How Alibaba does it: Alibaba emphasizes buyer protection, an important issue in this era of e-commerce rife with shady sellers. When an Alibaba customer pays for a good or service, the funds make a pit stop in the company’s escrow account until the customer receives the order. Concerned customers can request pre-delivery product inspections. Only when the buyer confirms satisfaction does Alibaba forward payment to the seller, thus greatly reducing fraud on its site.
How you can do it: Map your supply chain from start to finish. To start, look at the costs at each step, fulfillment ratios, and customer-satisfaction numbers. You may have to stand back and work on your business rather than in it to streamline and to exceed expectations.
To do this, you’ll need to understand how suppliers function before ever interacting with your company. While you probably know your first-tier suppliers well, consider your relationship with suppliers on the second or third tier. How critical are they to your supply chain? Where are their factories, and how established are they? Consider what might happen to your business if one of these lower-tier suppliers failed because of a natural disaster, financial collapse or civil unrest. Too often, procurement organizations rely on the unsustainable model of first-tier suppliers managing lower-tier suppliers. For example, 40 percent of businesses buying within the United Kingdom have no information on their second-tier suppliers, according to research from Achilles, a U.K.-based supply chain risk management firm.
Map your supply chain using a database for information storage. Seek to give customers peace of mind by enabling them to request information about everyone involved in their supply chains. Think of this as a system of cascades: When the buyer makes a purchase, your organization sends a request to your first-tier supplier, who sends a request to the second-tier supplier, and so forth.
Build your database gradually by requesting that companies send information up the chain. This enables your business to identify risk-prone supply chains, address bottlenecks and avoid relying on companies with long lead times or unethical business practices. Work beyond your business by collaborating with suppliers: By helping you map your supply chain, they can also map their own supply chains with this information. Collaboration can reduce the cost and time expenses associated with supply chain mapping.