May 2, 2022
Traditional Versus Modern Supply Chain Management
This blog post was originally published by Deliverr, which is now Flexport. The content has been adjusted to fit the Flexport brand voice and tone, but all other information remains unchanged. With the merging of Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) into Flexport’s existing international freight and technology services, we’re now able to provide merchants with true end-to-end logistics solutions spanning from the factory floor to the customer’s door.
Consumers crave the immediate gratification of fast shipping. Traditional supply chain management methods can't keep up, so they're being left by the wayside in favor of modern solutions. Merchants are feeling the supply chain headaches as efficiency plummets and it gets tougher to get products where they need to be, on time.
So how can businesses overcome delays and adapt to rapidly changing market conditions? By turning to innovative management strategies. If you're already familiar with the ins and outs of the traditional supply chain and just want to know how the most innovative companies handle theirs, skip down!
The Three Parts of an Ecommerce Supply Chain
A supply chain consists of three parts, each with its own function to help the entire process run effectively. From the supplier to the producer to the customer, the supply chain encompasses the product's entire journey from raw material to the final product delivery to your customer. If any one part of the operation is delayed or shut down, it impacts the entire system. Let’s take a closer look at the responsibilities of each part.
- Commonly referred to as vendors, these entities provide materials, products, or services to a business.
- They can provide raw materials or manufactured products needed to satisfy other parts of the supply chain.
- Referred to as manufacturers, producers make products for resale to distributors and retailers.
- Producers can provide raw materials such as wood or can even make a finished item.
- Service providers are also considered producers that offer services throughout the supply chain.
- Also known as consumers, customers purchase a product or service from the producer.
- Customers can be an individual or another business within the supply chain (e.g., a distributor, retailer, wholesaler, etc.).
Evolution of Supply Chain Management
Supply chain management evolves as the eCommerce industry grows. Yet no amount of effort can fix the burden of increased traffic at ports, a decreased workforce, and production delays.
Consumers expect next-day or 2-day delivery options at no additional cost. This means more technology integrations to help the eCommerce supply chain become a well-oiled and efficient system.
The success of the eCommerce supply chain relies on communication among its many moving parts. It’s a global network that requires the latest digital advances to ensure a smooth transition from acquiring materials to production, warehouse storage, and distribution to the customer. Without insight into the progress at each stage, businesses can’t be proactive at fixing problems as they arise.
Let’s take a look at traditional supply chain management processes and how they transformed into the modern management strategies that you can rely on to keep your business running efficiently.
What Is Traditional Supply Chain Management?
Traditional supply chain management is a rigid system focused on product production. Your team sources materials, provides them to a manufacturer to make the product, then sends them to a retailer or other sales channel to be delivered to the customer. Any issues along the way are manually dealt with, which can be hard to manage—especially as large volumes of products are being produced.
With the life-cycle of products being much shorter, and consumers expecting to have an abundance of choices, this model is no longer cost-effective when trying to source items that are in line with customer demands. Instead, modern supply chain management leverages automation and technology insights to better accommodate the needs of your customers.
WHat Is Modern Supply Chain Management?
Modern supply chain management incorporates real-time data as well as sales metrics to forecast which products will be in demand. This allows your business to scale production and make more informed decisions when ordering from suppliers. Utilizing the latest inventory management software provides a few key benefits to your business:
- Access to increased product visibility
- The ability to ensure inventory matches demand
- Assurance that inventory is able to quickly ship to customers by being placed close to demand
Digital communication and integration ensure all parts of the supply chain network are on the same page and running smoothly. Instead of waiting for a problem to arise, you can anticipate obstacles and work to overcome them so operations go as planned.
What Makes Traditional and Modern Supply Chain Management Different?
There are a few things that make each type of supply chain management different:
Traditional supply chain management systems prioritize the production of goods. It focuses on finding a worthwhile product, manufacturing large volumes, and working to deliver it to customers. The pathway is straightforward, not allowing for a lot of flexibility.
Modern supply chain management systems rely on advanced data and technology to cater to consumers’ needs and expectations. Modern supply chain management employs logistics to help make operations run smoothly and efficiently. It also takes into consideration a larger network of providers that can offer faster and more affordable options for production and fulfillment throughout the supply chain.
Using technology advancements and intelligent data collection allows you to focus on customizing products to meet customers’ needs. This means maintaining high-demand inventory to meet the expectations of current and potential buyers.
Most importantly, modern supply chain solutions build partnerships and collaborations that positively impact suppliers, producers, and consumers alike. Networks accommodate the growing pressures put on the eCommerce supply chain allowing for more efficient processes. Your business must rely on the expertise of others throughout the supply chain to handle different stages of the operation. These alliances are crucial to navigating the volatile nature of the supply chain that the industry now faces.
Is Your Supply Chain Management Traditional or Modern?
Modern supply chain management solutions allow your business to be more effective and readily adapt to market changes. When you’re able to predict consumer behavior, anticipate material shortages, and view inventory in real time, your team is better able to respond and thrive in an ever-changing landscape.
Ready to ditch your outdated supply chain management system? Flexport’s modern supply chain management system can help. Talk to an expert today to learn more.
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