The Promising Aspects Of E-Commerce Supply Chain

One industry that has been growing unstoppably even in difficult times is the e-commerce industry. It might take a few clicks from the customer’s end, but is it the same for the seller?

No, it is not. Have you ever wondered how does this procedure work? Yes, you place the order; it gets delivered to you by the shipping partner or the company itself. But then again, do many companies carry this out on their capability or outsource some entity?

It mainly depends on the situation of the company. The better way is to hire a third-party logistics or 3pl’s; this significant process needs to handle by experts.

What is a fulfilment centre, and how it contributes to the supply chain?

A fulfilment centre focuses on every minute detail while receiving, processing, packaging, and picking up the order. The inventories at the centres are organised so that the order processing time gets lessened to a minimum. A fulfilment centre is made available on rent by a 3PL company, and generally the commercials are fixed with a fee per order i.e. movement of the goods. Here the customer’s orders are completed and processed for the e-commerce retailers.

Owning and managing the roles of the fulfilment centre is not as easy as it seems. It requires a dedicated team of experts who are well-versed with the ins and outs of the industry. Moreover, every business is different from the other, and so its requirement. A very few and only specialised 3PL’s offer these services, as these are not only capital intensive but also requires understanding of the right acumen. Fulfilment centre covers various aspects and can be proved helpful. Let us understand how one can benefit from it:

• Perfect Space – Renting out or leasing or buying enough space at prime locations of your business doesn’t sound too appealing and inexpensive. While dealing with the local brokers or the builders in the warehousing sector, you need to decipher the way their terms and conditions works to get the best space at the best terms. Thus, the need for 3pl’s who has turned the master of negotiations in getting you the right warehouse.
  With proven experience, fulfilment centre always tries their best to provide the best rates with the best services. Hence, a reduction in operating costs and a lot better customer service.
• Scalability – Experienced 3pl’s fulfilment centres have the potential to operate a million products per month at a single warehouse efficiently. It is the Warehouse Management System (WMS) that conducts this whole procedure. The procedure involves receiving the order to dispatching it, invoicing, coordinating with the shipment partners, and reverse logistics (return of the product). To make things uncomplicated automated, and system-driven, processes are followed.
• Infrastructure – the 3pl provider will keep check of everything especially, infrastructure. Modern warehouses featuring good location, wide road access, quality construction, relevant licences, appropriate carpet area, 24×7 power supply and back-up, good shed height, enough docks with right dock height (for easy movement of vehicles), enormous daylight, proper air ventilation, basic office and IT setup, fire safety, parking facility, water storage drainage, dedicated security control, etc. are getting build. They provide centres with an operational infrastructure equipped with up-to-date technology.
• Human resource management – The whole procedure of maintaining a department brings in lots of responsibilities, and a department so uncertain like this needs to be put at priority. These 3PL companies have multiple personnel at different levels including supervisors, floor managers, data entry operators, security, labours, housekeeping staffs, etc.
  With the fluctuations or uneven sales, you might not be able to guarantee someone a promising job.
• Licensing – The legal procedure to own and administer a fulfilment centre is tantalising. Trade licence, GST, Fire Licence, Shop Establishment/ Pollution, etc. are required to operate a fulfilment centre. Various industries require different types of licenses like – FSSAI is required for the food sector. 3pl’s becomes a suitable choice to oversight the flow of the product.
• Processing – Conduction of fulfilment process can take days. It begins with the customer placing an order and mostly ends when they receive it. Generally, the process includes receiving the goods from the vendors, doing the quality checks, sort the goods and store in the right location with marking the location codes, and as and when an order is received from the customer, the fulfilment picks the same for packaging, billing, and dispatches. In several cases, they tend to return it, which is a part of reverse logistics – a bifurcation of the fulfilment process.
• Peak season management – There is always a fluctuation in the demand and supply cycle. Warehouses act as the storage space that keeps your stock safe, while the fulfilment centre makes sure that the consumer’s demand is fulfilled regardless of the shifting cycle. They are stacked with professionals who are trained for every situation.

This all is part of the forward supply chain, i.e., from manufacturer to customer but, there is a backward movement in the supply chain too.

To understand the other part, let’s take an example; you were browsing online and came across famous terracotta items of Kolkata. You decided to buy it; you ordered and received the parcel, later on realising that it is not up to the mark. You decided to return it.

After your return gets picked up, it’ll not directly go back to the seller/manufacturer it will precede to a fulfilment centre in West Bengal, more specifically the designated fulfilment centre in Kolkata. From there, the disposal, reselling or recycling of the product will take place. This whole procedure comes under reverse logistics.

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Reverse logistics

Reverse logistics gates the backward movement in the supply chain, i.e., the product moves back from the end-user to the producer or seller. It could happen for several reasons, such as regaining value from an asset or disposing of, putting in service, or recycling a product. The products may be are resold, compensated, or disposed of permanently.

The department also ensures to reduce returns by creating support websites or local centres, handling delivery failures and packaging when needed and moving unsold merchandise back to the manufacturer depending on the contract.

But how do the centres determine what to repair, what to dispose and what to resale? There are three reasons a product moves backwards in the supply chain.

• Received the wrong item – In a few cases, the product delivered is not the same as the ordered. And in other cases, the product delivered is the same but is of the wrong size/perfect fit.
• Dissatisfaction with the item – Sometimes, a customer, after receiving the product, feels dissatisfied with its quality, expectations, and appearance.
• Defective product – In one of those rare cases, an item on arrival might be defective, leading to its return.

Reverse logistics includes the monitoring of the life-cycle of the product/asset. It comprises a step by step procedure that is followed by the 3pl’s while performing the task.

• Handling the return – It starts with the end consumer filling up for the return. Once the product condition gets verified, it gets ready to be taken back to the centre. Other procedures include granting refund and replacement.
• After arrival – Once the product arrives at the designated centre, it is categorised for further proceedings. It will either move for repair, for reselling as a new product, for recycling or disposal.
• 3R’s (Repair, resell or recycle) – The process never stops. After categorisation, either the whole product or part of it gets repaired or the remaining moves for recycling. The product either gets recycled to reuse.

Return to origin – It is a fundamental metric in e-commerce. In this scenario, merchandise never makes it to the final destination. It can happen due to the – customer not receiving/accepting the package or the contact details were incorrect. There are RTO related costs that need to be put light on.

1. The to and fro movement of the product leads to shipping charges that are to be forwarded and returned.

2. For every backward movement of the product, the cost of repackaging gets included.

3. There is always a possibility of product damage during its shipment.

4. The expense in the handling of recalled inventory.

5. In few situations, the commodity gets caught in transit, thereby losing importance and becoming useless at moments.

6. The disposal cost for various returned items tends to be a little extra.

7. Loss of probability.

8. Cost of client turnover or customer turnover (when an organisation customer base gets reduced during a set period).

According to CNBC TV18, back in 2019, Kolkata recorded the highest return-to-origin rate leading to more demand for fulfilment centres in Kolkata.

It concludes that both fulfilment centre and reverse logistics are crucial parts of the supply chain that might seem expensive at first, but when joined hands with the right firm like StoreFresh, you will observe your company benefits in the long run.

You can contact us by visiting our website www.thestorefresh.com or emailing us at info@storefresh.net . We give our attention to customers as well as we care about the environment. Our services are not just limited to customer satisfaction but also contribute to the environmentally sustainable activity.

Choose correctly – do it right to make things right.

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