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Differences Between a B2B and B2C Supply Chain

You are currently viewing Differences Between a B2B and B2C Supply Chain

The supply chain is the flow of goods and services from one place to another. It also involves the process of transformation of raw materials into finished goods and delivering them to the customers. Through effective supply chain management, companies can cut excess costs and deliver products to the consumer faster to gain a competitive advantage. The value of supply chain management is equally important in the traditional retail business and e-commerce, and it plays a crucial role in order fulfillment in online shopping.

B2B transactions happen when one business sells its product or service to another business, while in B2C transactions happen between the business and its customer or end-user of the product.

Key Elements of a Supply Chain

The key elements remain the same in any supply chain; however, their execution might be different in each model. A supply chain management, with these key elements, can provide strategic advantages in improved customer relationships and satisfaction, while ensuring the efficiency, performance, and growth of the business.

Integration

Integration involves the strategic decisions regarding the information, its communication, and the data analysis of the supply chain activities. It is the use of accurate, and reliable sources of information on your supply chain activities to reduce the chance of human error, delays, shortages, over- or under-stocking, and bottlenecks. Access to the right technology and tools allows you to integrate your supply chain for continuous business growth.

Operations

Operations are the day-to-day business affairs that ensure accurate and real-time tracking of your inventory and production schedules. The use of technology and inventory management techniques can align these operations to keep your supply chain on track and help in order fulfillment.

Purchasing

In any business, sourcing plays an important role to maintain a competitive edge and profitability. Sourcing/purchasing the raw material is also the first step of your supply chain. The quality of your final product depends on the quality of the raw material and the price of the raw material directly impacts your profitability. Demand forecasting helps you to buy and hold the right amount of inventory at any point in time.

Distribution

The shipping of the final product involves transport, warehousing, delivery, and return of goods. Distribution in the B2B supply chain is much simpler than B2C. 3PL logistics companies help you simplify and optimize B2C shipping in eCommerce fulfillment.

B2B vs B2C Supply Chains

While the core elements of the supply chain remain the same there are some key differences between B2B and B2C supply chains including factors like the negotiations, the length of the supply chain, the volume of sales, and the number of customers involved.

Negotiations and Bargaining Power

Negotiation in supply chains depends on the payment terms, quality, prices, and quantities of the product. In the B2B supply chain, there is a greater level of negotiations and the bargaining power that one business has with its suppliers.

Length of Supply Chain

B2B supply chain is much shorter as compared to the B2C supply chain. B2C supply chains on the other hand are usually longer that involve manufacturers, wholesalers, and retailers. In an eCommerce B2C, the supply chain also involves D2C shipping and 3PL fulfillment companies.

Sales Volume

Sales volumes are usually higher in a B2B supply chain than in a B2C supply chain because B2B involves the sale of bulk services. The average order size also varies significantly due to the quantity of the product ordered at a single point in time.

Number of Customers Involved

The number of customers varies for both B2B and B2C businesses. In general, B2C businesses have a higher number of customers with a low volume of sales per customer, in B2B the number of customers is smaller but with a high volume of sales per customer. However, it is important for both B2B and B2C to manage their customer relationship and keep them happy. Using a fulfillment company for a B2C eCommerce can significantly improve your customer satisfaction when it comes to the delivery and supply chain of the product.

Returns

Both B2B and B2C supply chain strategies should incorporate the returns and exchange of products system in place. Due to the competitive nature of the market B2C businesses offer easy and clear return and refund policies. B2C businesses can handle their reverse logistics process with the help of their shipping company or fulfillment partners while B2B transactions returns are more complex due to the larger order size, contract type, and terms and conditions.

With the recent developments in technology and market dynamics, it has now become easier yet more important to provide products and services in no time. With the rise in quick commerce, there are multiple options available like 30-min delivery, same-day delivery, standard delivery, and many more. Everything is now just a click away. A proactive supply chain model with the right use of the technology can help both B2B and B2C business to keep their customers happy.