MANAGEMENT AND SHOP FLOOR PRACTICES AT AMAZON’S WAREHOUSES

MANAGEMENT AND SHOP FLOOR PRACTICES AT AMAZON’S WAREHOUSES

                                                                        Introduction

There are a lot of businesses in the world today that deal with the storage of products on a large scale. As a result, organizations that have warehouses prefer using the shop floor so that they can bring out the usable, tangible, and superior quality products as the specification form the customers. Most of the organizations that deal with the selling of products store them in warehouses so that they can have easy inventories and fewer damages. However, when it comes to logistics, small businesses use the warehouse so that they can manage the supply chain. Despite warehouses being important for the big organization, it is also known to be essential for small businesses. This is because it provides a central location for products where customers can request for orders, and the products are stored before they are distributed to them. Majorly, a warehouse is introduced by large or small businesses that deal with large amounts of products that came from oversees through shipping. The products then get identified, sorted, and dispatched to their relevant locations. Basically, warehouses are used to secure and minimize the damages of the products. On the other hand, there are other spacially storage units that different organizations use called shop floor warehouses. These are unique kinds of warehouses that can store and control the material need for the production process. Generally, the shop floor warehouse is linked to a work center where the products needed for operations can be pulled from the inventory, which again is linked to the location where it needs to be distributed. An organization that uses a shop floor warehousing is Amazon. As a result, the following paper will discuss shop floor practices at Amazon’s warehouses with the use of scientific management theory. Contingency theory will be used where scientific theory fails to explain Amazon’s shop floor management practices.

Analysis of Amazon Company

            Amazon company is an American multinational technology company that was founded in 1994. The company is situated in Seattle, Washington, and is known as one of the big four companies, along with Apple, Facebook, and Google. The company is known in artificial intelligence, cloud computing, e-commerce, and digital streaming. Amazon established itself through venturing to technological innovations and mass scale. General, the company was founded by Jeff Bezos, whereby it began as an online market place for small products where people could buy and sell things to other customers in different areas all over the world. Later it expanded to selling electronics, furniture, and jewelry. Amazon company managed to grow beyond Walmart, which is the largest supermarket in the United States in 2015. Today it has grown to the point that it has its television called Amazon prime, Amazon music, Amazon Studios, and a clouding computing subsidiary.  The company has employed about 647 500 employees. Its total assets are US$162.648 billion, a net income of US$10.073 billion, and a revenue of US$232.887 billion.

Board of directors

The board of directors according to the 2019 include Jeff Bezos who is the President, CEO, and Chairman, Rosalind Brewer who is the Group President, and COO, Starbucks, Jamie Gorelick who is the partner, Wilmer Cutler Pickering Hale, and Dorr, Daniel P. Huttenlocher who is the Dean and Vice Provost, Cornell University, Judy McGrath who is the former CEO, MTV Networks, Indra Nooyi who is the former CEO, PepsiCo, Jon Rubinstein who is the former Chairman, and CEO, Palm, Inc., Thomas O. Ryder who is the  former Chairman, and CEO, Reader’s Digest Association, Patty Stonesifer who is the President, and CEO, Martha’s Table, and Wendell P. Weeks who is the Chairman, President, and CEO, Corning Inc (Galloway, 2017, pp. 26)

Corporate Culture

Amazon is considered as a customer-centric company that focuses on the fulling the needs of its consumers. This means that all the focused is directed to the comments and complains that the customers make so that they can improve the experiences to suit their needs. For this reason, Amazon launched a new that they use it to do online interviews so that they can help job candidates through the process. The Amazon company is guided by four principles, which include; passion for invention, competitor focus, long-term thinking, and commitment to operational excellence (Head, 2017, pp.22).

Amazon company is made up of different cost leadership strategy that has helped it to stay in the market. The first strategy is a low-cost structure. Amazon does not incur any cost that relates to running pf physical retail outlets. As a result, the online marketplace is more profitable because there is more selling of products. Secondly, the selection is one of the strategies that Amazon uses to gain more market place through gaining a profit by selling around 562.5 million of various products. The different range of the products that are sold through Amazon is the reason customers prefer it to Walmart. Thirdly, another strategy that Amazon uses is the third-party sellers. Amazon does not have its own products that it sells but forms a platform for other businesses. Amazon’s business model accommodates third-party sellers who can offer their merchandise.

The main competitors of Amazon

Amazon is one of the largest companies in the world that has ventured into the field of technology. Its branch of technology called Cloud is growing tremendously. However, there are main competitors such as Google, Microsoft, Salesforce, Walmart, eBay, Oracle, and Alibaba. Google is one of the largest search engines, whereby its primary source of revenue is through digital advertising and cloud services, which is one of the main sources of income too. It has about 11.85 Billion according to the statistics made in 2017. Secondly, Microsoft is known to be one of the makers of Windows OS and Microsoft Office System. It has a revenue of about 27.44 billion dollars. The growth has been driven by the growth in sales server products and cloud services (Hager et al., 2017, pp.243). Thirdly, Salesforce is known as the major player of the cloud battle and solution that have grown in popularity. It has a revenue of 839 crores USD. Fourthly, Walmart is one of the largest supermarkets in the United States that has extended its presence to foreign countries. It has a revenue of about 485.9 Billion dollars as of the year 2017.

Amazon’s Operations

            Due to the high demand for products online, Amazon has created operation management that makes sure that a product has been delivered to their customers no matter the location. Majorly most of the products that are sold are not manufactured by Amazon. Different business organizations tend to post the preferences and features of their products in Amazon, where customers from other places take the liberty of searching and to satisfy their needs. After the customer has selected and paid for the products, they are delivered by the manufacturers to Amazon warehouse and give to the customer’s location as per the day it was promised to reach the customer (Hitchens, 2019, pp.49). Products reach the fulfillment center by trucks, and the workers pick and scan them so that they can be put to their responsible area until customers come to pick them or they are delivered to them. Generally, before the products could reach their destination, they are stored in a warehouse where they stay until the departure time. Warehouses are very vital in making sure that Amazon has delivered goods to the appropriate place without any damage. Additionally, the warehouse has allowed Amazon to come closer to its customers, thus being of great help when trying to reach its target.

Shop Floor Warehouse Management

As the global market has increased, Amazon has been pressure to improve its excellence and efficiency in their operations. As a result, they have chosen to have warehouses, especially where their customers are so that they can be closer and provide products faster and in a short time. This has improved the efficiency of the company, thus making a remarkable improvement in meeting the demands of customers (Nekutova, Svadlenka, and Kudlackova, 2015, pp.40). On the other hand, warehouses on their own cannot be effective if they do not have well-trained management that will direct and manage employees in meeting deadlines. For an organization to have success in storing and supplying products to their customers, they need efficient warehouse management. Warehouse management is a system that supports the daily operations in a warehouse making sure that there are no damages and misplacement of products. In the case of Amazon, warehouse management is directed by different leadership system that makes sure that all rules and regulations are followed when delivering products to their customers. Therefore, warehouse management system helps Amazon company to supply stock according to the customer demand, maintain the facility so that goods can be protected, support the daman of the custom orders, and the management tracks inventory from the time it arrives at the warehouse to the time it comes to the customers. On the other hand, Amazon has looked forward to deploying different ways that they can grow their business, tract all the products easily, and serve their customers faster.

Scientific Management

           Scientific management explains widely how Amazon’s warehouse’s management operates when it comes to storage, and delivering of products (Schein, 2017, pp. 56). Due to the increase in demand of customers more, it has been a challenge for warehouse management to focus on fulfilling its promise to all its customers on time. As a result, the company has desired to embrace technology and its ability to improve efficiency and excellence for the company, thus making its customers happy and satisfied. According to scientific management, the introduction of technology in the business will be a great influence in increasing efficiency and excellence (Shead, 2017, pp.4). Generally, scientific management was formed in the 20th century as a form of a new model that would manage work. Managers looked for ways that would help to sort an organization, and operating framework to guide them when working the employees. Scientific management is also known as Taylorism; show management can focus on how to maximize worker output through detailed analysis. The aim of scientific management is to measure every action along the assembly line to have more knowledge of how it could be optimized.

As a result, Amazon warehouse management has embraced scientific management through the introduction of technology in their warehouses. Amazon has introduced automation in the operations that concern the storage, parking, and delivering products. Earlier, Amazon had the tendency to make their employees repeat the same task every day, thus causing more errors and higher costs of management. This has brought more concerns to the management that has looking for solutions. Amazon management thought of introducing machines that work in automation mode so that they can execute repetitive tasks faster and efficient. Machines do not have limits like human beings, thus affecting their efficiency. This process has been known by different organizations to be cheaper with fewer errors, which reduces the cost of warehouse maintenance. Generally, the concept behind scientific management shows that the most important thing about the management of a warehouse was time and motion. As a result, the automation process will be the best solution to manage and control the process of how time would be beneficially in making sure that all the products are delivered on time with less or no damages (Li, and Liu, 2016, pp.48). However, when companies such as Amazon try to do extreme things so that they achieve efficiency, then they affect their employees on the process. According to different reports from the media, Amazon warehouse management has not focused on making sure that their employees are taken care of, especially when it comes to the division of duties.

Many employees are forced to work long hours and hen found with a mistake they given a heavy penalty. Thus, this shows how the management does not care much about the importance of their employees. The employees have complained about unsympathetic bosses and the culture that is both cruel and unforgiving. Employees are complaining about how their health was affected because they are used to walk long distances in the warehouse, which is about one million square feet and roughly covers about 23 acres. This is a lot of land for someone to walk around on foot. One of the employees said that he used to walk about 1.3miles per hour, which is okay, but it becomes so extreme if one walks around for about 10 hours straight. The warehouse management monitors every step of the employees in everything they do so that if they make any mistake, they are taken into action. The profits that Amazon company makes in a year is much more than anyone can imagine. It has taken the lead in the market place despite the completions from other companies.

A company sells a share at about $500 with a revenue that is about to increase to $100bn annually. Moreover, the company has a market cap of nearly $250b. Additionally, the fact that Amazon pays its taxes on time has given it a great reputation than the stories that talk about its work practices. This means that it has more power in the business world to the point that there is not a bad reputation that can take it down, such as the mistreatment of workers. In terms of reputation, Amazon has been affected by stories that have raised about it on how it manages its employees. The media has been strongly critical of how Amazon operates, especially in the management area. Amazon does not care about how their employees are doing. This has made many employees quit their jobs because of their physical and mental health. According to the story from the New York Times shows that the response that the CEO Jeff Bezos gave means that the company knows what the employees, especially working in the warehouse, are being affected by the management systems (Kantor and Streitfeld, 2015, pp.74).

Amazon managed to introduce new wristbands that can track and record the ability of the movement of its employees in real-time. The system is described as a dystopia form of surveillance. Amazon has claimed that the remarks made by the journalist are not true, and they are based on misguided speculations. Generally, according to Amazon, the track is used to make inventory equipment from worker’s hands to their wrists. Amazon is using the concept of scientific management to monitor their employees’ work performance so that they can improve instructions to ensure that they are using the more efficient ways of delivering quality results. Employees have complained that the monitoring process has gone extreme to the point that workers are supposed to know how many seconds they are supposed to find an item, place it in the trolley, and scan the barcode. This process is becoming more tiresome to the employees because they are given specific time which they are needed to find an item before they get fired.

On the other hand, the scanners were developed because of controlling the behavior of the employee by measuring it, preventing slowdown, and giving managers time to create new performance levels. According to the manager’s claims, employers who work faster usually raise the bar for everyone and the slower employers risk of losing their jobs. This has cost many employees their jobs because of extreme measures that affect employees’ mental processes. However, using the concept of scientific management, an organization can develop a strategy that will cause a win-win situation between the employees and the managers (Robischon, 2017, pp.39). In the case of Amazon, the management should make sure that they have introduced bonuses on the employees that are doing their work faster according to the time that is set. This will make employees desire to work for and faster so that they can get payed bonuses; thus, their salaries will increase, and there will be a win-win situation for the mangers too. This is the best way of solving conflict in an organization that is mostly subjected to conflicts between the employees and the management.

Human relation theory

           Amazon has tried its best to satisfy their employees and customers at the same time because they are the most valued people in the company. Generally, human relation theory explains the relationship that is between the employees and the management and how they are important in the development and the growth of an organization. This means that employees are the number one priority despite different claims of mistreatment, especially in the warehouse’s sector. Amazon has been known to be more concerned about their employees as other successful companies are doing (Mayer, 2019, pp.38). As a result, Amazon believes that they could not have achieved where they are right now because of the efforts of their employees. In Amazon, all the employees are trained, their needs addressed, it has fostered a workplace culture and resolved conflicts between employees and managers.

Conclusively, Amazon is one of the largest online retailers that has provided products to different geographical areas making it easy for customers to acquire them. They have used special warehouses that capable of storing a large number of products and distributing them to their customers on time. Amazon has managed to grow to other countries through building warehouses that can accommodate products that customers have ordered. This makes it easy for people to receive a high quality product in any place around the world as long as they can do a transaction online. On the other hand, Amazon has used the low coast strategy to lower the prices, which will make people buy a lot of products within a short period of time. However, in trying to increase efficiency and excellence in managing their employees, there has been a conflict with the way managers practice their managerial act in the warehouses. With the introduction of new strategies, employees get affected because they think that the company targets them. Despite the conflict between the managers and employees, the company has used the concept of human relation theory to try to contain the situation. This shows how Amazon has managed to survive long in the market place as the leading online business in selling and delivering products to all its customers despite their geographical areas.

References

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