supply chain that maximizes profit. A young e-commerce brand that is watching every penny will, understandably, be drawn to identifying ways it can lower the cost of each individual component of its supply chain – manufacturing, transportation, and fulfillment. But the smartest brands think about how each of these components work together along with marketing and sales to maximize total profit.

For example, a brand may look to minimize the costs of processing returns. But achieving those lower costs may result in longer times until the items are returned to available-for-sale inventory. And that may mean lower profits if returns are processed after the peak selling season.

Choose partners that bring expertise to your organization. Every organization has limited resources. Each partner you choose is an opportunity to bring expertise into your organization without having to hire full-time staff. So look for partners from whom you want to learn and with whom you can develop a good working relationship. You’ll want a partner you want to invite into the process and with whom you want to collaborate on new solutions. It’s important to look for a good fit with your company’s culture and values. If a potential partner has a lot of expertise but offers no flexibility in its solutions, they may not be the best long-term choice.

Communicate often. To make a partnership work, it is important to continually invest in the relationship. If you simply sign the contract and walk away, you almost certainly asking for disappointing outcomes down the road. It is important to engage with your 3PL consistently and frequently. Remember: a 3PL can’t read your mind. Things that seem second nature to you – like a new product offering, a spike demand from a new promotion, or a change in packaging – may catch your 3PL off guard. Having regularly scheduled times to updated each other on upcoming potential changes in the business will ensure your both best prepared to handle those changes smoothly.

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