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Looking to maximize efficiency in your Amazon supply chain? Our partners at Tactical Logistic Solutions have put together an excellent guide that will help you with that!
Managing your supply chain can quickly become a nightmare if you don’t have the right systems and processes in place. Between communicating with freight forwarders, scheduling Amazon appointments, and keeping costs under control, it’s easy to get overwhelmed. But there are proven ways to streamline your operations.
In this comprehensive article, you’ll discover common supply chain inefficiencies that hinder Amazon sellers and actionable strategies to optimize your processes.
With the right solutions, you can enhance customer satisfaction, lower costs, and gain a real edge over your competitors. Read on to improve your supply chain and unlock new levels of efficiency and profitability in your Amazon business. It’s time to start managing your supply chain like a pro!
Identifying Inefficiencies in your Supply Chain
It’s essential to identify areas where inefficiencies may be hindering your operations. Here are some common areas to focus on:
1. Excessive Inventory Levels and Long-Term Storage Fees
Inventory that is not moving is inventory that you are paying for to sit. Whether it is at a 3PL or your Amazon FC’s, you’re paying everyday. This is expected in any supply chain model, however, it is important to audit any inventory that has been sitting over the 60 day mark. Especially if this is inventory sitting at Amazon, anything that you suspect will not sell within the 60-90 day period is best to find another storage solution. Amazon fees spike heavily after 90 days and you do not want to have a mystery pallet or 20 that are just not moving and instead are just draining your inventory funds.
2. Rushed or Expensive Shipping Options
The better you plan the more flexibility you have! If you’ve been having to ship via air a little too much recently, you might want to evaluate why? Unless you have small shipments and small products, air shipments are generally meant for emergencies only and are a much more expensive method than shipping by sea. So if you’re using this method too often you might want to see what’s causing all the rushed orders.
3. Inefficient Packaging and Dimensional Weight
Are you paying to ship and store air? Your packaging might be too big for your products. You just need enough packaging to keep your product secure through transit and presentable for your customers. Excessive packaging and unnecessary weight can be secretly costing you more than you need to be spending per unit.
4. Returns and Reverse Logistics Costs
Amazon can not accept or sell your whole container load… what do you do?! Placing removal orders and reverse logistics can be very expensive when you’re unprepared or have no standard procedure you follow. To remove, destroy, donate, or resell, that is the question. All options have a cost associated with it and it is important to establish a course of action should you encounter this scenario or it can cost you more than you thought.
Strategies to Improve Your Supply Chain
1. Invest in Inventory Forecasting Accuracy
Accurate inventory forecasting means not overspening nor undersupplying. Being able to properly align your inventory levels at Amazon fulfillment centers, your 3PL, and time your shipments to a T is a real skill. Perfecting your rhythm will ensure you are properly stocked and your end consumers will be guaranteed Prime shipping. We all know the dangers of running out of stock or losing our Prime Badge. Here are some options to achieve this;
- Invest in inventory management software and tools that utilize advanced forecasting algorithms.
- Work with engineers to develop your own tracking reports, custom software, or curated spreadsheets that will report you unique sales patterns
- Partner with third-party logistics providers (3PLs) that offer sophisticated inventory tracking and demand planning capabilities.
2. Implement Efficient Inventory Management Practices
Streamlined inventory management relies on technology, automation, and knowledgeable partners. This can all be facilitated so long as there is a consistent level of visibility into your supply chain. Here are a few ways to create efficiency while maintaining transparency:
- Implement robust inventory management systems, including AI-driven solutions.
- Develop custom software or integrate APIs to enhance visibility and streamline processes
- Partner with 3PLs that provide real-time updates and offer inventory management capabilities through user-friendly portals
3. Optimize Packaging to Reduce Dimensional Weight and maximize storage
Improving packaging efficiency can not only lead to cost savings in shipping, but also in storage and overall utilization of your budget. Here are some ways to improve;
- Consolidate when possible, less boxes is better
- Invest in finding the accurate size and protective packaging, avoid oversized boxes
- Store only one sku per pallet to minimize errors
- Maximize pallets, ask your 3PL to stack to the highest point (we can safely stack as high as 72in)
4. Streamline Returns and Reverse Logistics Processes
Efficient returns management reduces costs and enhances customer satisfaction.
- Implement advanced returns management systems that automate processes and improve visibility.
- Collaborate with reverse logistics providers to leverage their expertise in managing returns efficiently.
- Evaluate the best method for handling returns for your business: Donating your returns can lead to beneficial tax right offs. Does liquidating make sense or will the cost outweigh the returns? In some cases Amazon can handle and disprove of or resell your goods, are the fees reasonable?
A streamlined and efficient supply chain is vital for business success. By identifying inefficiencies and implementing targeted improvements, you can enhance customer satisfaction, reduce costs, and gain a competitive edge. However, it is crucial to recognize the role that funding and capital support play in driving these transformations. With the right financial resources, you can invest in advanced technologies, optimize inventory management, and implement streamlined processes. Embrace funding and capital support to accelerate your supply chain revamp and unlock the full potential of your operations. Remember, an optimized supply chain powered by strategic investments is the key to long-term growth and profitability.
Solutions for streamlining your supply chain