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10 Key Benefits of Outsourcing Supply Chain Management Services for E-commerce Businesses
Introduction
Managing an e-commerce business is no small feat. From ensuring timely delivery to supplier relationships and optimizing inventory, supply chain management often becomes a time-consuming and resource-intensive task. According to a 2022 report by Resilinc, supply chain disruptions cost global businesses over $4 trillion annually, with e-commerce sellers among the hardest hit due to delayed shipments, lost sales, and dissatisfied customers. Enter outsourcing—a strategic move that allows you to delegate these responsibilities to experts. Outsourcing supply chain management not only alleviates operational burdens but also unlocks several benefits that drive growth and profitability.
1. Increased Business Profitability
One of the most compelling reasons to outsource supply chain management is the immediate impact on your bottom line. Here’s how it works:
- Cost Savings: By outsourcing, you eliminate the need to maintain an in-house supply chain team. Agencies handle everything from inventory management to logistics, significantly reducing overhead costs.
- Optimized Operations: Experts use advanced tools and methodologies to identify inefficiencies, reduce waste, and streamline processes.
- Better Freight Rates: Outsourcing partners often secure bulk shipping discounts, passing the savings on to you.
With reduced expenses and streamlined operations, e-commerce businesses can allocate more resources to growth-driven initiatives.
Best Practices for Inventory Management on Amazon
- Utilize Inventory Management Tools: Amazon provides tools like the Inventory Performance Index (IPI) and Amazon Fulfilled Inventory (AFN) to help you manage your inventory more efficiently. These tools provide insights into your inventory’s performance and suggest actions to optimize it.
- Forecast Demand: Use historical sales data and upcoming events to forecast future demand. Consider seasonality, trends, and other factors that may affect your sales. This will help you order the right amount of inventory.
- Set Reorder Points: Establish reorder points to automatically replenish inventory when it falls below a certain level. Let’s say you can set a targeted Days of cover for your high selling items and low selling items, to be maintained in your sales channel.
- Inventory Segmentation: Categorize your inventory through segmentation and allocate them categories such as “A”, “B”, “C”, and “D”. This can help you a lot in making decisions for best seller items over slow moving or low selling items.
- Monitor Deadstock: Regularly review your inventory for slow-moving or obsolete items. Consider running promotions or liquidating these products to free up capital and storage space.
- Regularly Audit Inventory: Perform regular physical counts and audits to ensure your inventory levels match what’s listed in your Amazon account. So that you may not face orders while you are actually out of stock.
Conclusion
Effective inventory management is a cornerstone of Amazon seller success. It enables you to meet customer demands, minimize costs, and maintain a strong seller reputation. By following the best practices outlined in this blog and utilizing the tools and resources provided by Amazon, you can take control of your inventory and thrive in the competitive e-commerce landscape.
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