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The supply chain in the plan is designed to deal with problems of low profitability and lack of physical resources in Amazon. It will also address the need for personalization of services and greater consumer reach for Mobil.
The new integrated network between the two firms will be focused on offering consumers sales services for twenty four hours. Although, Amazon was already doing this, now Mobil will also get the opportunity of providing such services as well (Miliotis, 2010). Additionally, this new supply chain will be focused on offering direct sales to clients.
Mobil will not just focus on its traditional supply chain partners such as wholesalers, retailers and the like. Now the firm can get a chance of dealing directly with consumers and hence be better able to personalize its services as well as customize some of its offerings. The plan will involve the collection of information from a variety of sources so technology will be playing a critical role here.
The amount of time needed to get material from either firm to the market will be substantially reduced. Amazon has traditionally been managing supply chains for other companies so it would greatly benefit by adding yet another outlet to its business. Amazon will use a huge share of its resources in order to sell Mobil’s good and then deduct a portion of its profit.
To this end, Mobil will be saved from excessive inventory and will be exposed to a wider client pool than it would have been through its traditional outlets. Mobil on the other hand already possesses warehouses. It will therefore provide Amazon with yet another opportunity to increase its physical supply chain network (Exxon Mobil, 2010).
Also, because transportation costs have always been a problem for Amazon then the latter organization will tap into the resources already possessed by Mobil. Little information structure investment will be needed because Mobil will take advantage of what Amazon has set up for itself.
It should be noted that both these organizations have been having a hard time tapping into their potential and it would probably be best for them to solve this problem by merging. The two organizations will also need to come to an arrangement of what the right price will be for their products.
Recent reports have shown that Amazon’s overemphasis on free shipping and affordable prices have compromised on its profitability. In order to avoid a repeat of the same, these two parties will come up with realistic prices for their commodities. Lastly, the two companies will focus on handling the returns of their investments because there are always immense returns on ordering through the use of such a model.
Pros and cons of the plan
Since formation of an integrated supply chain network between Mobil Oil and Aamzon.com involves bringing together two separate corporate cultures, then this may prove to be a disadvantage. There should be some resemblance between the two organizations and when this is lacking then chances are that trust will be lacking between the two groups.
Another issue is the need for thorough planning before implementation of the process. Stakeholders from Amazon and Mobil oil need to think of all the logistical needs, inventory needs, information needs and capacity needs of the integrated network before implementing it. Failure to do so could result in bottle necks in execution. Furthermore, there may be a debate over who will be in charge of operating controls.
One firm may feel as though the other is dominating. In relation to the latter problem is the issue of extendedness. Perhaps the time, resources and time dedicated towards this integrated network will not be able to yield immediate results. Therefore, the two firms need to agree on the extendedness of their relationship by getting into a contract.
The major advantage of this plan is that the gains that Amazon was repeating from its e-supply chain can be shared with Mobil oil. On the other hand, the profitability that Mobil oil was enjoying can also be enjoyed by these respective firms. There will be mutual sharing of the pros and cons of the supply chain (Miliotis, 2010). Even the burdens that each company’s supply chain was exerting on both firms can now be shared and reduced.
Also, these organizations will greatly benefit from information exchange. Amazon.com has not reached or tapped into its full potential in supply management so it will need as much information as it can get in order to improve. Mobil on the other hand has been dependent on the traditional supply chain model.
The best way of dealing with inefficiencies in both organizations is to merge the two systems together and hence establish a superior supply chain network. This network will also provide a way of enjoying costs savings for Mobil oil and Amazon. The two organizations will be in a position to give accurate responses, optimize their facilities as well as optimize the levels of stock that either of them selects.
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The overall performance of these firms is likely to go up because both of them will not just be using traditional measures of success to assess the effectiveness of their supply chain.
Traditional measures here include lead times, inventory costs and correction or detection of defects. Non conventional performance measures in this case refer to customer satisfaction, customer contribution to product design, long term partnerships and good information use.
The integrated supply chain network between these two companies is designed to optimize the current resources that the two organizations have while still making sure that the missing elements in these supply chains are efficiently handled.
Exxon Mobil. (2010). About the Company. Retrieved from https://corporate.exxonmobil.com/
Miliotis, P. (2010). Supply chain and e-supply chain. Web.