Agility: the ability to move quickly and easily.
When you think of what it means to be agile, you might think of an Olympian athlete competing for the gold.
But in the ecommerce supply chain context, agility relates to how quickly an ecommerce business can adjust to ever-changing expectations in speed and delivery.
An agile supply chain must also be able to react quickly to changes, delays, and unexpected events to maintain customer expectations, stay competitive, and grow their business.
In this article, you will learn the importance of supply chain agility, what it means to be agile, plus strategies and best practices you can incorporate into your supply chain.
What is supply chain agility?
Supply chain agility refers to how quickly and efficiently an ecommerce supply chain can react to changes in the market and customer demand. It also relates to the ability to anticipate, resist, and bounce back from unexpected, disruptive events.
To build an agile supply chain, an ecommerce business must have the resources to:
- Optimize and improve logistics operations efficiently.
- Easily implement the latest technology and automation.
- Gain visibility into operations and access real-time data.
Why is supply chain agility important for ecommerce?
Having the right technology and processes in place is what keeps customers satisfied and an ecommerce business financially secure, despite unforeseen setbacks.
An agile business model has always been important across all industries, but agility plays a key role in ecommerce, from meeting customer expectations to optimizing operational costs.
Here is an overview of why supply chain agility is important for ecommerce.
Meets market demands
One of the biggest benefits of having an agile supply chain is that it enables you to consistently meet customer demand around fast, affordable shipping, despite fluctuations in order volume.
However, to meet ever-changing market demands takes deliberate supply chain planning and execution.
To build supply chain agility, you have to consider different ways to ensure you can meet customer expectations despite potential disruptions or unexpected changes in market demand.
Some examples of how to meet customer demand and stay agile include:
- Storing inventory in several distribution centers
- Integrating logistics automation and technology
- Working with multiple manufacturers
- Leveraging a mix of major and regional parcel carriers
Reduce supply chain costs
One of the most important parts of running a successful ecommerce business is finding ways to optimize logistics costs, including:
- Warehousing and storage fees
- Order fulfillment
- Inventory management
There are several ways you can optimize costs and keep your business agile, from sourcing products closer to home to reduce transportation costs, to optimizing inventory based on demand.
Streamlines supply chain processes
Supply chain efficiency is what will establish agility, and it’s important to constantly look for ways to make your supply chain leaner.
By streamlining supply chain processes, you are able to to improve efficiency, reduce human error, and save time and money in the long run.
An effective way to streamline processes is to introduce automation to reduce manual work.
Though automating time-consuming processes such as order processing and automated shipping, doesn’t necessarily replace the need for human effort, it does help you streamline your operations and increase productivity.
Some businesses even implement warehouse automation using their own homegrown technology and tools.
Improves customer satisfaction
Customers expect fast, consistent, and reliable shipping.
These expectations have led to the rise of on-demand logistics, which involves the ability to expand customer reach geographically and fulfill orders across multiple channels quickly.
To meet customer expectations by building an agile supply chain requires a robust distribution network, flexible fulfillment solutions, and the latest technology that enables speed and improve order accuracy.
What does a functional agile supply chain look like: 5 key dimensions
To build an agile supply chain, it’s important to understand the different dimensions that influence agility.
Here are the five key dimensions in creating an agile supply chain.
‘Alertness’ refers to the ability to quickly identify changes, opportunities, and threats.
It’s important for online retailers to be able to quickly detect and react to any changes (good or bad) throughout the supply chain. This involves identifying changes in the market ahead of time, even how competitors are approaching the market, and keeping an eye on the industry as a whole.
Staying alert protects an online brand from losing out on sales or offering products that are no longer in demand. This might mean it’s time to discontinue certain items from your product line or find ways improve your shipping strategy.
By offering high-demand products and fast delivery, you are more likely to build customer loyalty and continuously meet profit goals.
While ‘alertness’ allows a business to be proactive, ‘accessibility’ refers to the amount of supply chain visibility you have. And the amount of visibility you have relies on real-time data.
For example, having access to real-time data and insights into past historical data make it easier to forecast demand, allocate inventory efficiently, and find ways to improve the fulfillment and shipping process.
‘Decisiveness’ refers to the ability to make informed decisions.
As your supply chain grows, the harder it is to make informed decisions in an efficient manner. However, implementing supply chain technology that automatically records data throughout your supply chain can make it easier for you to be proactive and make the right decisions based on the data.
For example, ShipBob’s technology includes a merchant dashboard with an advanced data and analytics reporting tool, which provides visual insights to help with everything from year-end inventory reporting, to better supply chain management and decision-making.
With the right technology in place, you can easily record and access data and improve supply chain planning without ever slowing down operations.
‘Swiftness’ refers to the ability to implement changes efficiently.
It’s one thing to be able to identify changes and ways to improve, it’s another to be able to implement changes quickly. As you build your supply chain, make sure you leave room for supply chain optimization.
By doing so, you can focus on making small incremental improvements in a consistent manner to reduce inefficiencies and save on overall costs — whether it’s slowly expanding into additional fulfillment centers or diversifying your carrier network.
‘Flexibility’ refers to the ability to modify supply chain operations based on necessary changes and decisions made.
Being able to amend and adjust operational tactics efficiently is important for all supply chains as it provides more flexibility and enables growth.
For instance, working with multiple manufacturers or suppliers can help you meet customer demand, introduce new product items based on popularity, and ensure enough inventory is in stock at all times.
Another way to stay flexible is to partner with a 3PL like ShipBob that provides operational infrastructure and technology to easily expand into new channels, regions, and fulfillment center locations.
With the right 3PL on your side, you can easily expand your supply chain without the need to invest in your own infrastructure and technology, which can be time-consuming and costly.
“Since partnering with ShipBob, we’ve been able to scale our business from $300,000 in sales per year to over $1.1 million due to infrastructure, technology, and scalability improvements.”
Ryan Casas, COO of iloveplum
6 supply chain agility strategies & best practices
By understanding the key dimensions, it’s time to implement them into your retail supply chain.
Here are some of the most common strategies and best practices that fast-growing online brands use to keep their supply chain agile.
1. Implement demand forecasting
Inventory forecasting is the process of modeling out predictive analytics based on historical data to estimate customers’ future demand for a product or service.
By implementing demand forecasting tools, you can anticipate fluctuations in demand based on the past, seasonality, and patterns. Proper demand forecasting can help you maintain healthy stock levels at all times, plan for future promotions and flash sales, and ensure enough inventory during the busy holiday shopping season.
For example, ShipBob’s 3PL software includes built-in inventory management tools to collect historical order data that can be used to model out future scenarios. ShipBob premium software also integrates with leading inventory management solutions to make demand forecasting even more efficient.
“A ShipBob integration I love is Inventory Planner. It saves me hours every week in Excel spreadsheets, and I can raise a PO in minutes when it used to take me hours.
For every order I placed for years, I was ordering too much or not enough. Between inventory forecasting tools and the ability to auto-create WROs, we don’t have stockouts much anymore. I sleep better at night.”
Wes Brown, Head of Operations at Black Claw LLC
2. Set SKU reorder points
To avoid stockouts and delays in retail fulfillment, you can use past inventory and sales data to determine when it’s time to reorder inventory at the SKU level to, so you can replenish inventory right on time. You can also take future growth into consideration to understand how many units of each SKU you should order.
To calculate this, you can use the simple reorder quantity formula, which consists of multiplying the average daily units sold by the average production lead time:
Optimal Reorder Quantity for a SKU = Avg. Daily Units Sold x Avg. Lead Time
To speed up this process, there are several inventory apps on the market that pull in the data you need to determine an optimal reorder point and includes an automatic notification feature that notifies you when inventory is running low.
“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.”
Oded Harth, CEO & Co-Founder of MDacne
3. Use real-time data
Real-time inventory levels are critical to success as this provides more visibility into operations, so you can make informed decisions and be proactive in implementing changes throughout your supply chain.
For instance, the ability to track, view, and manageinventory levelsthroughout your supply chain in real time gives you insights into how to optimize inventory to meet demand and keep costs low.
Additionally, you can use operational data to better forecast demand, calculate safety stock quantities, identify inventory turnover rate for your products, and perform tactics that can help you improve your brand’s financials and keep your supply chain strong.
“I felt like I couldn’t grow until I moved to ShipBob. Our old 3PL was slowing us down. Now I am encouraged to sell more with them. My CPA even said to me, ‘thank god you switched to ShipBob.
ShipBob provides me clarity and insight to help me make business decisions when I need it, along with responsive customer support.”
Courtney Lee, founder of Prymal
4. Invest in warehouse technology
As you expand your supply chain, you will most likely need to store inventory in multiple warehouses, which can make ecommerce warehousing a challenging and complex process.
That’s why it’s important to have technology in place that monitors and controls daily operations within your warehouse. This makes warehouse management more efficient and less time-consuming.
Warehouse automation and technology, such as a warehouse management systems (WMS), helps ensure inventory is received, stored, picked, packed, shipped, and replenished in the most efficient way possible.
The right warehouse technology also has the potential to improve customer satisfaction. For instance, ShipBob’s WMS provides transparency into performance such as supply chain velocity, fulfillment speed, orders fulfilled on time, error rates, orders shipped claim-free, and much more. That way, merchants can work with ShipBob to make improvements to maintain customer satisfaction.
Since the demand for warehouse digitization is on the rise, it provides more opportunities for online brands to improve warehouse management.
Incorporating warehouse technology can be as cost-effective as implementing an inventory scanner system to investing in a more advanced solutions, such as warehouse robotics.
5. Distribute your inventory
Let’s say you rely on one warehouse, and it had to be shut down to severe weather caused by a natural disaster. How would you fulfill orders on time?
Though the primary benefit of splitting inventory across multiple fulfillment locations allows you to expand customer reach geographically (while reducing shipping costs and speeding up transit times), having a secondary distribution center can help to avoid long fulfillment delays, so you can continue to meet customer expectations despite a warehouse shut down.
For instance, ShipBob’s locations cover every region of the US, as well as international fulfillment locations, which allows you to continuously meet demand despite potential disruptions.
“ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US. This is helpful especially when weather challenges happen; being able to have different locations to ship from allows for a more seamless supply chain.”
Andrea Lisbona, Founder & CEO of Touchland
6. Partner up with a 3PL
Operating your own warehouse network, investing in technology, and improving operations is time-consuming and costly, and it doesn’t always directly tie to driving revenue.
ShipBob is a best-in-class 3PL that provides access to expertise, technology, and retail fulfillment solutions to protect, optimize, and improve your your supply chain, from inventory management and product allocation, to establishing a stronger shipping strategy.
Partnering with ShipBob can help you worry less about improving supply chain agility, so you can focus more time on other initiatives, such as ecommerce customer service, product development, and sales and marketing.
“ShipBob saves us a lot of time by saving us a lot of headaches. Whenever an issue comes up, the resolution is quick, and we appreciate how they make things right.”
Ines Guien, Vice President of Operations at Dossier
Managing post-COVID supply chain agility
The COVID-19 pandemic brought the importance of supply chain agility to the surface. Since the pandemic hit, every stage of the ecommerce supply chain has been disrupted:
- There was a sudden scarcity of raw materials and components.
- Changes in product demand caused stockouts.
- Major shipping carriers were stretched beyond capacity.
Ecommerce was already on the rise, yet the pandemic caused it to grow at a rapid pace, making it hard for many online brands to keep up with the unexpected rise in market demand.
However, brands that have continued to thrive during the pandemic had already put operational systems, which established supply chain resilience, such as partnering with a tech-enabled 3PL like ShipBob, which offers access to technology, expertise, and premium customer support.
The pandemic is only one example of how important it is to stay agile. Other events such geopolitical changes (e.g., Brexit and the US-China trade war) and natural disasters can impact your supply chain at any time.
To stay agile, it’s important to partner with expertise that can support your supply chain. From diversifying your carrier network to working with multiple manufacturers or suppliers, to outsourcing fulfillment to a 3PL.
“ShipBob helped Black Claw keep orders flowing and saved us on shipping costs so that we could continue to authentically help our community throughout COVID. They feel like a partner.”
Wes Brown, Head of Operations at Black Claw LLC
How to leverage ShipBob’s supply chain agility for your ecommerce
ShipBob is the ideal 3PL partner for direct-to-consumer (DTC) brands looking to protect their supply chain and enable long-term growth.
ShipBob’s international fulfillment network is operated by the same WMS, which provides visibility and transparency into fulfillment operations and performance, including access to real-time inventory and order management data.
This provides business owners the ability to step back from day-to-day operations, while still having access to important data and insights that impact a brand’s operational and financial stability.
“We are very impressed by ShipBob’s transparency, simplicity, and intuitive dashboard. So many 3PLs have either bad or no front-facing software, making it impossible to keep track of what’s leaving or entering the warehouse.
On the supply chain side, I just throw in what we placed at the factory into a WRO in the ShipBob dashboard, and I can see how many units we have on-hand, what’s incoming, what’s at docks, and so on.
I can see all of those numbers in a few seconds, and it makes life so much easier.”
Harley Abrams, Operations Manager of SuperSpeed Golf, LLC
By partnering with ShipBob, you’re given access to a robust logistics network, which saves you time and money, so you can focus on growing your business and staying competitive.
To learn more about ShipBob, click the button below to start a conversation with our team.
Supply chain agility FAQs
Here are the answers to common questions about supply chain agility.
What is an agile supply chain?
Supply chain agility refers to how quickly and efficiently an ecommerce supply chain can react to changes in the market and customer demand. It also relates to the ability to anticipate, resist, and bounce back from unexpected events that cause supply chain disruption(s).
How do you achieve agility in the supply chain?
To achieve supply chain agility, it’s best to invest in a robust fulfillment network and premium technology that enables the ability to distribute inventory and provides real-time data and visibility into logistics systems and operations. Without the the right technology and infrastructure in place, it will be a challenge to stay competitive and meet customer demand.
Why is supply chain agility important?
Having the right technology and processes in place is what keeps customers satisfied and an ecommerce business financially stable, despite unplanned setbacks. An agile business model has always been important across all industries, but agility plays a key role in ecommerce, from meeting customer expectations to optimizing operational costs.
What is an example of an agile supply chain?
Hand sanitizer brand Touchland sold out the first week of the pandemic with 34,000 customers waitlisted. Since they had already partnered with ShipBob as their 3PL, they were able to fulfill a high volume of orders quickly despite the sudden influx in demand.