amazon com supply chain management case study questions and answers

Amazon Supply Chain: Understanding how Amazon’s supply chain works

Whether you are a small or medium-sized business looking to scale your eCommerce operations, Amazon is one of the best examples to learn from to improve productivity, expand the reach, and maximize profits. Though several factors make Amazon the eCommerce leader it is today, one of the most critical elements to its success has been Amazon’s state-of-the-art supply chain.

Amazon has one of the biggest and most efficient supply chain operations globally. While the basic model has remained the same since its inception, it has adopted newer technologies over the years to streamline its operations and improve its efficiency.

Below, we explain how Amazon’s supply chain works and look at the key elements contributing to the company’s success.

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What is the Amazon Supply Chain?

Amazon fba and fbm, how does the amazon supply chain work, what happens when you buy a product on amazon, components of amazon supply chain strategy.

The supply chain of Amazon refers to the entire process on the platform, right from product warehousing and inventory management to pricing and delivery. Over the years, Jeff Bezos and his team have devised new ways to optimize every part of the supply chain process, ensuring everything works efficiently and smoothly to guarantee customer satisfaction.

As third-party sellers contribute up to 55 per cent of the total sales Amazon makes, the company makes sure these sellers using the platform have multiple fulfilment options available.

when it comes to selling on the platform, Amazon sellers have two options:

Fulfilment By Amazon (FBA) – Amazon takes care of logistics and customer support in this model. Sellers send products in bulk to the fulfilment centres from where the company picks, packs, and ships to customers. This fulfilment option is ideal for sellers who handle small and lightweight products or cannot arrange for logistics.

Fulfilment By Merchant (FBM) – With this option, third-party sellers are responsible for listing their products and taking care of storage and fulfilment on their own.

There is also an FBA Onsite option where Amazon uses its warehouse management program to help sellers optimize their operations. Third-party sellers take care of the inventory of the products, but Amazon is responsible for picking the products from the inventory and selecting the best fulfilment method.

Amazon covers all the bases for different seller types by offering these two programs. Sellers who want to store, pack, and ship products on their own can use FBM, while others can go with the FBA.

Related: How to start an Amazon FBA business

Amazon has been known to reduce delivery times and even offer same-day delivery. This is because it recognized the need for super-fast delivery among customers. There are two main components crucial to the success of Amazon’s supply chain – Amazon Fulfilment Centers & Amazon Delivery Fleet.

Amazon Fulfilment Centres

Amazon puts a robust fulfilment and logistics network to complete orders and meet the ultra-fast delivery expectations of over 110 million Prime membership subscribers. At present, it has more than 175 fulfilment centres across the world. Amazon also has approximately 500 warehouses near metropolitan cities globally.

Related: Crucial Tips for Selling on Amazon that every Seller must know

As the eCommerce sector experienced a boom in the past few months, Amazon has shown considerable growth. In ten months, it has hired about 427,000 employees to keep up with the increasing demand.

Third-party sellers have seen up to 60 per cent growth in sales, and the trend is expected to continue in the coming months. To respond to the growing demand, it will also open about 50 new warehouses and fulfilment centres in the United States.

Amazon Delivery Fleet

Amazon uses many logistics and delivery partners to deliver orders to customers on time. Trucks are used to carry boxes from fulfilment centres to sort centres. Then packages are sorted depending on the delivery speed and location. After this, the most efficient transportation mode is chosen to transport the packages.

Amazon uses an airplane fleet to meet the one-and-two-day delivery window offered to Prime members. The company uses vans, trucks, bikes, and even robots to facilitate timely delivery on the land. Amazon is presently working on drones to deliver products to locations near fulfilment centres.

Let us understand how Amazon’s fulfilment centre works to complete an order.

Receiving Products

Products are either stored into pallets manually or handled by machines at these centres. Freight is separated based on where it comes from, whether third-party vendors or Amazon facilities. Over half of the products sold on the platform come from small businesses and solopreneurs.

Product Storage

Amazon does not categorize its storage by type but instead stores everything randomly. There are yellow bins containing random items tracked by computers. The containers are then transported to associates depending on the size.

Picking Orders

When a customer buys a product, a robot brings pods of items to Amazon associates at the pick stations. The pickers read the screen, retrieve the product and place the product in a tote box.

Quality Assurance

A lot of quality assurance is required for the proper working of robots with humans. An item’s physical location should match the computer entries so that robots can function well.

Finally, products are organized and sent to the pack station, where box sizes are chosen, and the amount of tape required to pack them is measured. Items coming from third-party vendors ship out in their original packaging, but Amazon works with them to reduce these costs.

While the process of buying from Amazon seems straightforward, it involves a few crucial elements that come together to ensure a smooth shopping experience.

Warehousing

A big factor behind Amazon’s success, the warehousing strategy the company adopts is smart enough to make sure products are accessible from anywhere in the world. It hosts many warehouses and distribution centres near big metropolitan cities. Currently, there are 175 warehouses globally, the majority of which are located in Europe and North America.

Amazon stores its product inventory across these centres to quickly meet the demand. Such an extensive network of warehouses allows it to deliver orders to customers quickly and cost-efficiently. It also has mini-warehouses in smaller areas to ensure enough supply. All the warehouses are optimized from within, with five storage areas. Employees and robots can quickly find products and get them ready for dispatch.

Amazon’s delivery options are one of the most significant factors differentiating the supply chain from other eCommerce operators. The company offers two-day Prime deliveries, free delivery, and even the Prime Now option that delivers the products within two hours. Amazon uses a host of methods ranging from traditional to high-tech to deliver orders with lightning speeds worldwide.

Amazon has delivery trucks, vans, and even bikes operating in specific areas; it also leverages traditional routes like UPS and FedEx. Such a wide range of delivery strategies enables it to deliver faster, more efficiently, and easily to any location globally, even in rural and remote areas that traditional options don’t cover.

Related: 10 Dropshipping Tips that will drive sales growth

Technology adoption is at the core of the Amazon supply chain strategy, helping it work efficiently and cut costs. The company relies on several automation and robotic solutions to pick, pack and ship orders. Such tools and techniques improve the delivery speeds and cut down the costs associated with warehousing and staffing, saving funds for other processes.

One of the biggest advancements in technology anticipated by Amazon is its Prime Air Drone Delivery. Though still in its development phase, the program will ensure 30-minute deliveries in some areas once operational. Customers with an Amazon-branded landing mat living within 15 miles of the nearest fulfilment centre can qualify for a delivery option.

Manufacturing

Amazon has discovered that it can benefit from manufacturing more popular products to increase its profits and provide cheaper options.

Currently, the company has started white-labelling products from sellers and offering options across categories that include everything from household goods and pet supplies to a lot more. This strategy allows Amazon to keep the entire lifecycle of products, from production to delivery, in-house.

Related: What are the risks of dropshipping, and how do you avoid them?

Cost-effectiveness is one of the most crucial parts of the Amazon supply chain. One of the most innovative strategies is to segment the customers into Prime and Standard, offering varying service options at different prices. By creating additional shipping and delivery windows, Amazon keeps the flow of orders smooth, allowing it to respond to changes in demand without affecting the supply chain as a whole.

Amazon also uses such a pricing strategy for its FBA program. It understands that the large inventory can raise costs and slow down fulfilment. It, therefore, charges high storage fees for long-term usage from FBA sellers. This ensures that sellers only send sufficient inventory to meet the demand, and Amazon’s costs don’t rise.

Global Reach

Amazon operates 11 online marketplaces globally to let sellers grow their business worldwide, regardless of where they are physically based.

Businesses can introduce their products to millions of potential customers with these marketplaces located across Asia, Europe, and North America. When sellers register with one of these marketplaces, they get instant access to loyal customers who trust Amazon’s experience.

Related: Which is the Best Online Marketplace: Selling on Etsy vs eBay vs Amazon

Final Thoughts

The Amazon supply chain works efficiently with its latest innovations to beat the biggest competitors. This retail giant has set an example for eCommerce businesses with its consumer-centric approach and use of technology.

Regardless of the industry it enters next, Amazon’s unique supply chain strategy combined with innovations suggests that it will continue to rule the landscape.

Pia has consulted for a number of digital startups and small businesses in Asia before coming to the UK. Pia writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore.

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How the Amazon Supply Chain Works

Brian Connolly

October 25, 2021

Amazon Inventory Management , Amazon Seller , Selling on Amazon , Uncategorized

The Amazon Supply Chain is responsible for getting customer orders from point A to point B as quickly and efficiently as possible. 

Between those two points is a lot of moving parts such as receiving inventory, sorting inventory, warehousing, product-picking robots, warehouse associates, truck drivers, Amazon Prime Air, delivery drivers, and so on.

On the customer side, all one needs to do is click a button, then two days later, their order magically appears on their doorstep. 

As an Amazon FBA ( Fulfillment by Amazon) third-party seller, you get to leverage Amazon’s state-of-the-art facilities and processes, giving your business the logistical efficiency that would be impossible to match on your own. In a nutshell, here’s is how the supply chain works :

• You (the Amazon seller) create a shipment in Seller Central specifying how many units or products will be shipped and the size and weight of your shipment, making sure each unit has a scannable barcode.
• An Amazon-partnered carrier or shipping company delivers your bulk product shipment to the Amazon fulfillment center(s) specified in your shipment information.
• Amazon associates unload and receive your shipment by scanning a unique barcode that connects each package to your seller account.
• The units are unloaded from your shipment and scanned individually by an associate to identify each one so it is properly added to your inventory. The product should have either a UPC barcode or an FNSKU, which are unique Amazon barcodes that identify your products.

• Once received Amazon stores and/or distributes your units to other Amazon fulfillment centers.
• When a customer places an order for your product, Amazon robots and associates work together to accurately pick, package, and label the product.
• The product is then sorted and loaded onto a truck and/or plane to reach its delivery station where customer orders are prepared for last-mile delivery.
• One to two days later, the package is delivered to the customer’s doorstep.

To make all of this possible, Amazon’s fulfillment network consists of over a hundred buildings across the country for inventory management and processing millions of orders every single day. 

According to Amazon’s facilities page , this is what the fulfillment network is comprised of:

Sortable fulfillment center

Around 800,000 square feet in size, sortable fulfillment centers can employ more than 1,500 full-time associates. In these buildings, Amazon employees pick, pack, and ship customer orders such as books, toys, and housewares. Thanks to the innovations of Amazon Robotics, associates often work alongside robots, allowing them to learn new skills and help create a more efficient process to meet customer demand.

Non-sortable fulfillment center

Ranging in size from 600,000 to 1 million square feet, non-sortable fulfillment centers employ more than 1,000 full-time associates. In these centers, associates pick, pack, and ship bulky or larger-sized customer items such as patio furniture, outdoor equipment, or rugs.

Sortation centers

At sortation centers, associates sort customer orders by final destination and consolidate them onto trucks for faster delivery. Amazon’s sort center network provides full- and part-time career opportunities and is powering our ability to provide customers with everyday delivery, including Sunday delivery, which customers love.

Receive centers

Amazon’s receive centers support customer fulfillment by taking in large orders of the types of inventory that we expect to quickly sell and allocating it to fulfillment centers within the network. Full- and part-time roles are available in these buildings, which are about 600,000 square feet in size.

Amazon’s fulfillment network support includes additional types of buildings that handle specific categories of items or are pressed into service at peak times of the year such as the holiday season. Many of these buildings feature part-time opportunities with the option to convert to full-time.

Delivery stations

In these buildings, customer orders are prepared for last-mile delivery to customers. Amazon delivery providers enable our fast, everyday shipping.

How Amazon’s Supply Chain benefits Amazon sellers

The average small- or medium-sized online retailer doesn’t have the capacities or sophisticated logistical processes that Amazon has built. Amazon’s supply chain not only benefits them and their customers but also benefits the third-party sellers who sell their products on Amazon. 

Amazon sellers have two options to fulfill their orders: FBM or FBA . 

In FBM (Fulfilled by Merchant), the seller handles all order fulfillment including storing, packaging, and order shipment

While in FBA (Fulfilled by Amazon), sellers send their products to Amazon fulfillment centers and Amazon handles all storage and order fulfillment. On top of that, products become Prime eligible which allows sellers to have orders delivered to their customers within 1-2 days. 

By using FBA, sellers get to use Amazon’s advanced fulfillment network to grow their business. Instead of worrying about where to store your products or how you’re going to package and ship orders, you can let Amazon handle it all.

Amazon fulfillment centers

Amazon has 110 fulfillment centers across the US and over 185 across the world to ensure no matter where customers are located, they receive their orders fast and on time. 

When sellers create a shipment in Seller Central, Amazon will tell them which warehouse or warehouses to send their inventory to. They base this on the demand for your type of product across the US. For example, Amazon may split your shipment between a New Jersey fulfillment center and a Texas fulfillment center.

Sellers do have the option to send all of their inventory to a single fulfillment center. Amazon will then distribute its inventory across multiple fulfillment centers to ensure sellers can meet the two-day Prime shipping promise in any region. 

The fulfillment centers are where all the magic happens! Receiving, quality assurance, storing, packaging, and shipping all take place here.

Fun fact: Did you know that before COVID-19, you were able to tour an Amazon fulfillment center? While you can’t visit one again in person just yet, Amazon does offer virtual tours so you can get a glimpse of what their technology and people do for Amazon. It’s worth watching if you want to see where your products go and come from.

How Amazon customers receive their orders

Once one of your customers orders your product, Amazon quickly processes and ships the order — and you don’t have to do a thing.

When your products leave the fulfillment center, Amazon loads them into a tractor-trailer or an Amazon Air cargo plane to bring your package closer to its final destination. Once Amazon sorts out packages at the delivery station, they load them into one of Amazon’s delivery vehicles and deliver them to your customer. 

It’s pretty incredible to think all of this happens within two days from when a customer placed their order. Next time you order something on Amazon or send inventory to a fulfillment center, think of all the hardworking employees that make these swift deliveries possible.

You know the Amazon delivery vans and trucks you’ve been seeing in your neighborhood? Many of their routes are actually owned and operated by independent contractors through the Amazon Delivery Service Partner program. Anyone can apply to become an Amazon delivery partner with as little as $10,000 and no logistics experience.

Use Jungle Scout to Navigate Amazon

As much as Amazon’s supply chain benefits all sellers, each seller should fortify their own operations on their end. To have a successful business on Amazon, you must be able to properly manage your inventory . 

Without proper inventory management, you run the risk of understocking, causing a loss of sales or overstocking, resulting in costly monthly and long-term storage fees. Overstocking also causes issues with your storage limits in Amazon’s fulfillment centers, taking up the space you could use for faster-selling products. 

With the right tools and strategies in place, you’ll know how to maintain the perfect balance of inventory needed for your business to run smoothly.

Using Jungle Scout’s Inventory Manager tool, you can accurately forecast demand , know when to replenish your inventory, and avoid costly storage fees.

Using this tool in conjunction with your Amazon metrics will allow you to run your FBA smoothly without the worry about overstocking inventory in Amazon’s fulfillment centers. 

Use Amazon’s expertise to run your business

Amazon’s innovation won’t stop here. They will continue to invest in fulfillment centers, advanced technology, and talented people to exceed customer expectations and beat the competition in every aspect.

We hope this article gives you a better understanding of Amazon’s supply chain and how much actually goes into its operations. 

If you have any more questions about Amazon’s supply chain and process, let us know in the comments below!

Brian is a writer and entrepreneur with over 6 years of experience in e-commerce and selling on Amazon.

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• Harvard Business School →
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Amazon.com, 2021

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Understanding Amazon’s Supply Chain Strategy

As one of the world’s largest and most successful retailers, Amazon’s supply chain strategy plays a crucial role in its overall success. The company’s ability to efficiently source, produce, and deliver a wide variety of products to customers around the globe has helped it become the preeminent e-commerce leader. 

A closer look at the Amazon supply chain strategy reveals the reasons for the company’s dominance. Key elements drive the effectiveness and innovation that has outperformed the competition and attracted the world’s biggest brands to the Amazon marketplace.  

The fulfillment process

Inventory and storage.

The first step in getting products to the customers who placed the order is making sure the items are available to be shipped out. For some sellers, this means having a supply of the inventory in stock at a business, warehouse space, storage facility or third-party warehouse. In the case of Fulfillment by Amazon (FBA), it requires sellers to ship products to Amazon’s distribution centers in a manner that meets the company’s strict compliance requirements. 

Success for an Amazon seller via FBA or other means requires careful inventory management. It’s imperative that the sellers are capable of meeting customer demand and planning for seasonal surges and events such as Cyber Monday or Prime Day. 

Understanding Amazon’s FBA shipping criteria allows sellers to keep their products in stock for customers and ensures a fast and efficient shipping process. The rules include using boxes that match Amazon’s size requirements and avoiding loose packing materials such as packing peanuts or shredded paper. In addition, the shipping label should not be placed over box seams, and each unit should have a scannable barcode with no extraneous barcodes on case-packed units or shipping containers that might create confusion at Amazon’s warehouse. Finally, of course, the packaging should also be sufficient to protect the products while in transit to the Amazon distribution centers. 

Order placement

With the inventory ready for distribution, the next step in the process occurs when a customer orders the item. A brand’s marketing, optimization and reputation all play an integral role in driving these conversions. 

Once a transaction is completed, the seller can begin processing the order and moving on to the final phase of delivering the chosen item to its intended recipient. 

Pick, pack and ship

The pick, pack, and ship stage includes the steps required to ship a product to a customer. The process typically involves the following steps:

Picking – This is the selection of the specific items that are included in the customer’s order. In a warehouse setting, this might involve using a handheld device to scan the items and add them to the order.

Packing – Once the items have been picked, they need to be appropriately packaged for shipping. This usually requires placing the items in a box or other packaging, along with any necessary packing materials to protect the items during shipping.

Shipping – The final step is to ship the order to the customer. The shipper must print a shipping label, attach it to the package, and hand it off to the appropriate shipping carrier, such as USPS, UPS or FedEx.

Seller fulfillment options

Fulfillment by merchant.

Fulfillment by Merchant (FBM) is when a brand uses its own warehouse or fulfillment provider to ship a product to the end customer. For example, a customer would order a product on Amazon. That order is transmitted to the brand’s warehouse, which then picks, packs, and ships it to the end customer. On the surface, this seems like a suitable fulfillment method since inventory can be stored in one location and used to fulfill orders on Amazon, on a brand’s website, and on other marketplaces like Walmart.com . In addition, the merchant avoids having to comply with any Amazon-specific packaging, labeling or shipping requirements and may enjoy more flexibility when bundling products for sale to customers. 

However, companies relying on this model will be unlikely to gain Prime eligibility for their products and will have to manage the return process in-house. In most cases, shipping costs will also be higher than the FBA alternative, and shipping times will be longer by several days. 

Fulfillment by Amazon

One of the ways that Amazon sellers try to reach their full potential and land the coveted Buy Box is by opting to use Fulfillment by Amazon (FBA) rather than managing the process alone. The service outsources order fulfillment to the online retailer and puts your products inside an Amazon FBA warehouse where they can be picked, packed and shipped by an Amazon employee. Unlike a Vendor Central 1P relationship, the seller retains complete control over pricing and inventory management while relying on Amazon logistics for the rest. 

Obviously, the decision to use Amazon’s FBA service comes with added costs. In addition to paying standard seller fees on orders, Amazon will also charge a fulfillment fee based on the type and size of the product. Storage fees for the space that inventory takes up in Amazon’s fulfillment centers are yet another cost that results from using an FBA model for sales. 

However, some of these costs would simply originate elsewhere, such as from in-house employees or a different logistics provider. By partnering with Amazon on fulfillment, sellers enjoy an easier path to Amazon Prime status for their products, reduced customer interactions and more streamlined processes for returns. 

Multi-channel fulfillment

Many Amazon businesses already take advantage of the platform’s Fulfillment by Amazon (FBA) program to support their efforts to get products ordered on Amazon to the buyer. However, fewer companies may realize that Amazon also offers similar fulfillment services for products that are ordered from other websites. With this option, Amazon Multi-Channel Fulfillment (MCF) can simplify the logistics of order fulfillment by providing the same features and services of Amazon FBA to fulfill orders that originate from most online merchants, including a brand’s direct-to-consumer (DTC) website.

Much like any other third-party logistics (3PL) company, Amazon allows sellers to store their inventory in their vast fulfillment network. Once products are in one or more of the company’s warehouses, order fulfillment can be automated by integrating Amazon’s services with other e-commerce platforms. Amazon will then handle the picking, packing and shipping of products even when they are ordered via a sales channel other than Amazon. These orders remain fully trackable, and Amazon Multi-Channel Fulfillment can also manage customer returns according to the seller’s preferences. 

While brands can use Amazon’s MCF and FBA programs simultaneously, it’s worth noting that the company will always prioritize Amazon orders over those from other sources. However, the Multi-Channel Fulfillment program is not restricted to sellers who use Amazon as one of their sales channels. Even brands that use only their own DTC site or alternative e-commerce solutions can still choose to have Amazon handle their order fulfillment. 

Amazon’s fulfillment advantages

Warehousing.

Amazon’s growth over the past two decades is largely due to its approach to order fulfillment. The marketplace’s emphasis on quickly delivering items, including its popular two-day Prime shipping, has set the standard for the industry. But, clearly, their fulfillment strength begins with their warehousing strategy. 

The company’s largest warehouses are located in near population hubs, with the Amazon inventory split among them to minimize delays. Each distribution center is optimized to make picking, packing and shipping as efficient as possible. In addition, inventory storage is divided into separate areas according to demand and shipping requirements, such as one for magazines and books, another for Prime items and others for oversized or irregularly-shaped products. 

In addition, Amazon utilizes various types of warehouses and fulfillment centers dedicated to particular tasks. According to the company, these include:

Sortable fulfillment center – Around 800,000 square feet, sortable fulfillment centers can employ more than 1,500 full-time associates. In these buildings, Amazon employees pick, pack, and ship customer orders such as books, toys, and housewares. Thanks to the innovations of Amazon Robotics, associates often work alongside robots, allowing them to learn new skills and help create a more efficient process to meet customer demand.

Non-sortable fulfillment centers – Between 600,000 to 1 million square feet, non-sortable fulfillment centers employ more than 1,000 full-time associates. In these centers, associates pick, pack, and ship bulky or larger-sized customer items such as patio furniture, outdoor equipment, or rugs.

Sortation centers – At sortation centers, Amazon associates sort customer orders by final destination and consolidate them onto trucks for faster delivery. Amazon’s sort center network powers the ability to provide customers with everyday delivery, including Sunday delivery.

Receive centers – Amazon’s receive centers support customer fulfillment by taking in large orders of the types of inventory that are expected to sell quickly and then allocating those items to fulfillment centers within the network. 

Specialty – Amazon’s fulfillment network is also supported by additional types of buildings that handle specific categories of items or are pressed into service at peak times of the year, such as the holiday season. 

Similar to its approach to warehousing, Amazon is revolutionizing the delivery options that customers can utilize when shopping on the platform. In recent years, Amazon has accelerated the time needed to get orders from storage to the purchaser and launched new methods that increase efficiency. 

Free, two-day Prime deliveries are likely one of the most familiar. While the company and its sellers still use third-party carriers like UPS, FedEx and the U.S. Postal Service for some deliveries, Amazon has also added its own proprietary shipping options. Drones that land in your backyard or on your roof can deliver products in a matter of hours. Amazon-branded trucks and delivery vans are now offered via a franchise-like structure to entrepreneurs and small businesses interested in expanding the company’s delivery footprint. 

The company also focuses on making the delivery process more convenient via its Hub & Locker and Hub Counter locations. At the same time, Amazon Key gives delivery drivers the ability to place packages inside a home or garage. As a result of these innovations, delivery times are reduced and convenience for shoppers and Amazon is increased.

Customer service and returns

Amazon has built a reputation for having a strong customer service team and for making it easy for customers to return products. This is likely because Amazon has invested heavily in developing a comprehensive and user-friendly returns policy and process and training its customer service staff to be knowledgeable, helpful, and efficient.

Amazon also offers a wide range of options for returning products, including the ability to return items by mail, at a local drop-off location, or select retail stores, and provides clear instructions for how to do so. Additionally, Amazon provides convenient tracking and updates throughout the returns process and often offers refunds or replacements quickly and without hassle. All of these factors contribute to making the customer service and returns experience with Amazon generally positive and stress-free.

When third-party sellers opt for an FBA agreement, Amazon handles the customer service and return processing for those brands. While this sometimes leads to concerns about the condition of returns and fraud, it does minimize the costs and time-consuming burden of handling those responsibilities in-house. 

Technology  

Amazon’s supply chain management relies heavily on technology and is often among the first to integrate new technologies. The company uses robots, automated conveyor belts, and other technology in its fulfillment centers to streamline the process of sorting, storing, and shipping orders. Advanced software optimizes routes and schedules for its delivery trucks, planes, and other transportation assets, to reduce costs and increase efficiency. Sophisticated algorithms and data analytics help track and manage inventory levels and predict product demand. Technology such as barcodes and RFID tags can track products throughout the supply chain and ensure that goods are shipped and delivered accurately and on time. And as mentioned, drones are now being used to make some Amazon Prime Air deliveries in larger markets. 

Overall, Amazon’s use of technology in its supply chain helps the company to operate more efficiently, reduce costs, and improve the speed and accuracy of its fulfillment and delivery operations. But the advantages also extend to the companies it works with. For example, the Seller Central and Vendor Central dashboards provide sellers with a central hub to manage their relationship with Amazon, and each offers a wealth of data to help with forecasting and optimization. 

Manufacturing

As Amazon has grown, so has its focus on private-label brands. Inspired by the success of house brands in brick-and-mortar stores, Amazon hoped to capitalize on its ability to market low-priced products backed by the company itself. Since committing to the tactic, they have offered private label products, some bearing the Amazon name, in categories ranging from food to clothing to electronics. 

However, new reporting indicates a shift may be on the horizon. While sellers and brands utilizing Amazon have previously focused on competing with Amazon’s private label brands, the new priority may be on learning how to adjust to a marketplace with fewer Amazon-branded products available, but new challenges that would accompany such a transition.

Both Vox and the Wall Street Journal addressed the potential change in Amazon’s strategy in recent weeks. Their reports centered on the possibility that Amazon’s efforts to drive market share in-house may lead to more harm than profit.  

Among the motivations for a decision to minimize these offerings is the scrutiny Amazon has faced from government regulators due to their private label products. There are well-documented questions about how Amazon’s role as a marketplace and data-collection company may conflict with its aspirations to sell more of its in-house brands. Regardless of what happens in the future, current sellers should be aware of the industry climate and have a plan to respond in ways that will grow their businesses. 

Amify can deliver for your brand 

Find the right Amazon warehousing strategy for your business with help from the experts at Amify . They understand the impact that a delivery option can have on your bottom line and how growing sellers can make Amazon’s supply chain strategy and operations an important advantage. Contact us today to learn more.

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Behind the Scenes: Exploring Amazon’s Logistics and Supply Chains

When online behemoth  Amazon  introduced its Prime service almost two decades ago in 2005, it was just the beginning of a game-changing retail upheaval.

With over 175 fulfillment centers around the globe, over 1,137 delivery stations in the USA (with the plans for 331 underway), an innovative drone delivery service, Amazon Prime Air, in the works, the manufacturing of its own products as well as those of third party sellers, including small businesses, Amazon has catapulted from the world of straightforward digital bookselling and media to the head of the e-commerce pack.

Image Credit: Shutterstock/Tada Images

One of the main reasons behind the company’s success is its superior supply chain management. To meet the increasing demand for quick, easy e-commerce purchasing, the retail giant is finding itself at the heart of today’s fast-evolving reinvention of e-commerce supply chain management.

How the Amazon Supply Chain is Shaking Up e-Commerce

The one-time online bookstore is now known for, among other things, its effortless customer experience, technological innovations such as its own VA smart speakers, and even a grocery delivery service via its Fresh warehouses.

Stiff competition, strict delivery expectations, and an ever-growing demand for quick, easy online purchasing demand a modern e-commerce supply chain that performs at higher levels than ever before. The challenges involved in managing more products, faster turnarounds, and direct-to-doorstep delivery requires continuous assessments and thorough logistics evaluations.

Put simply, those who thrive are built to be nimble, and Amazon has adapted to the changing times with ease by  leveraging technological innovation and strategy . These have been the driving forces behind Amazon’s warehouse designs and warehouse processes.

The Amazon supply chain is one of the most advanced around, with an organized and smooth-sailing logistics network (as well as its own third-party logistics businesses) that enables the company to deliver packages in as little as a day (and sometimes within the same day thanks to Amazon Prime Air capabilities), and partnerships that allow for low-cost production.

Amazon’s Fulfillment Centers

Amazon warehouses collectively have a massive 150 million square feet of space, and in just two decades, Jeff Bezos soared the company to unbelievable new heights. Bezos’ goal was to make Amazon the most “customer-centric company,” able to sell anything, all over the world — even in remote areas.

Amazon has since become a household name, and, though your local Amazon delivery person might not wear a uniform, Amazon packages are instantly recognizable. To sell products, the company made it easier than ever for customers to shop thanks to everyone’s favorite virtual assistant AI technology, Alexa, as well as its own app.

Everything anyone could ever need, including the most high-demand products, are available on Amazon. Electronics, cosmetics, music, movies, TV shows … you name it, it’s got it — in many instances, at lower prices, too. As a result, Amazon’s sales have now generated $514 billion in revenue .

Warehouse Automation Beginnings

Taking advantage of the expanding presence of the Internet of Things (IoT), Amazon jumped ahead of the curve yet again when it introduced Amazon Dash in 2015.

Image Credit: Shutterstock/Chokii.Ns

Amazon Dash was an integrated, Wi-Fi-connected, push-button device that allowed customers to create shopping lists by scanning barcodes, and could even be voice-controlled (users just have to say the product names out loud).

When the Dash button was pushed, it would order consumers’ most-used products. Everyday items like soap, paper products, coffee, and peanut butter could all be  refilled  with the touch of the Amazon Dash button.

However, by 2019, the Amazon Dash series had become obsolete due to the growing popularity of product subscriptions, voice-activated shopping using Alexa, and automatic reordering; in March of that same year, the series was discontinued by Amazon.

Current Digital Warehousing Technologies

Amazon has put a lot of money towards  warehouse mechanization  and inventory management, and, after purchasing robotics company, Kiva System — now known as Amazon Robotics —  which creates robots (now the company has upwards of 200,000 robots.

Image Credit: Shutterstock/Frederic Legrand – COMEO

Since 2015, the company has powered fast, accurate picking and packing processes across an expanding network of warehouses. The fleet of automated technology grows each year by thousands of units and shows no sign of stopping.

These robots bring the objects to the warehouse worker responsible for picking, but we can soon expect to see everything in these warehouses fully automatic, which may lead to a decreased number of employees.

In-House Expertise

In spite of Amazon’s tech-savvy flash (yes, we mean the air hub designated Amazon Prime Air in particular), perhaps the most deeply disruptive element of the retail giant’s logistics strategy is its outsourcing — or more specifically, its lack thereof.

Image Credit: Shutterstock/Quality Stock Arts

As delivery demand increases, Amazon is pulling logistics in-house. Amazon has been able to accomplish this  by building  large regional fulfillment centers and sorting centers that, using digital product warehousing technologies, are both agile and automated.

Amazon’s Own Delivery Business

From custom delivery vehicles to robot-powered distribution centers and automated warehouse systems to the Amazon Air carrier plans — Amazon’s cargo airline — that is in collaboration with the Air Transport Services Group, Amazon handles each order as completely as possible, from start to finish.

Image Credit: Shutterstock/Bjoern Wylezich

In addition, Amazon’s own delivery business, Amazon Freight, has also taken off. This Amazon trucking venture, according to the company, is its “middle-mile logistics technology solution for anyone looking to ship road freight.” Amazon Freight allows any Amazon seller to ship palletized shipments or full truckloads directly to its Amazon fulfillment centers, or even to non-Amazon facilities at competitive prices.

As a further convenience, the company offers Amazon Hubs (previously known as Prime Now Hubs), which are a network of pickup locations all over the world, allowing businesses with physical locations to offer secure package pickups and returns to customers who buy their products via Amazon.

High Responsiveness

The two-day shipping and delivery time promise of Amazon Prime allowed for more than just enhanced convenience; it completely transformed an entire industry. Amazon  revolutionized the industry again  when it introduced one-day delivery. Quick, simple, and free — it doesn’t get much better than that.

As competitors have begun to catch up, however, the stakes have been raised, and in 2014, Amazon introduced Prime Now, offering one-hour deliveries to customers in select regions. Users can order takeout or groceries, schedule a custom drop time, and more.

Enhanced Ease

The driving theory of “anything you can do, I can do better” doesn’t stop with the Amazon delivery van. The retailer and distributor added private-label brands to its extensive portfolio, producing an ever-growing catalog of custom goods. Lightweight electronics, home goods, baby care items, and even dog food bags come straight from AmazonBasics.

Image Credit: Shutterstock/Claudio Caridi

Do Amazon’s in-house products stand a chance against established brick-and-mortar competition? With its acquisition of the Whole Foods brand and its growing network of physical stores, you may find AmazonBasics products on neighborhood shelves sooner than you think.

Employee Protection

Amazon has also invested in  more high tech  to improve working conditions and help keep the human warehouse employees that work side-by-side with the robots in an Amazon facility to fulfill orders safely. In early 2019, Amazon rolled out the Robotic Tech Vest, a sensor-laden piece of wearable equipment with collision detection technology designed to help warehouse workers and robots avoid collisions.

Business Training

In order to expand reach and get even more businesses selling on its platform, Amazon provides seller training, with many events, webinars, development tools, and even the Seller University that offers a series of free training videos to teach companies how to successfully sell on Amazon. Lessons include the creation of product listings, understanding product rules and restrictions, advertising, and promotions. The courses even offer advice on taxes and everything they need to know about Fulfillment by Amazon (FBA).

Sustainability

Amazon claims it is committed to a more  sustainable  future, with attempts to reduce packaging (and even make sure that the box sizes are a bit more suitable for the contents) and increase the use of recyclable materials in its original boxes. Although aware that plastic is lighter and makes for lower carbon emissions, Amazon is not keen on using the single-use material.

Image Credit: Shutterstock/christianthiel.net

However, the company is constantly working on how to find ways to minimize waste as well as carbon emissions. The company says it has “teams of scientists and other experts who are constantly working to reinvent how products are shipped for the good of customers and the planet.” Though there has been some advancement in this area, the company is not yet satisfied and is continually working to find better solutions.

The Future of Amazon’s Supply Chain

Looking to the future, Amazon’s tech-centric, one-stop strategy and advanced supply chain are poised for nothing but growth.

Image Credit: Shutterstock/Around the World Photos

While we’ve yet to see drone delivery available at customers’ whims (but are confident that it’s coming very soon), Amazon proves time and time again that it’s committed to staying ahead of the technology game. Insourcing and innovation keep per-unit supply costs to a bare minimum, and innovative strategy and technology keep processes quick and efficient. Any business will do well to look to this e-commerce leader and emulate its strategies in relation to increased productivity, profit-building, and expanded reach.

So what else can we expect from Amazon in the near future? Are   robot servants  next? We can only wait and see.

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• Amazon.com: Supply Chain Management
• Technology & Operations / MBA Resources

Introduction to case study solution

EMBA Pro case study solution for Amazon.com: Supply Chain Management case study

At EMBA PRO , we provide corporate level professional case study solution. Amazon.com: Supply Chain Management case study is a Harvard Business School (HBR) case study written by P. Fraser Johnson, Ken Mark. The Amazon.com: Supply Chain Management (referred as “Amazon Supply” from here on) case study provides evaluation & decision scenario in field of Technology & Operations. It also touches upon business topics such as - Value proposition, Supply chain. Our immersive learning methodology from – case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Technology & Operations field, and broaden their skill set.

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Case Description of Amazon.com: Supply Chain Management Case Study

By early 2018, Seattle-based Amazon.com Inc. (Amazon), one of the world's most valuable companies and the largest online retailer in the world, had grown dramatically since its beginnings in 1994. The company that had started as an online bookseller now sold merchandise and digital content in more than 30 categories, including electronics, clothing, books, furniture, and streaming music and video. It sold its own products and listed products for sale by over two million third-party sellers. It provided on-demand cloud-computing services and offered fulfillment and shipping services to businesses, and it had recently entered grocery retailing through its purchase of Whole Foods Market. With 2017 shipping costs that exceeded $21 billion, the company was working to establish greater control over its supply chain network and capabilities. Amazon was selling a huge variety of products in many formats, and the chief executive officer needed to determine how to structure the company's supply chain in order to support its strategy and growth objectives. What supply chain capabilities would Amazon need as its business model continued to evolve?

Case Authors : P. Fraser Johnson, Ken Mark

Topic : technology & operations, related areas : supply chain, what is the case study method how can you use it to write case solution for amazon.com: supply chain management case study.

Almost all of the case studies contain well defined situations. MBA and EMBA professional can take advantage of these situations to - apply theoretical framework, recommend new processes, and use quantitative methods to suggest course of action. Awareness of the common situations can help MBA & EMBA professionals read the case study more efficiently, discuss it more effectively among the team members, narrow down the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to Amazon.com: Supply Chain Management Case Study Solution

The three step case study solution approach comprises – Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons – At the second stage provide the reasons for the conclusions. Why you choose one course of action over the other. For example why the change effort failed in the case and what can be done to rectify it. Or how the marketing budget can be better spent using social media rather than traditional media. Evidences – Finally you should provide evidences to support your reasons. It has to come from the data provided within the case study rather than data from outside world. Evidences should be both compelling and consistent. In case study method there is ‘no right’ answer, just how effectively you analyzed the situation based on incomplete information and multiple scenarios.

Case Study Solution of Amazon.com: Supply Chain Management

We write Amazon.com: Supply Chain Management case study solution using Harvard Business Review case writing framework & HBR Technology & Operations learning notes. We try to cover all the bases in the field of Technology & Operations, Supply chain and other related areas.

Objectives of using various frameworks in Amazon.com: Supply Chain Management case study solution

By using the above frameworks for Amazon.com: Supply Chain Management case study solutions, you can clearly draw conclusions on the following areas – What are the strength and weaknesses of Amazon Supply (SWOT Analysis) What are external factors that are impacting the business environment (PESTEL Analysis) Should Amazon Supply enter new market or launch new product (Opportunities & Threats from SWOT Analysis) What will be the expected profitability of the new products or services (Porter Five Forces Analysis) How it can improve the profitability in a given industry (Porter Value Chain Analysis) What are the resources needed to increase profitability (VRIO Analysis) Finally which business to continue, where to invest further and from which to get out (BCG Growth Share Analysis)

SWOT Analysis of Amazon.com: Supply Chain Management

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are result of Amazon Supply internal factors, while opportunities and threats arise from developments in external environment in which Amazon Supply operates. SWOT analysis will help us in not only getting a better insight into Amazon Supply present competitive advantage but also help us in how things have to evolve to maintain and consolidate the competitive advantage.

- High customer loyalty & repeat purchase among existing customers – Amazon Supply old customers are still loyal to the firm even though it has limited success with millennial. I believe that Amazon Supply can make a transition even by keeping these people on board.

- Experienced and successful leadership team – Amazon Supply management team has been a success over last decade by successfully predicting trends in the industry.

- Low profitability which can hamper new project investment – Even though Amazon Supply financial statement is stable, but going forward Amazon Supply 5-7% profitability can lead to shortage of funds to invest into new projects.

- Amazon Supply business model can be easily replicated by competitors – According to P. Fraser Johnson, Ken Mark , the business model of Amazon Supply can be easily replicated by players in the industry.

Opportunities

- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the international market. Amazon Supply is in prime position to tap on those opportunities and grow the market share.

- Developments in Artificial Intelligence – Amazon Supply can use developments in artificial intelligence to better predict consumer demand, cater to niche segments, and make better recommendation engines.

- Home market marketing technique won’t work in new markets such as India and China where scale is prized over profitability.

- Customers are moving toward mobile first environment which can hamper the growth as Amazon Supply still hasn’t got a comprehensive mobile strategy.

Once all the factors mentioned in the Amazon.com: Supply Chain Management case study are organized based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Amazon.com: Supply Chain Management Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact the macro environment in which Amazon Supply operates in. P. Fraser Johnson, Ken Mark provides extensive information about PESTEL factors in Amazon.com: Supply Chain Management case study.

Political Factors

- Political and Legal Structure – The political system seems stable and there is consistency in both economic policies and foreign policies.

- Political consensus among various parties regarding taxation rate and investment policies. Over the years the country has progressively worked to lower the entry of barrier and streamline the tax structure.

Economic Factors

- According to P. Fraser Johnson, Ken Mark . Amazon Supply should closely monitor consumer disposable income level, household debt level, and level of efficiency of local financial markets.

- Foreign Exchange movement is also an indicator of economic stability. Amazon Supply should closely consider the forex inflow and outflow. A number of Amazon Supply competitors have lost money in countries such as Brazil, Argentina, and Venezuela due to volatile forex market.

Social Factors

- Leisure activities, social attitudes & power structures in society - are needed to be analyzed by Amazon Supply before launching any new products as they will impact the demand of the products.

- Consumer buying behavior and consumer buying process – Amazon Supply should closely follow the dynamics of why and how the consumers are buying the products both in existing categories and in segments that Amazon Supply wants to enter.

Technological Factors

- 5G has potential to transform the business environment especially in terms of marketing and promotion for Amazon Supply.

- Artificial intelligence and machine learning will give rise to importance of speed over planning. Amazon Supply needs to build strategies to operate in such an environment.

Environmental Factors

- Environmental regulations can impact the cost structure of Amazon Supply. It can further impact the cost of doing business in certain markets.

- Consumer activism is significantly impacting Amazon Supply branding, marketing and corporate social responsibility (CSR) initiatives.

Legal Factors

- Health and safety norms in number of markets that Amazon Supply operates in are lax thus impact the competition playing field.

- Property rights are also an area of concern for Amazon Supply as it needs to make significant Supply chain infrastructure investment just to enter new market.

What are Porter Five Forces

Porter Five Forces Analysis of Amazon.com: Supply Chain Management

Competition among existing players, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitutes.

What is VRIO Analysis

VRIO Analysis of Amazon.com: Supply Chain Management

VRIO stands for – Value of the resource that Amazon Supply possess, Rareness of those resource, Imitation Risk that competitors pose, and Organizational Competence of Amazon Supply. VRIO and VRIN analysis can help the firm.

What is Porter Value Chain

Porter Value Chain Analysis of Amazon.com: Supply Chain Management

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily used for analyzing Amazon Supply relative cost and value structure. Managers can use Porter Value Chain framework to disaggregate various processes and their relative costs in the Amazon Supply. This will help in answering – the related costs and various sources of competitive advantages of Amazon Supply in the markets it operates in. The process can also be done to competitors to understand their competitive advantages and competitive strategies. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Amazon.com: Supply Chain Management

BCG Growth Share Matrix is very valuable tool to analyze Amazon Supply strategic positioning in various sectors that it operates in and strategic options that are available to it. Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a scenario where Amazon Supply can be market leader in the industry without being a dominant player or segment leader in any of the segment. BCG analysis should comprise not only growth share of industry & Amazon Supply business unit but also Amazon Supply - overall profitability, level of debt, debt paying capacity, growth potential, expansion expertise, dividend requirements from shareholders, and overall competitive strength. Two key considerations while using BCG Growth Share Matrix for Amazon.com: Supply Chain Management case study solution - How to calculate Weighted Average Market Share using BCG Growth Share Matrix Relative Weighted Average Market Share Vs Largest Competitor

5C Marketing Analysis of Amazon.com: Supply Chain Management

4p marketing analysis of amazon.com: supply chain management, porter five forces analysis and solution of amazon.com: supply chain management, porter value chain analysis and solution of amazon.com: supply chain management, case memo & recommendation memo of amazon.com: supply chain management, blue ocean analysis and solution of amazon.com: supply chain management, marketing strategy and analysis amazon.com: supply chain management, vrio /vrin analysis & solution of amazon.com: supply chain management, pestel / step / pest analysis of amazon.com: supply chain management, swot analysis and solution of amazon.com: supply chain management, references & further readings.

P. Fraser Johnson, Ken Mark (2018) , "Amazon.com: Supply Chain Management Harvard Business Review Case Study. Published by HBR Publications.

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A case study of Amazon on its supply chain management

Every company has their own supply chain in order to sort or produce goods. However, the company needs to manage supply chain to maximize its highest benefits.

By having effective supply chain management, the company can ensure that the right product or service will be available at the time to the right place and at the right price (Kamala 2007). Amazon is one of the companies that have best supply chain practices in order to respond high level of responsiveness for the customers.

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Thereby, this paper explains about Amazon Company, analysis of Amazon’s supply Hahn, recommendations and barriers to implement will be discussed. Company background Amazon is an American commerce company based in Seattle, Washington, USA. Rhea company used to be only a bookstore, but now it diversified into difference type of products.

The goal of Amazon is to provide one stop shop experience where the customer can find everything on Amazon as earth’s biggest selection (Warrant 2012).

Amazon operates as a pure internet retailers that does not have retail store at all Nile the delivery will be done through Amazon’s networks of distribution centers. His operation makes the company is able to provide wider range of goods and lower cost of products with high quality. Moreover, it is also increase customer satisfaction as it supports customer convenience. An effective supply chain strategy makes the company is able to respond high level of responsiveness. Amazon balances between cost of distributions and level of services by having the efficient distribution centers and multi-tier inventory networks.

However, there is a competition from substitution brands that provided the same service as Amazon, which are Ebay and Walter. Currently, eBay is pushing shipping e to the seller in order to reduce cost for the buyers while Walter introduced free shipping to the customers but buyers have to pick up the item at the store (Amazon strategies 2010). ANALYSIS OF AMAZON SUPPLY CHAIN Most of the companies need successful supply chain management to create sustainable competitive advantages.

There are various benefits from having an effective supply chain management such as inventory reduction, delivery service improvement and shorter product life cycles (Faucet et al 2008). This part provides the scenario of Amazon’s supply chain strategy, how Amazon manages in wider intent, factors influencing its supply chain, and strategic and operational implications will be evaluated.

Supply chain strategy to Amazon Strategic fits According to Copra and Mined (2007), supply chain strategy and competitive strategy should have aligned goals. Amazon has identified their customers as highly responsiveness.

In order to respond with high uncertainty demand and availability of products, the four main components drive the outcome of Amazon are having several distribution centers as a storage facilities, multi-tier inventory management, highly efficiency transportation and implement information systems to provide real time Information within its supply chain. All of these factors explain how both strategies of Amazon are fit together and that makes Amazon’s supply chain successful. Inventory outsourcing The advantage of outsourcing is to help the company to focus on its core activities and cost savings (Buck N.

Amazon is one of the companies that need to gain those benefits from inventory outsourcing. However, there is another side of outsourcing deals as well. Candor (2008) argued that the company should not outsource even it was not their core activities when the demand level is increasing.

He company is able to optimize the service if the stock is owned and managed efficiently. So Amazon decided to outsource only some part of its inventory in order to mitigate risks and optimize services. The products that are frequently purchased or popular were keeping and managing in-house while other products are stocked by distributors.

The products will be shipped after Amazon has requested. The company acted as a trans-shipment centre (COMIC India 2003).

It was a right decision for Amazon and the company is able to reduce the cost of holding large amount of inventory while the customer service is better as it shipped faster. Managing the supply chain with its wider context and organization context Price differentiated customers Dispatch and delivery options were used to divide customers into each category based on responsiveness because difference customers need difference service levels and difference prices.

Amazon has provided many types of deliveries in difference costs such as free super saver delivery, one-day delivery, First-class delivery and etc (Amazon 2013). Each type of delivery reflects how fast the delivery is. It means if the customer needs very high responsiveness, get the products by tomorrow, the buyers are willing to pay more.

So Amazon divided customer segments to match with its distribution systems and inventory strategy in order to control cost and service level. The company also received increased flexibility (Duran et al 2006).

Moreover, there is a membership programmer called Amazon prime. It provides unlimited one-day delivery for one year and it costs GAP. Once the buyers are member of prime, buyers will get discount if the buyers want to get express or evening delivery. The members will also able to borrow kindle books for free (Amazon prime 2013).

Push-pull strategy Amazon has started with pull systems. There is no inventory, no warehouse and no overhead. The company acts as a middleman who taking the orders and it will be filled by Ingram book group (Seismic-Levi et al 2007).

When the time has passed, the growth of the company has forced Amazon to hold some inventory in order to respond customer needs by having several distribution centers. So the strategy has changed to push-pull. The inventory is hold using a push strategy while orders are shipped using a pull strategy.

The decoupling point of Amazon is distribution centers. However, some of slow items are still used pure pull strategy as there is no Inventory. By having several distribution centers, the holding cost for Amazon is increased as well. Inventory segmentation The inventory network of Amazon is multi-tier inventory management.

This will help the company plans and offers real time optimization service that allows Amazon to have minimal amount of inventory needs to achieve its service level (One network N.

D. ). By having this network, Amazon is able to offer nearly unlimited selection. Nonetheless, the problem is each tier treats separately while not concerns about inventory of another echelon. Then bullwhip effect occurs which is inventory holding Geiger in each tier because there is no sharing information across the tier (Lee 2003).

Amazon’s multi-tier inventory is composed of three tiers.

The first tier is Amazon distribution centre. The inventory will be aggregated in distribution centers, which enables the company to hold fewer inventories. The second tier is wholesaler and partner Dc. If the products are not available from Amazon’s DC, the company will use IT systems to search for this product in partner inventories in order to assign Inch party will be responsible for this order.

By doing this, the customer service will be high as there is no stock out experiences. Lastly, publishers, manufacturers, ‘endorse and third-party sellers are included in third tiers.

All these parties help the company to fulfill unlimited selection of goods offer in Amazon (Chilies and Dad 2005). Factors influencing Amazon’s supply chain configuration now and future Transportation Amazon provided many choices of delivery to balance cost of transportation and level of service. The company does not have large scale to contact full truckload.

So the company provides free shipping in order to achieve longer lead-time of transportation. This will help company able to reduce cost and achieve economy of call (Robinson 2010).

However, the company is provided highly responsiveness options as well, which is cost company a lot. Even though the customers are willing to pay higher price to get the products faster, it should not cost anything from Amazon but it is not like that. Amazon cannot utilize its highest benefits of its transportation systems.

That is why the company needs to design its supply chain networks to minimize the costs. Order sourcing The challenge of Amazon is to make decision which internal warehouse or external partnership should be the one who responsible for this customer order.

Once the order has been places via website, customer is expected to get products on time. Finding the lowest solution in short period of time is the hardest things when there are many items located in deterrence places and it needs to deliver in single delivery. So, the company decided to implement technology such as warehouse management systems to get real time and single view of inventory for effective sourcing (Retrained N.

D. ). Evaluate strategic and operational implications Supply chain network Amazon operates eight distribution centers within United Kingdom (I-J), which are

Ruggedly, Hummel Hempstead, Marathon gate, Detonates, Petrography, Timberline, Source and Swansea. Locations are selected base on distance to markets, Close to transportation mode such as Motorway and main rail link, Airport and river (Amazon Location 2013). According to Enameled (2013), several DC would help the company provides quicker deliver, lower transportation costs and easy access.

Furthermore, sometimes transportation hubs, also known as injection points, were used to reduce the cost of transportation in high customer demand areas.

The products will be shipped from DC to transportation hubs with full truckload. Then the Inbound trucks will be unloaded the packages and load into outbound trucks which runs by a smaller carrier partners such as UPS, DVD and Hermes (Amazon Carriers 2013; Chilies and Dad 2005). Moreover, Amazon adopted drop shipment approach. The order will be picked, packed in Amazon package and delivered by supply chain partners, which are manufacturer, wholesaler and third parties. By doing this, the company is able to survive from its huge losses but it caused negative effects as well.

It is about 33 percent of Amazon’s single orders are multiple products. Nonetheless, it needs to LOL specific goods from difference location and ships the collective goods as one delivery, which takes time and causes a delay that leads to customer dissatisfied. Pilaf and Data 2004) Transportation The most difficult factor of transportation is to gain efficiency due to large numbers of small order from customers, so the company cannot gain advantage of the scale at all. Amazon used transportation hub to reduce the cost of transportation. He hub is acted as a cross docking to transfer goods to last-mile delivery. Amazon Nil aggregate the demand and ship it to transit hub together in order to achieve less Han truckload or full truckload.

Nevertheless, it needs to accumulate in term of region zone. So it takes longer time to complete this strategy. Hence, the company has introduced difference delivery option such as free super saver delivery in order to get longer lead times/ available to promise day. By doing this, Amazon is able to achieve economy of scale which is lower its cost and the customer satisfaction stays on acceptable level.

However, sometimes goods are not available to the customer on time because the time spent on accumulate took longer than it should be and when he demand is high (Amazon 2013; Chilies and Dad 2005; Robinson 2010; Barriers 2009). Technology As Amazon does not have a storefront, so it needs to provide the perfect visual store experience to compensate the touch of products.

The company utilizes from its own technology innovations to differentiate itself from other e-commerce. The innovation includes AY and one click ordering.

The former aspect is a subsidiary company, which provides product search engines and search inside the books Inheres the latter aspect is used to speed up ordering process, and introduce product recommendations, which determine customer interest from previous researches (AY 2013; sums 2013). Amazon also needs an innovation to support back-end supply chain integration and execution. The company have advance warehouse management systems to support order sourcing, labor management, load balancing, process alternative and supplier collaboration.

All these factors make an efficient process to support multi- tier inventory of Amazon (Chilies and Dad 2005). Besides, Amazon has been critiqued about unbearable working conditions, mandatory overtime and using human as a robot which is pushing workers to physical limit. Employees within its DC walked ore than 1 5 miles a day to look for products and every move has checked by computers. Therefore, the company decided to use Kava robot to deliver shelves stocked with merchandise to DC workers instead of workers to walk around and find products.

There are 1,400 kava robots in three DC. By having these robots, Amazon can improve productivity and reduce cost up to 50 percent annually in area of Morehouse efficiencies (Super 2011; Kaiser 2013).

Nevertheless, this robot costs Amazon large amount of money. It is more cost effective if Amazon Just hires human Norse. Is it worthwhile to invest for? Wastage (2012) argued that the benefit of this Investment for Amazon is outweighed. The company will have better publicity, improve reputation about ethical and avoid lawsuits.

In addition, Amazon also launched prime air, also known as drones, which is able to delivery goods to customers within 30 minutes after buyers place the orders. The process of prime air starts from packages pass on a conveyor belt and drone will lift t off with the package and go straight to customer’s address.

However, this innovation has not allowed to use nowadays. The fastest possible will be around 201 5 2013). RECOMMENDATIONS The problem is Amazon depends on courier such as UPS and Fed too much in order to reduce the cost of transportation and make it efficient.

Recently, this courier causes negative reputation for Amazon that cannot deliver the products on time En the demand is high and the customer satisfaction is decreased Kumara 2013). Hence, the company should run its transportation with their private fleet in last-mile delivery because responsiveness is a crucial factor for Amazon. According to Hirsch (2010), the benefits from using private fleet is not only better customer service ND greater visibility but also hold 100 % control of driver for safety, enhance branding and no driver shortage during high season/demand.

Besides, private fleet Nil become a true competitive differentiate point as it is a connection point to customers (Schulz 2010). Furthermore, bullwhip effect is another issues. This issue happened because there is lacking of integration along the supply chain. The current stage of Amazon and its supply chain partner is cooperation. So the company should raise the relationship to be coordination with its suppliers or become the best scenario which IS collaboration.

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Case Study: The Supply Chain Success Story of Amazon

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• Case Study: The Supply Chain…

Amazon’s supply chain success is a testament to its customer-centric approach, advanced warehousing and distribution capabilities, innovative technologies, supply chain visibility, and continuous improvement mindset. The company’s ability to deliver millions of products quickly and reliably has reshaped customer expectations and set a benchmark for supply chain excellence. As Amazon continues to innovate and expand, its supply chain success story serves as an inspiration for businesses across industries. By prioritizing customer satisfaction, embracing technological advancements, and continually optimizing operations, organizations can strive to achieve similar levels of supply chain excellence.

Customer-Centric Approach

Amazon’s supply chain success can be attributed to its relentless focus on meeting customer needs and expectations. The company has built a robust infrastructure that enables fast and reliable delivery, contributing to exceptional customer service.

According to a report by Statista, Amazon’s net sales reached $386 billion in 2020, highlighting the scale of its operations and customer base. By prioritizing customer satisfaction and delivering orders quickly and accurately, Amazon has established itself as a trusted and preferred online retailer.

Advanced Warehousing and Distribution

Amazon’s extensive network of fulfillment centers is a cornerstone of its supply chain success. These strategically located warehouses ensure efficient order fulfillment, reduced delivery times, and optimized inventory management.

As of 2021, Amazon operates over 175 fulfillment centers worldwide, spanning millions of square feet. This vast warehousing infrastructure allows the company to store a wide range of products and fulfill orders swiftly, even during peak periods.

Innovative Technologies

Amazon’s supply chain success is driven by its relentless pursuit of innovation and adoption of cutting-edge technologies. The company leverages automation, robotics, machine learning, and artificial intelligence to optimize operations, enhance efficiency, and reduce costs.

One notable example is the implementation of Amazon Robotics, which employs autonomous robots to assist with tasks such as picking and packing in warehouses. This technology has improved operational speed and accuracy while reducing the physical strain on human workers.

Supply Chain Visibility and Data Analytics

Amazon’s supply chain success is built upon a foundation of real-time visibility and data analytics. The company utilizes advanced analytics tools and algorithms to analyze vast amounts of data, enabling proactive decision-making and optimization.

By leveraging supply chain visibility and analytics, Amazon can forecast demand accurately, manage inventory levels effectively, and optimize logistics operations. This contributes to reduced costs, improved order fulfillment, and enhanced customer satisfaction.

Continuous Improvement and Adaptability

Amazon’s supply chain success is underpinned by a culture of continuous improvement and adaptability. The company constantly seeks opportunities to optimize its processes, embrace new technologies, and respond to evolving market dynamics.

Amazon’s acquisition of Whole Foods Market in 2017 exemplifies its adaptability and commitment to expanding its supply chain capabilities. This strategic move enabled the company to enter the grocery industry and leverage the existing physical store infrastructure for improved last-mile delivery.

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Handbook for Supply Chain Risk Management: Case Studies, Effective Practices and Emerging Trends

• ISBN-10 1604270381
• ISBN-13 978-1604270389
• Publisher J. Ross Publishing
• Publication date October 1, 2011
• Language English
• Dimensions 6 x 0.8 x 9 inches
• Print length 344 pages
• See all details

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Editorial Reviews

About the author, product details.

• Publisher ‏ : ‎ J. Ross Publishing (October 1, 2011)
• Language ‏ : ‎ English
• Hardcover ‏ : ‎ 344 pages
• ISBN-10 ‏ : ‎ 1604270381
• ISBN-13 ‏ : ‎ 978-1604270389
• Item Weight ‏ : ‎ 1.08 pounds
• Dimensions ‏ : ‎ 6 x 0.8 x 9 inches
• #1,143 in Business Purchasing & Buying
• #1,244 in Risk Management (Books)
• #1,266 in Business Operations Research (Books)

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