Lean management principles focus on producing less waste across all processes to drive overall business growth and help to boost revenue. The methodology is already popular in the manufacturing industry but it’s becoming more widespread in the e-commerce space too. Let’s discuss why and how you can embed Lean management into your e-commerce strategy.
The benefits of Lean management principles for e-commerce businesses
So, Lean management is all about reducing the amount of waste produced. That involves continuously improving your processes or looking for ways they can be improved.
In the e-commerce space, that could mean:
- Optimising your business’ resource utilisation processes which can enhance demand planning, procurement and logistics (improving your supply chain efficiency)
- Improving the ability to track the flow of particular processes - such as materials and products as they travel from vendors and suppliers to customers
- Being better equipped to meet changing customer expectations - e.g. a reduced order fulfilment cycle and improved logistics network (thanks to optimised resource utilisation processes and an ERP-commerce integration, to name a few) can help you shorten lead times and deliver on-time
- Identifying opportunities for automation to reduce manual processes and improve overall efficiency
Read more about the role Lean management plays in e-commerce here.
How to fit Lean management principles into your e-commerce strategy
An effective Lean e-commerce strategy is based on three pillars:
- The ability to respond to demand
- The ability to deliver at the promised date and time
- The ability to maintain just enough stock while keeping expenses at a minimum
Automation to improve process efficiency and reduce the impact of errors
Of course, balancing all three is a challenge. After all, there’s always that possibility of things going wrong. For example, a product could arrive at the warehouse damaged or if you’re a manufacturer, it’s not manufactured to the quality a customer would expect.
If you rely on largely manual processes, it can take you longer to identify and resolve issues like the one above. That causes unnecessary waste (time, resources, plus you’re jeopardising customer satisfaction).
If you can automate some of these repetitive processes, such as tracking products in real-time as they arrive from vendors/suppliers into your warehouse/manufacturing facility, you can quickly resolve this issue.
Customer satisfaction doesn’t need to be impacted - it may even be boosted if you notify the customer of the issue, what you’re doing to fix it and whether their delivery date will be affected.
Accelerate order fulfilment…
When orders are placed on your commerce website, that information (e.g. what was purchased, the payment, customer details etc) needs to be passed along to your back office for approval. Once it is, someone needs to let your warehouse team know so they can start packing the order to get it ready for shipping.
This pass-the-parcel-esque process can be simplified, accelerated and the chances of errors (e.g. orders slipping through the cracks, payments not processing properly etc) can be reduced if your business systems are integrated.
For example, a commerce-ERP integration means:
- Web order sales details can be automatically sent and inputted into your ERP system
- An update of this will be sent to the commerce platform (e.g. the customer will receive an order confirmation email)
- Back office can start with their processing
All of that requires no manual data entry which frees up your team to focus on other higher-value tasks. Read about the benefits of a commerce-ERP integration here.
…and reduce the need to carry excess stock
When all of that essential order and customer-related data is stored in one place, that makes data analysis much easier. You can draw up accurate sales forecasts, based on this real-time data, and order just enough stock.
This reduces the need for you to carry excess stock which leads to unnecessary waste (e.g. dead stock, storage costs etc) and improves overall cost efficiency.
This leads to another benefit - one that customers may find particularly attractive. If you can maximise variable costs and minimise fixed ones, you may be able to offer more competitive pricing.
Want to dive deeper into Lean management principles for the commerce industry?
This blog post covers just a glimpse into the world of Lean management for the commerce industry. Want to find out more? We sat down for a virtual discussion with digital experience experts Episerver. Hosted by premier manufacturing industry publication The Manufacturer, you won’t want to miss it if you want to learn more about going Lean in a digital world.
The video is now available on-demand and you can watch it here.
While you’re waiting, you might be interested in some other tactics that can improve your e-commerce strategy. Our guide offers plenty of tips B2B companies like yourself will want to take away.
