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E-commerce Profits: Unleash Hidden Savings with Supply Chain Hacks

Updated: 10 hours ago

E-commerce Profits: Unleash Hidden Savings with Supply Chain Hacks

You've been hustling for far too long to be still losing money on supply chain inefficiencies. It's time to stop leaving profits on the table and start running your e-commerce business like the well-oiled machine it's meant to be. In this post, we'll explore key supply chain optimization strategies from supply chain expert Lara Guevara to help you enhance operational efficiency and boost your bottom line. With targeted cost negotiations, strategic partnerships, and a laser focus on your hero products, you'll be primed to fix your supply chain and save a ton of money. So let's jump right in - your increased profits are waiting.

Grasping the Basics of Supply Chain Management

Optimizing your supply chain is crucial for e-commerce success. As Lara explains, understanding the essential components of supply chain management can help you gain a competitive advantage.

Forecasting Demand

To improve your supply chain, you need to focus first on forecasting demand and managing inventory. If you need a good handle on how much of each product you'll sell and when you can't ensure you'll have enough on hand to meet demand without ending up with excess stock. 

Managing Inventory

Work with sales data to identify trends and use that information to project how much you'll need for each item. Then, set reorder points so you get new stock just as the previous shipment was running low.

Establishing Supplier Relationships

You should also build strong relationships with your suppliers. When suppliers know you well, they'll be more willing to negotiate on things like minimum order quantities, payment terms, and shipping costs. They may offer volume discounts and be more flexible if issues arise.

Optimizing Logistics

An efficient supply chain also requires optimizing logistics - how you move materials and products. Look for ways to reduce transit times and costs by using a single carrier for multiple orders or re-evaluating your warehouse and distribution center locations.

Implementing Technology

Finally, technology like inventory management software, transportation management systems, and warehouse automation tools should be implemented. Technology can help you gain visibility into your supply chain, identify bottlenecks, and streamline processes.

By focusing on these fundamentals - forecasting demand, managing inventory, establishing supplier relationships, optimizing logistics, and leveraging technology - you'll make huge strides toward supply chain efficiency.

The Pareto Principle: Applying  Strategic Cost Reduction for Your Supply Chain

The Pareto Principle: Applying  Strategic Cost Reduction for Your Supply Chain

To optimize your supply chain and cut costs, focus on your biggest sellers. Apply the 80/20 rule and target your top 20% of products that drive 80% of revenue.

Smarter Shipping Solutions

Negotiate the best shipping rates and terms for your essential products. Look at blanket purchase orders to lock in lower prices. Consider negotiating in the local currency of your suppliers and manufacturers to uncover hidden savings.

The Power of Blanket Purchase Orders (POs)

Blanket POs establish a long-term agreement with vendors to provide materials at an agreed-upon price. They reduce paperwork and ensure price stability for the duration of the contract. See if your top suppliers will give a blanket PO to lower costs over the long run.

Negotiating in Local Currencies

If you currently pay all your suppliers in US dollars, you may be leaving money on the table. Suppliers often build in a “risk premium” when quoting in dollars to account for currency fluctuations. By paying in the local currency, you avoid these hidden fees and may be able to negotiate lower overall prices. 

By focusing your efforts on the products that really matter, negotiating strategic agreements with vendors, and making payments in local currencies, you can streamline operations and boost your bottom line.  

Leveraging Technology to Enhance Supply Chain Efficiency

The key to optimizing your supply chain is leveraging the right technologies. Using these tactics can significantly enhance your e-commerce expenses. 

Automated Replenishment

One way for you to always have enough stock on your most popular products is through automated replenishment systems. These AI-powered systems analyze your sales data to anticipate demand and automatically trigger reorders when inventory gets low. No more emergency rush orders or lost sales from stockouts!

Real-Time Inventory Visibility

Another way to have insight into your inventory levels across your entire supply chain is by using real-time inventory visibility. Know precisely what you have in stock, what's on order, and where it is at every step, from your suppliers to your warehouses to your stores. This lets you make data-driven decisions to prevent overstocks, minimize waste, and ensure you have the right products in the right places at the right times.

Accurate Demand Forecasting

Lastly, accurate demand forecasting uses algorithms to analyze your historical sales data and predict future demand. These forecasts enable you to make strategic plans around inventory, warehousing, and transportation to optimize your supply chain. Your team can anticipate surges in demand and account for seasonal trends to keep costs low while still meeting customer needs. Demand forecasting, combined with other technologies, helps create an efficient, streamlined supply chain poised for success.

Leveraging the right technologies for your business can help cut supply chain costs, improve customer satisfaction, and boost your bottom line. While the initial investment may seem steep, the long-term rewards for your operational efficiency and profitability will make it well worth the effort.  

Building Relationships and Embracing the Future

To optimize your supply chain, focus on building strong relationships with suppliers and partners. As Lara said, "Supply chain is an investment, and there is a return if the team is managed well or if the supply chain is managed well." Take the time to understand your suppliers' priorities and find mutually beneficial solutions. Negotiating in their local currency can help build trust and uncover more opportunities for savings.

Once you've established a solid foundation with key partners, look for ways to innovate. Technological advancements like AI, automation, and predictive analytics are transforming supply chains. According to Lara, try to apply the Pareto principle. Focus on your biggest product first and then have different project savings for that product, and you will see because that will move the needle. Start with your most popular items and find ways to streamline the ordering, shipping, and delivery processes using technology. As you scale, these innovations can help you achieve substantial cost savings and a more sustainable supply chain.

The future of e-commerce depends on resilient, transparent supply chains. Build win-win relationships, embrace innovation, and keep your customers' needs at the heart of every decision. By optimizing your supply chain in a sustainable, forward-thinking way, your business will be poised for lasting success. 

This article is based on the Andrew Faris podcast episode, Let's Fix Your Supply Chain And Save You A Ton Of Money (With Lara Guevara). You can listen to the podcast here.

Andrew Faris Podcast

Review your supply chain and start saving today!

You've reached the finish line of this supply chain optimization journey. Let's recap the key takeaways. Focus your energy on optimizing costs for your best-selling products first. This is where you'll see the biggest return. Negotiate in your supplier's local currency for enhanced savings. Open and transparent supplier relationships foster mutual growth. Lastly, the supply chain should be viewed as an investment, not a cost center. Done right, it generates immense value. 

Now it's your turn to put these tips into action. Get a custom supply chain assessment from the experts and find the perfect fractional team to elevate your e-commerce operations. Their experienced talent and specialized services will help you maximize efficiencies across the board. What are you waiting for? Your supply chain nirvana is now within reach. Get it! 

About the expert

Lara Guevara is a supply chain expert

Lara Guevara is a supply chain expert with more than a decade of experience working with e-commerce brands. She is also an executive coach and More Staffing’s co-founder and CEO. You can learn more about her thought leadership on supply chain and staffing by following her profile on X and tuning in to her podcast.


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