E-commerce in Africa has emerged as one of the industries helping individuals and businesses level the playing field when providing consumer goods and services but the supply chains in the industry may unfold if these entities fail to optimize it.
Why is it important for e-commerce businesses to optimize their supply chain? There are several reasons, but our top three are:
- Customer Satisfaction
- Competitive advantage
- Cost Efficiency
You may call them the three C’s for optimizing your e-commerce business.
Now that we know why businesses must optimize their supply chains, the big question is how. And that is the essence of our article.
Four key strategies will help in supply chain optimization. Let us review some of them.
1. Collaboration
You must have heard of Jumia, Konga, and other major African e-commerce platforms.
But did you know that many e-commerce businesses across the continent are small businesses with no more than one or two people on the payroll?
This is where collaboration becomes very necessary.
These businesses can partner with other businesses to help them optimize their supply chain, especially regarding last-mile delivery.
They can partner with 4PL or fulfilment companies like Jumia to reach more clients. They can also partner with logistics businesses like GIGM to ensure customers get their goods on time.
When collaboration is done well, it can help the supply chain reach more customers while saving the business expenses such as advertising, order processing, and transportation.
The right collaboration or strategic partnership can help these businesses grow faster and better, but attention should be paid to the development of these relationships as well.
2. Technology Integration
Technology is the engine that powers e-commerce businesses and modern supply chains. But it should go well beyond customer interfacing to order fulfilment and feedback.
With the right technologies, businesses can cut order delivery time by up to 50%. They can reduce mistakes in the sorting process and enhance the supply chain’s productivity.
Take, for instance, the food e-commerce industry. The cost is massive when businesses in this industry make mistakes in customer sorting and order processing.
While other businesses might just lose in the logistics aspect of it, the food industry cannot afford such luxuries due to the nature of their product.
It could all be avoided with the right technology, and it is not expensive, which makes it easier for small businesses to leverage such solutions.
Technology also helps with visibility and transparency. Kobo360 is an example of a company facilitating this.
Customers and businesses can track their orders across the supply chain, which goes a long way to reduce complaints or incessant calling from customers.
It also helps all relevant parties understand and interact with the supply chain process as needed.
3. Inventory Management
Inventory management differs from business to business, and to a great extent, it determines the success of an e-commerce supply chain.
There are three major types of inventory management styles. The pull, push, and Just-in-time (JIT). Knowing the right inventory style for the business is essential if the business has any chance of survival.
The pull method takes orders from the market or customer base, and the push forces the product to the consumers while the JIT reacts to the customer’s demand in real time.
Every successful supply chain has mastered using one or a mix of both to improve the efficiency of its inventory and distribution operations.
In Africa, the same will need to apply to these businesses. There are many benefits to having the right inventory management, such as cost-cutting, faster lead times, and increased throughput.
4. Forecasting
Forecasting is a real money saver, and in a very dynamic economy, it could help supply chains better understand their customers, even for e-commerce businesses.
With robust forecasting, a business knows when to invest in certain SKUs. It also knows the level of investment to dedicate to each SKU.
It is very difficult to go wrong with forecasting. There are several types, but the most robust ones are tech-based and could be quite expensive.
Forecasting and demand planning are only one side of the puzzle. Getting the customer’s demand right is great, but delivering it to the customer is what matters.
This is why it is beneficial for businesses to have a solid balance between their demand and supply operations.
5. Controlled SKU Proliferation
Variety is the spice of life, and it is certainly true for e-commerce businesses in Africa and their SKUs. However, it should be done with care.
Although SKU proliferation is a good strategy for many businesses across the continent, it can be very dangerous when allowed to get out of control.
To control the SKU proliferation effectively, businesses can use sales and forecasting data to determine which SKUs are doing better in the market at every point.
With that, they can dispose of the bad-performing products, freeing up capital to reinvest in the business and supply chain operations.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
