The Path to Increasing Supply Chain Resilience While Lowering Carbon Footprint

Deb Kaplan

When it comes to supply chain pains, the lessons of COVID-19 have been learned. Resilience is top of mind for executives everywhere. According to of supply chain professionals plan to increase resilience across the supply chain.

But how?

Why Drop-shipping is trending up

Third-party drop shipments enable companies to deliver goods to customers without manufacturing them — or keeping them in inventory.  You can resell another manufacturer’s products or enlist your manufacturer to deliver them directly from their warehouse to your customers. Wholesale distribution has been doing this for years, but additional use cases are increasing across various industries such as Life science, Industrial manufacturing, Mill Products, and others that have complex installation and services that they offer to their customers, dealers and service providers.

Third-party drop shipping advantages :

  • Expand product and service offerings: Make upsell options available (e.g., a laptop case for a laptop computer. lubricants for a generator purchase, etc. ). Enhance the customer experience by allowing them to buy directly from you—perhaps with better pricing than if they were to buy it direct.
  • Streamline wholesale distribution: Fulfill your business-to-business (B2B) customer orders without bringing merchandise in-house.
  • Manage internal complexity: Set up your commercial business to ship orders directly from internal or external manufacturing sites without storing inventory at intermediary distribution points.

OK, so what’s standing in the way?

The diagram shows the typical manual process flow for third-party drop

3rd%20party%20drop%20ship%20flow

3rd party drop ship flow

If you’re the buyer, you need insight into your supply partner’s inventory so you can offer your customers the products your partner has available and manage allocations plans. Then, when that third-party order is placed, you need to manage all the related transactions, including confirming delivery, collecting payment from the customer, and paying the supplier.

Unfortunately, most organizations attempt to manage all these transactions with manual processes involving spreadsheets, e-mail, and PDF invoices. This limits visibility into delivery dates and requires waiting for proof-of-delivery confirmations before initiating invoicing and processing payments. The manual model is time-consuming, inefficient, and often ineffective, leading to high-overhead and compromised customer experiences.

How business networks help

Business networks can transform the drop shipping process. With SAP Business Network, you gain the visibility you need to monitor, streamline, and control the entire drop shipping process cycle while enhancing customer experience.

The SAP Business Network supports a consumer-grade experience and a secure business relationship exchange with suppliers, 3PLs, and Logistic Partners, bringing value to all via enhanced visibility, streamlined automation, and compliance.

You can share data with your resell partners —simultaneously expanding your product offerings and increasing their reach.  You can easily automate critical tasks for accounts payable, accounts receivable, and procurement in general.

Throughout the drop ship process, the SAP Business Network provides enhanced visibility to manage issues as they arise and deliver as promised.

Attaining resiliency

Connecting with trading partners on the SAP Business Network and flexibly managing third-party drop shipments keeps you agile through supply chain disruptions. No matter what, you have the partners, visibility, and processes you need to serve your customers best by delivering what they want – as expected.

So much of resilience is about keeping customers happy. That’s why SAP Business Network ties into back-end SAP software systems and integrates the customer experience software you use to manage and measure customer satisfaction. In addition to more effective and efficient drop shipping management, you can optimize your customer experiences, gaining loyalty and referrals.

Lowering the carbon footprint

Transport is a significant source of emissions –anything we can do to minimize it is a welcome development. Drop shipping cuts transport dramatically. Instead of moving goods to various distribution points in anticipation of incoming orders, you move the goods only once – in direct response to customer demand.

The SAP Business Network also supports global and trace. Once a drop shipment is triggered, you can monitor where it is and access other logistics insights to avoid delays – all in the context of a process that minimizes transport and reduces emissions.  With this visibility, a Proof-of-delivery can initiate automated customer billing and supplier payment. Improving you OTIF and customer experience.

The measurable advantages of a business network

.When managed through business networks, drop shipping can deliver tangible benefits. Here’s what companies are achieving.

41%
Can respond more quickly to changes in consumer demand 
43%
Realize higher customer retention rates 
50%
Expect more sales 
50%
Notice increased order value
46%
Anticipate increased profits
43%
Experience increased customer lifetime value 

Learn more


These numbers are compelling. If you’re looking to help your company increase supply chain resilience, lower your carbon footprint, and keep customers satisfied, give drop shipping and SAP Business Network a look. For more information Visit us online.