Amazon’s supply chain and Logistics

Amazon’s supply chain and Logistics

Introduction

Amazon is one of the largest online retailers in America. Jeff Bezos founded the company in 2994 with the mission, “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.“ It initially started as a book seller. Today, it is involved in trading several customer goods and services. Some of the goods traded by the company include televisions, e-book readers, and food stuffs among others. On the other hand, services offered to customers by Amazon include cloud printing and online streaming among other digital online services. The company conducts its business transactions through its website, Amazon.com. However, The Company is in a competition race involving several other related companies. Some of the primary competitors are Walmart, Costco, Target (NYSE:TGT, Alphabet (NASDAQ:GOOG), among others. These competitors are challenging to Amazon’s operation since they offer several similar retail goods and services as offered by Amazon. Besides, Amazon has been able to maintain a sustainable development due to its strategies as explained under its supply chain and logistics worldwide. Generally, amazon is maximizing on online services. Therefore, it has less physical hardwires in which it stores its commodities. Amazon success has been and is still highly dependent on its logistics and supply chain management. The supply chain management and logistics cove different perspectives under which the company runs. These perspectives include manufacturing, technology, transportation, innovation and delivery services. The company utilizes opportunities under this perspectives to leverage time inconveniences and enhance customer satisfaction.

Amazon’s supply chain and Logistics

Amazon’s supply chain and logistics has allowed the company to maintain great performance despite the existing market competitions. Its supply chain is focused on maintaining an efficient management of delivery of goods and services to customers. This has been possible through ensuring a proper working delivery and distribution network linking the company and its customers. Continued innovation has been a strong weapon and pillar supporting the company’s supply chain. Amazon, through its software engineering employees has been able to make several innovations that ease the transactions between the company and its customers. Efficient delivery means delivering the ordered goods and services to the right place and good condition using the shortest time possible. Lately, Amazon has been able to ensure the same, thus overtaking its competitors in the field.

Processing in the company’s hardware has been digitized to boost efficiency. For instance robots are used in hardware to perform several tasks. One of the tasks handled by these robots is the movement of commodities within the hardware. The robots are instructed by a well-developed network system. Therefore, this is one of the strengths that endowed to the company to be able to outdo the competitors. These robots transfer goods for manual picking by employees for processing. This has helped save a lot of time in the company. Secondly, some robots are designed to participate in the production process. For example, packaging in Amazon has been made easy since it has been automated using these robots. The robots have the capabilities to work faster than manual workers. After packaging, the slow moving products are stored by use of the same robots. However, fast moving commodities are also stocked. The stock is meant to cover for any unexpected shortage that may arise in the market. Therefore, Amazon can be said to be one hundred percent satisfying to its customers in terms of production and delivery.

Specialization in production and distribution is the most essential aspect used by Amazon. Currently, Amazon is building more warehouses in the United States and the outside world. This construction of more warehouses is focused on improving specialization. In these warehouses, procedures are well organized and mechanized. While delivering goods and services to customers, Amazon uses fast moving trucks and other forms of transport to make the deliveries. There are four types of deliveries used by Amazon in the current worldwide market. Technology is seen to be a significant factor in promoting this specialization. The specialization aspect is evident by Amazon’s warehouse organization. Amazon decided to divide each warehouse into five storage areas. Each storage area is mandated to store particular category of commodities in the hardware.

The first storage area is the library prime storage. The storage is capacitated for books and magazines storage only. Secondly, amazon’s warehouse has a case flow prime storage section. In this storage category, broken case and high demand products are stored. The stored high demand products are essential since they serve whenever there is a shortage of the same in the market. The third storage capacity is the Pallet prime storage. This is where full case and high demand storage services take place. The other storage is the random storage. In this section, all uncategorized and smaller items are stored. Lastly, Amazon has Reserve storage. This is where products with low demands are kept as they await order. Therefore, diversification of delivery services through these storage divisions boosts the efficiency of delivery and distribution in the company.

Additionally, Amazon has implemented a strategy meant to minimize time wastage while accessing their warehouses. The company came up with a trucking app to be used by drivers while visiting the hardware. The app is designed to take orders before the customers arrive at the picking point, hardware. The app then provides a feedback in form of a QR code. The code is essential in saving the customer’s time as well as reducing congestion in the hardware gates. This is because there is no need any more of doing manual check-ins. the drivers are able to use the code provided as a security to be allowed into the hardware. In some amazon’s stores, specific lanes have been built for Relay users only. While in the hardware, robots deliver the ordered commodities to them. Therefore, there is also no manual checkouts. At the end of the day, a lot of transactions will have been handled as compared to those companies who do manual check-ins and check-outs. Generally, Amazon is a more effective retail service provider as evident by reduced manual distribution and delivery processes.

In terms of manufacturing, Amazon provides sufficient support to most of its manufacturing sectors. The company is always focused on massive production. Large quantity production is aimed at supplying a wider market and winning a bigger market share. Therefore, Amazon is regarded as a giant in the manufacturing sector of United States. In the company, a wide variety of products is dealt with. It offers brands in relation to all ranges of products based on customer demands. Testimonials say that it is only in Amazon where one can find whatever product that he/she desires. On the other hand, the company applies economic concepts to minimize the cost of production. In the long run, Amazon is generating massive revenue as a result of its massive production.

In order to improve the company’s supply chain management in future, Amazon has mentioned the desire and efforts to implement the use of drones to deliver goods to customers. A short time of product delivery is the desire of every customer. Therefore, the drones are expected to deliver as per the customer’s order within thirty minutes. As compared to other competing retail companies such as Alibaba, this strategy will put Amazon mile ahead. This development of drone-based delivery system portrays Amazon’s efforts in adapting to daily changes in technology as well as maintaining better performance in the global market. Besides, Amazon has also announced future use of air cargo warehouses to improve efficiency as well. This will help reduce the number of customer visiting the physical warehouses currently. Instead, the customers will be able to obtain their ordered products while in their residential areas. The company’s supply chain management will also be boosted as Amazon is employing more software engineers who will in turn trigger new innovations in the company.

Amazon’s supply chain management strategies and logistics have several strengths that allow the company to do more than its competitors. This strength includes customer focus, powerful network system in the company, technological innovations, monopoly characteristic of the company and the ability to balance production volumes with cost of production. On the other hand, the supply chain management is faced with a lot of challengers. The first challenge is the high global competition. For instance, Amazon is unable to gunner many customers in china because of the existence of a domestic retail company, Alibaba. Secondly, Amazon suffers cost problems. Automation of manufacturing, processing and delivery activities demand a lot of funding which in turn reduces the amount of profits in the company. Another problem is the high transportation costs concerning last mile delivery of services. This reduces the end profitability margin of the company. Other challenges include branding problems, technological changes and customer experiences in the market.

Conclusion

In conclusion, Amazon remains to be one of the largest retail companies in United States and worldwide. Its efficient use of proper supply chain management strategies and logistics has led to its success. Increase rate of innovation in the industrial supply chain management has allowed Amazon to give a send-off to low volume competitors. These innovations have lessened production and delivery time as well as congestion in its stores. Considering the kind of diversification and specialization in Amazon’s production process, it has become hard for other retail companies to emulate Amazon in the market. Reduced time delivery also has led to increased customer satisfaction. Therefore, Amazon gets an increasing number of customers daily while competitors may be losing. Amazon has also enjoyed a competitive advantage through delivering its products directly to customers unlike some who use third party deliveries. In future, Amazon is planning on maintaining its course towards efficiently attaining its mission. Implementing drone-based delivery system will be the most significant event that has ever happened in the retail industry. Therefore, a successful combination of technological activities in Amazon Company has made it a leader in the Retail industry.