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Important Logistics Factors for eCommerce Operations

The term ‘logistics’ is commonly used but not always understood in the online shopping industry.  It is the coordination and management of the flow of goods and services from supplier to end user.  It is crucial to deliver products to customers on time and in good condition.  Logistics operation is crucial in the context of eCommerce.  The functions of logistics operations entail the transportation and storage of goods from the producer to the consumer.With the rapid growth of eCommerce, customers have enjoyed significant ease and convenience regarding receiving their orders.  However, businesses are constantly facing challenges in enhancing their logistics system and operations to provide seamless experiences to their clients.

Organising for E-Commerce Logistics

Logistics organisation is critical to the success of an eCommerce business. It should be a guarantee for products to be delivered efficiently and on time to customers. It also reduces overhead costs by delivering orders from central warehouses. Faster order fulfilment times contribute to competitive advantage and increase client satisfaction.

Businesses can save money on returned items with the help of an effective logistics system. Logistics is critical for eCommerce businesses to remain competitive in the market and provide customers with flawless shopping experience.Significant growth has been seen in their sales revenue. Businesses can improve customer satisfaction, cost savings and efficiency by streamlining their logistics operations. An efficient logistics organisation combines technology, strategic planning and operational effectiveness.

Warehousing and Inventory

Warehouses should be designed to facilitate efficient storage and picking processes.  E-commerce warehousing is the storage of physical items until they are sold online and ready to leave the warehouse for delivery. Safe and secure storage of products is what warehousing involves. The location of items stored and the date of goods receipts are tracked by it.Inventory should be organised according to categories and should use suitable storage methods that maximise the use of an existing facility. Warehouses are strategically located and optimized for efficient eCommerce order fulfilment and storage.   Logistics facilities with sortation capability for eCommerce can drastically improve the businesses process and deliver orders expediently.Online businesses heavily rely on efficient warehousing to sustain potential growth in the highly competitive eCommerce market.  Some logistics companies even specialize in inventory management, allowing them to keep track of their inventory in real-time.  Inventory is an integral part of order fulfilment and is a huge part of eCommerce logistics work.

On-Time In-Full (OTIF) Delivery

Animportantkey performance indicator in the eCommerce logistics industry is the delivery performance being on-time and in-full.  It measures a supplier’s ability to deliver a shipment on time at the full amount ordered. OTIF has been quickly adopted widely to assess the supply chain for inventory planning and optimization, as well as order fulfilment.  OTIF helps retailers avert losses due to lack of stocks or items that are otherwise unsellable as it incentivizes accuracy and timely delivery. One of the best ways to earn loyal customers is to fulfil orders quickly and accurately. OTIF KPI measures the potential growth of eCommerce business.  Furthermore, late deliveries and incorrect orders can lead to negative reviews and complaints, as well as discourage others from buying the products. A major problem is that manufacturers and retailers calculate OTIF using different formulas.  They have different perspectives on the same performance because of the different metrics used.  More analysts have recently advocated for a standard definition of OTIF throughout the supply chain to avoid confusion.

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Mohammad Amli Bin Abdul Hamid
Mohammad Amli Bin Abdul Hamid
Mohammad Amli has extensive years of experience in the field of warehousing and logistics operations and specializing in domestic logistics for distribution channels. He is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Amli completed Diploma in Logistics and Supply Management (DLSM) on December 2023 at SIPMM Institute.


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