Introduction
Supply chain management is a crucial constituent of any retail business entity. The smooth flow of operations within warehousing, inventory, transportation, and delivery is key to successful performance and customer satisfaction. Amazon, as one of the leading online retail companies, demonstrates significant advancement in its supply chain management. In this paper, general information about the company, its supply chain strengths and weaknesses, innovations, and perspectives for future improvement will be provided. A broad discussion of the strategic decisions made by the authorities of Amazon will be presented to introduce Amazon’s transportation improvement plan.
Demographic Information About the Company
Amazon is an American online retail company that has become a leading entity in the worldwide market of online product selling. It was founded in 1994 as a retailer of books (Sharanya & Nair, 2018). The headquarters of the company are located in y based in Seattle, Washington. The current range of Amazon’s products varies from books, computers, and goods for gardening to media, such as e-books, films, music, and others (“Amazon.com Inc.,” 2019).
Also, the company offers services of personal shopping, direct delivery to the client, and an accessible system of online payments. The number of employees in the United States is estimated to be approximately 275,000 people; however, the investments made by the entity have led to the creation of 680,000 jobs in the country (“About Amazon,” 2019). Amazon’s strategy is to create a favorable economic environment for small businesses that would enable efficient and reliable service and product delivery for the customers.
The Relevance of the Supply Chain to the Company’s Strategic Goals
The supply chain utilized by the company enables creating transportation opportunities from the place of the product’s origin to the location of consumption in the shortest period. The entity initiates such programs as Amazon Flex and Delivery Service Partners to encourage small businesses participation in free and fast delivery of products (“About Amazon,” 2019). Overall, technology and artificial intelligence are identified as the essential components in the supply chain management utilized by Amazon (Fawcett, Jin, Fawcett, & Bernardes, 2018; Onyusheva & Seenalasataporn, 2018). The robotic technologies enable the immediate automatic transition of the information about order placement and its shipment to a customer.
Warehousing includes a wide system of places for product storage situated closely to large residential areas so that the products can be available at any time. Effective vendor management enables a continuous supply of goods to the company (“Planning the Amazon experience,” 2019). Such an approach to supply chain management is relevant to the company’s strategic goals which prioritize technological advancement and customer satisfaction. The effective utilization of such a strategy allows Amazon to grow as a retail company and provides promising perspectives for future development and competitiveness.
The Strengths of the Supply Chain
Evidently, the strength of this supply chain is its ability to satisfy both vendors and customers by ensuring successful performance and profit for Amazon. In more detail, firstly, the system of warehouses and distribution centers, which are located in different parts of the world close to large cities, contains all necessary products that might be ordered (Sharanya & Nair, 2018). Secondly, strong logistics enables fast and most efficient delivery options. Thirdly, the segmentation of customers and the price differentiation system provide an opportunity for faster shipment of the order (Onyusheva & Seenalasataporn, 2018).
Lastly, a range of partners which cooperate with Amazon allows for timely distribution of products and their availability on demand according to the pull strategy. All these advantages in the supply chain make Amazon the leader in the online retail market.
The Weaknesses of the Supply Chain
As for the weaknesses, it seems relevant to mention that Amazon uses other delivery companies (FedEx and others) services to transport its products to the customers. Such a strategy enables creating a wide partnership framework but also might impose reliability challenges. In addition, the automation of the warehousing and the attraction of robotic systems and technologies are expansive and impose significant expenditures for the company on a regular basis.
Metrics Utilized by the Company for Its Supply Chain
The utilization of specific metrics allows for a company’s successful assessment of its supply chain and change implementation if necessary (Christopher, 2016). The metrics which apply to Amazon’s supply chain management include inventory velocity, which contributes to the optimization of warehousing of the products with acute attention paid to those with the most and least demand. Perfect order to customer also shows its significance for the analyzed company, since Amazon prioritizes smooth delivery of products to its clients without any incidents. Also, due to the fact that Amazon has created a significant system of partners and small businesses which cooperate within one corporation, perfect order to vendor metrics helps to identify the efficacy and performance parameters of the cooperating entities.
Supply Chain Initiatives and Innovations Implemented by Amazon
Amazon has undertaken a series of initiatives and innovations in the sphere of supply chain management, which have contributed to its business success. One of the initiatives introduced by the company is same-day delivery, which was first implemented in 2005 and is still available for customers in the USA (Sharanya & Nair, 2018). Another Amazon initiative relates to the creation of the prime members’ free two-day delivery. This shipping strategy allows for increasing revenue and investing in the following adjustment of the delivery program to the demand of the clients. It is estimated that “over 100 million consumers pay $119 per year to participate in the Prime program” (Fawcett et al., 2018, p. 2).
Amazon has opened a number of Prime Now delivery hubs in big cities. Also, Amazon initiates outsourcing programs to enhance the efficacy of its operations. As for innovations, the application of new technologies is the key to the company’s success. One of the projects that the entity works on is the opportunity to “use drones for rapid delivery if regulatory approval is obtained” (Sharanya & Nair, 2018, p. 39). These initiatives and innovations set high benchmarks for the competitors and change the whole design of the online retail business.
Supply Chain Initiatives and Innovations that Amazon Should Consider
The extensive utilization of technology, logistics, and partnership programs leaves little space for recommendations. However, the advancements in the world of business set their requirements even for such successful companies as Amazon. Therefore, an initiative that the entity should consider is related to the transportation means that the company is utilizing for order delivery. As it has already been mentioned, Amazon partners with FedEx and other delivery service corporations to ensure its fast and comfortable shipping for the customer’s satisfaction. However, it is recommended for the company to engage in the development of its own means of delivery, which would minimize the inclusion of third parties and thus increase the reliability of the business, as well as its brand recognition.
The Next Step to Improvement of the Supply Chain
In order for Amazon to improve the supply chain and utilize the recommended initiative, it should invest in the development of its own end-delivery means which would be visible to the customers. It is anticipated that brand recognition will be greater if the customers perceive the company’s logo when connecting with the ultimate delivery point. Therefore, the company should start with the implementation of partial delivery by company-owned transportation means on its way to the broader implementation of the initiative. It is anticipated that the freight flow will not change under the influence of this recommended plan; however, the customers’ recognition of the company will contribute to the popularity of the brand.
Conclusion
To sum up, Amazon is a global online retailer that has originated in the USA and expanded throughout the world. Its supply chain embraces a wide range of warehousing that use the latest advancements in logistics and technologies to operate the order delivery in a fast and most effective manner. The developed system of partner cooperation and the inclusion of small businesses all over the world has allowed Amazon to reach any customer in a two-day time.
Therefore, the Prime delivery programs and delivery hubs are applied to supply products to the clients fast. The area for recommendations is related to brand recognition which might be limited due to the in-sourcing strategies of delivery services. It is anticipated that the development of Amazon’s own means of end-delivery will expand its influence on the market and benefit the corporation as a whole.
References
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Christopher, M. (2016). Logistics and supply chain management. London, United Kingdom: Pearson.
Fawcett, S., Jin, Y. H., Fawcett, A., & Bernardes, E. (2018). Technological game changers: convergence, hype, and evolving supply chain design. Production, 28, e20180002. Web.
Onyusheva, I. V., & Seenalasataporn, T. (2018). Strategic analysis of global e-commerce and diversification technology: The case of Amazon.com Inc. The EUrASEANs: Journal on Global Socio-Economic Dynamics, 1(8), 48-63.
Planning the Amazon experience. (2019). Web.
Sharanya, & Nair, S. V. (2018). Supply chain management system of Amazon. International Journal of Latest Technology in Engineering, Management & Applied Science, 7(1), 37-40.