Supply Chain Management System of Amazon

Supply Chain Management System of Amazon

A supply chain is an organization’s network that involves people, activities, resources, and procedures used to move products or services from the supplier to the consumer. Supply chain management involves efficient processes through which a company plans and coordinates the flow of goods from materials to production and distribution. Companies can maximize the flow of information and products by integrating the planning and implementation procedures. Some of the aspects coordinated through a supply chain management system are; logistics, demand planning, sourcing, managing the inventory, and production. For a company to gain a competitive advantage, it should use strategies and specialized software in managing its supply chain. Supply chains are complex to manage since they require collaboration and effective communication between the partners and stakeholders. For a supply chain to be effective, it requires some consistency in leadership to bring experience, strength, and stability in the company (Davis, 1993).

Technology provides mechanisms of excellent management of a supply chain. Businesses can track inventory, strategize, organize, and plan with ease through specialized software. The network design of a supply chain is a crucial factor in determining its efficiency. Valuable links create healthy interactions and help the company meet its objectives and bring customer satisfaction. Amazon has become a leading supply chain in the world because of its simple and effective process of selling and delivering goods to its customers. Amazon’s business strategy to focus on streamlining the logistics and distribution processes for products has made it experience impressive growth. The company has heavily invested in reducing the time taken to deliver products. The use of drones to supply products is a fantastic technology that will transform Amazon’s delivery services. Amazon is a global leader in online commerce because of superb digital marketing, impressive delivery time, competitive prices, variety of products, and excellent customer services (Chiles & Dau, 2005).

Amazon’s primary transportation objective is to deliver its products to customers within the shortest time possible. Also, the company is diversifying its business by running transportation and logistics services. Amazon uses cargo planes, truck trailers, and vans to deliver products, and soon drones and other high-tech strategies will be used to supply goods to customers directly. The company competes directly with shipping companies like FedEx Corporation and United Percel Service Inc.

Amazon’s supply chain management system is simple; the customer first creates an account and logs in to the system to place orders by adding products to a shopping cart. On checking out, the customer enters the billing and shipping details and completes the order. In the backend system, the requests go to Amazon’s warehouses, where the workers get red light signals with the order details. The items move to a distribution center for sorting and matching the product bar codes and the orders. They are then put in a box, sealed and weighed ready for shipment and delivery. Computer algorithms predict the kind of products people need in a region, and they are supplied to a warehouse where a customer can easily pick them. The ordered items are then packed and put in a delivery truck. The entire process takes minutes from the time a customer completes an order to when the product is shipped (Chiles & Dau, 2005).

A warehouse is a storage and distribution facility for goods. It’s a place where orders are sorted, packaged, and securely kept. They help in price stabilization and the regular production of goods. Amazon has an excellent warehousing strategy that ensures the ease of product access from anywhere in the world. The warehouses are in strategic metropolitan places and densely populated areas. They are also fully equipped with inventory that ensures that supply meets the demand. To quicken the process of sending and delivering products, Amazon also has stores in smaller areas. Optimization of the warehouses is done by creating five storage areas where packing robots and team members instantly move and organize items to be delivered. The Library prime area stores magazines and books, the Pallet prime storage keeps full case items that are on high demand, Case Flow Prime section stores goods with a broken case with high demand, and Random storage space keeps things that are small and have average demand. Reserve storage keeps items that have irregular shapes and are rarely needed (Leschly et al, 2003).

Amazon owns its storerooms and most of its inventory. Many retailers do not own warehouses, but they either rent or lease. For effective delivery of orders, third-party firms ship products to retail stores or customers and also manage the warehouse inventory. Amazon owns and operates an enormous space where it stores products that they sell and even items that other businesses sell. For instance, towards the end of 2018, Amazon had 288 million square feet space. The scalability strategies and customer satisfaction factors have guaranteed the success of Amazon.

References

Chiles, C. R., & Dau, M. T. (2005). An analysis of current supply chain best practices in the retail industry with case studies of Wal-Mart and Amazon. com (Doctoral dissertation, Massachusetts Institute of Technology).

Leschly, S., Roberts, M. J., Sahlman, W. A., & Thedinga, T. (2003). Amazon. Com 2002. Harvard Business School Cases.

Davis, T. (1993). Effective supply chain management. Sloan management review, 34, 35-35.

Chopra, S., Meindl, P., & Kalra, D. V. (2013). Supply chain management: strategy, planning, and operation (Vol. 232). Boston, MA: Pearson.

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