Q-Commerce: Suppliers' Stress in Q-Commerce Supply Chain

Context:

The best thing at LongArc has been the ability to see the entire spectrum of the supply chain, rather than limiting ourselves to either the brand or the distribution side. Our expertise on the latter is allowing us to solve for upstream complexities that can create win-win scenarios for all. We at LongArc are focussing on following problem space for a couple of brands .

Problem:

Q-commerce conversations revolve around speed, assortment, and convenience. But an equally critical engine sits upstream: suppliers.

Warehouses and dark stores operate on: High inventory turns, Low buffers, Tightly managed inbound slots

Suppliers must deliver: Exact SKUs, Precise quantities, Strict SLA adherence Or face loss of sales.

Many brands depend on contract manufacturers who also require: Accurate and Timely Demand visibility, Raw material planning, Packaging readiness, Production scheduling, Dispatch coordination and more.

Also, there are 7 major platforms along with many new and niche platforms operating simultaneously. The supplier complexity multiplies.

Where pressure builds

Suppliers and contract manufacturers are expected to operate with startup agility on manufacturing economics and with current systems not built for this velocity and complexity.

Multiple Location Fulfillment requirements
Multiple Open Purchase Orders per Warehouse at a time
Order volumes vary significantly across PO cycles
Bullwhip effect due to demand shifts
Partial fulfillment distorts availability
Slot delays create dock congestion
Packaging stock-outs stall production
Working capital locks into raw materials
Stock build ups based on overestimation of demand without any buy guarantee from QC
Replenishment cycles stretch

Future:

The way forward is shared visibility, collaborative planning, and system-level integration

Integrated, end-to-end demand visibility between Q-commerce inventory teams and suppliers.
Dynamic planning for all scenarios
Production-level inventory visibility
Fast replenishment cycles
Real-time data sharing
New supplier performance scorecards

Q-commerce is optimized for speed and availability for the customers. However, these downstream innovations have outpaced upstream system design and solutions, which are now clearly visible at suppliers’ and contract manufacturers’ end.

Q-commerce warehouses and dark stores operate on high turns and small quantities per SKU. This operating model creates significant challenges for suppliers managing multiple platforms, fluctuating POs, and limited demand visibility. The result includes bullwhip effects, distortion in fulfillment strategy, packaging & raw material stock-outs, working capital lockups, and stretched replenishment cycles.

We are super excited for some of the products that we are building in this direction, with a singular goal of removing inefficiencies.