How Online Purchasing Disrupts Traditional Supply Chain Logistics

The department of logistics and supply chain management has undergone significant changes over the last two decades, transforming its operations from the traditional operational function that was attached to other organizational departments like sales and manufacturing to an independent supply chain management function. However, with the advancements in technology and the rampant growth in the use of social media, the world has witnessed potential changes in consumer purchasing behavior towards online purchasing. As a result, organizations are forced to rethink various ways they design their logistics and supply chain networks to address the changes in consumer preferences and expectations. Therefore, the purpose of this essay is to highlight various ways in which the introduction of online purchasing has significantly disrupted the traditional supply chain logistics.

Direct-to-consumer (DTC) model. Traditional supply chain logistics involved the use of different intermediaries within the distribution channel like wholesalers and third-party retailers through which the product could bypass before being delivered to the final consumers (Attaran). However, online purchasing has led to the introduction of a direct-to-consumer model that offers an opportunity for manufacturers to bypass all the intermediaries to sell their products directly to consumers (Ivanov). As a result, the DTC model has significantly streamlined the supply chain, leading to reduced lead time and reduced costs of product distribution.

Improved inventory management. Online purchasing has influenced the need to embrace digital supply chain and logistics strategies that embrace the use of artificial intelligence, machine learning, big data analytics, robotics, and robotic process automation technologies (Ivanov). These disruptive technologies offer automation and predictive analytics capabilities that make it easier for companies to promote shortened planning cycles, which improve time to market, thus enhancing inventory management, which is a critical element in supply chain management.

Enhanced customer focus. Online purchasing has potentially transformed the traditional supply chain my introducing the aspect of being consumer centered in supply chain operations (Choudhury). Digital supply chains are now directly connected with the consumer, which has presented the opportunity to think beyond the traditional transactional way of operations. They are focused on delivering value and building long-term relationships with the consumer (Choudhury). As a result, the objective is to optimize the entire supply chain operations to improve on customer experience.

Data integration. Online purchasing has proven to be one of the effective ways through which business organizations can collect vast information on the trends in the consumer markets. This information is potentially essential in the management of supply chains in the digital era as it aids in improving efficiency and streamlining the logistical operations (Choudhury). Additionally, online purchasing offers insights on the performance of other logistics companies through consumer reviews, which serve as a benchmarking point for most of the logistics operations.

Conclusion

The shift of consumer purchasing behavior from the traditional way of purchasing from the open stores to online purchasing has significantly disrupted the traditional supply chain logistics. The introduction of the direct-to-consumer model of doing business influenced by digital purchasing has presented an opportunity for organizations to bypass the traditional supply chain intermediaries. Additionally, it has improved inventory management as businesses use big data analytics to predict future purchasing trends. Additionally, the current supply chain is more consumer-centered compared to the traditional supply chain logistics, which embraced transactional methods of interaction with consumers. It has been noted that through online purchasing, data integration through the different supply chain systems has been made seamless. Therefore, there is a need for business organizations to redesign their supply chains to embrace online purchasing as it proves to be the future for business operations.