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Welcome to e-commerce logistics. One to one where I plan to give you the knowledge you need to truly understand what it means to build a rock solid supply chain that will help you to scale your business rapidly. I want to help you avoid the pitfalls of commonly slow. Most of this down is we scale like spending or your time stuck in your warehouse. Shipping packages wrestling with your manufacturer because
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of shipping delays and quality issues were worse worst constantly running out of product. Your time is precious. So instead of dealing with logistics and supply chain issues your time is much better spent developing new products that delight your customers finding creative ways to market to them and thinking strategically about how to grow your business. So to understand e-commerce logistics
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we have to start by defining a few key terms. What do I mean by logistics and supply chain anyway. I’ll be using these terms interchangeably throughout the course. But for now, let’s agree on this definition. The supply chain can be defined as the flow of processes involved in the production and distribution of a commodity. So to build a rock solid supply chain
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the key is to understand what those processes are and more importantly the flow between those processes most frustrated and overwhelmed new store owners focus on only half of that definition. The individual processes getting frustrated by things like manufacturing carriers customs packaging warehousing
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and so on they end up in a seemingly never ending stream of supply chain problems coming out of China. Shipments to the customs running out of product having to spend all their time shipping quality control issues unexpected costs and many, many more they get overwhelmed because they missed the equally important first half of that definition of supply chain.
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The flow. The key to avoiding all these issues ensuring that each process flows into and out of the process before it and after it. That way, you’ll get a rock solid supply chain that will be hassle free rather than a constant source of stress that leads us to the second key term that we need to define logistical flow.
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Logistical flows the synchronization of the processes required to move products from production to end consumers at a profit to the key to getting your supply chain right is getting your logistical flow right. You have to know what each of your processes are how much they’re costing you and most importantly, if those costs are less than the revenue
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you’re generating from the sales of your products and services. So what are these processes I keep referring to while there are many. For us e-commerce entrepreneurs I’m going to boil it down to the four key processes that will matter most to you. These four will form the building blocks of your supply chain. First, there’s manufacturing. This is where you get your goods produced to your quality standard.
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Second inbound shipping. Once your goods are made by your manufacturer this is how you get them to your warehouse. Thirdly you’ve got your warehouse. This is where your goods are stored in bulk and broken down into individual shipments to be sent to paying customers. And lastly, you’ve got your outbound shipping. Once a customer purchases an item
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this is how you get it from your warehouse to their location. It’s not enough to just have those four processes identified. You also have to manage them. Here are the three critical measurements you need to keep track of for each process. One should budget the amount of money you need to spend on each process individually and combined. For example cost $10,000 for manufacturing
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five bundles for inbound shipping 500 off for storage and 50 $100 for outbound shipping. Your total budget is $12,500. Secondly, you know the time how much time it takes to move your inventory through each process individually and in total through your entire supply chain. For example 90 days for production 30 days for shipping 14 days receiving to warehouse 90 days to sell.
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So total 270 days to process through your supply chain or roughly 7 and 1/2 months. Third quantity. The number of units you can move through each individual process within your supply chain and through your supply chain as a whole. For example 10,000 units were produce 10,000 ship 10,000 stored but only 5,000 were sold so 5,000 units are left in your house.
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So the key to solving your logistical flow is knowing what your processes are how much they’re going to cost you and most importantly making sure those costs are less than the revenue you’re generating from the sales of your products. Now that we understand the critical importance of logistical flow and have defined the key processes that make up your supply chain it’s time to dive deeper into each one to show you how to set it up for success.
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Let’s move on to module 1 manufacturer.
