Amazon Supply Chain Management ✓ Solved

Amazon Supply Chain Management

Supply Chain Management (SCM) is the skill and knowledge of coming up with plans and enhancing the ways of acquiring, changing goods to finished products, and supplying them to the consumers. Corporations ensure that they produce merchandise of high quality, and the same reach customers promptly. The main reason that motivates businesses to incorporate SCM strategies in their activities is to make sure there is a productive, timely, and profitable link between business associates. Amazon has incorporated SCM in their day to day activities.

The firm has afforded its clients the chance to buy available stock in its online stores as well as the various retail outlets. To gain customer loyalty, the firm ensures that goods reach their clients without delay in the fastest time possible. Amazon is a model business venture that has utilized SCM.

Planning is a significant factor of SCM that ensures that operations run smoothly and sales are realized. Both the sales and operation processes of planning have enormous impacts on its SCM system. Also, communication plays a dominant role in the SCM system in ensuring that the supply and demand needs of the market are met. It requires a modest SCM structure with practical strategies for it to be successful. Supply chain integration is only fruitful when a client buys goods.

Intermediate and long-term strategies put in place at Amazon are very crucial in the running of its SCM structure. For example, it would be necessary for the board of management to identify the market trends and forecast the future market dynamics using the time-series evaluation. Intermediate prediction ensures the business can have a forecast of how the market will be between three months to two years. In long-term plans, estimates exceeding two years are useful. In our case study of Amazon, the operations department can effectively use the median forecast to enable it to meet the short-term demands of its customers.

It will also allow them to understand the effects of periodical changes in business, together with the long-term overall trend forecast. These forecasts enable Amazon to follow up on goods that are bought mostly and refill their shelves when the need arises.

Amazon has exploited the SCM strategies of logistics, shipping, and warehousing with tremendous success. The company revolutionized online marketing by providing a simple online platform for enabling clients to make orders for their goods. With the click of a button, the clients will receive their orders at their doorstep within the shortest time possible.

The movement of goods quickly has been realized due to the collaboration between Amazon and various transportation companies that include ships, trucks, airplanes, and even drones. The firm has left a long-standing mark in the business world by transporting for free goods in transit. The company has adopted the strategy of quick delivery of goods while guaranteeing safety and therefore takes pride in offering one of the most well-organized shipment methods.

The storage of its products in warehouses ensures that the company can supply goods on the same day provided the customer is within the location where the goods are stored. For example, Amazon boasts of over fifty warehouses in the USA that guarantee timely delivery of customer orders.

Amazon has a global reach, and this has enabled it to incorporate worldwide sourcing and procurement in its SCM scheme. These tools have ensured tremendous success in their business approach. Due to trusts between Amazon and its vendors, business people can market their goods in Amazon on a contractual basis. This procurement process involves entering into a contract where the seller must meet specific targets in the number of products they sell during that period, pricing tactics, and the legal requirements to be met.

The process is a competitive one, whereby the e-procurement dashboard of the company enables the vendors to purchase goods on merit. Sellers who buy products in bulk are given better discounts, and their buys are shipped faster.

To reduce the logistical problems, it faces, Amazon subcontracts other firms to do logistics for them. Before, the company depended solely on external logistical firms, but they have started their logistics to minimize the operation costs as well as reducing overdependence on foreign firms. Also, crowdsourcing has reduced the cost of supplying goods by reducing the logistical costs and revolutionized the third-party logistics business.

One of the problems facing Amazon is the delivery of goods late. In the first half of the year 2017, 4.6% of its products arrived late to the clients, and this year, it stands at 16.6%. It is a worrying emerging trend where customers have started losing trust. However, these strategies have made it possible for Amazon to be the link to third-party vendors.

Amazon is among the leaders when it comes to e-commerce trading. This is aimed at enhancing their competitiveness. The tactics include quick loading of its webpage, user-friendly dashboard, product reviews, and product endorsements. The dynamism of its e-commerce platform has enhanced its status among business people by guaranteeing business at the touch of their button. The positive reviews guarantees returning customers.

The company has a service that expedites same-day or quicker shipping for those with Prime membership. The use of the tactic has encouraged people to subscribe to this service and reliance on different sellers on Amazon for the shipping of their goods.

Amazon has adopted supply chain integration with tremendous success. The company comes up with tactics that ensure that the customer receives their goods. The business giant regularly evaluates the market and incorporates tactics that offer it a competitive advantage. It has included ways in which they can get the best logistical services for the shipment of its products from its distribution centers.

In the U.S, the company has a workforce of over 40,000 personnel. This way, it addresses the supply and demand issues of the market. The company is guided by ethics and ensures that product description matches what the customer gets, and customers do not wait for too long to get their products.

Also, in case the customer is not satisfied, the system has a return policy, or they can revoke their orders. Amazon has a model supply chain system that should be emulated. The firm’s SCM has been so effective, thus guaranteeing customer devotion due to the fast dispatch of goods. Its e-commerce platform is continually evolving to meet the demands of the market and can be considered among the inventive in the business.

However, challenges like late deliveries are due to be addressed, and customers can be guaranteed quality service at the comfort of their homes.

Paper For Above Instructions

In recent years, the significance of Supply Chain Management (SCM) has escalated as businesses strive to optimize operations and enhance customer satisfaction. Among global market leaders, Amazon.com Inc. has emerged as a principal innovator in SCM practices. Known for its efficient logistics, real-time inventory management, and customer-centric approaches, Amazon exemplifies the effective integration of technology, process optimization, and strategic supplier relationships within its SCM framework.

The integration of SCM within Amazon's operations is pivotal not only for sustaining customer loyalty but also for maintaining a competitive edge in the ever-evolving e-commerce landscape. Amazon's objective focuses heavily on meticulous planning, coupled with robust communication channels among all stakeholders involved in the supply chain, which facilitates meeting consumer demand promptly and accurately.

Planning and Forecasting

Effective planning is integral within Amazon’s SCM, as it directly influences operational efficiency, sales forecasting, and inventory management. Utilizing sophisticated algorithms for demand forecasting and inventory optimization, Amazon engages in periodic analyses to adapt to market fluctuations. This capability for short-term forecasting allows for agile responses to changing consumer behavior, while the long-term forecasting presents insights that pave the way for strategy formulation (Jacobs & Chase, 2014).

Logistics and Transportation

Logistics is a cornerstone of Amazon's supply chain strategy. By establishing logistics networks that utilize various transportation modes—such as trucks, airplanes, and drones—Amazon has revolutionized deliveries, thereby earning its place as a pioneer in last-mile logistics (Schreiber, 2016). Ultimately, the alignment of warehousing locations with customer bases minimizes delivery times and optimizes resource utilization, which proved essential during high-demand periods, such as holidays.

Global Sourcing

Amazon's global sourcing initiatives redefined how products are obtained and supplied, fostering a competitive procurement process through trust-based vendor relationships. Utilizing an efficient e-procurement system, Amazon enhances collaboration among suppliers, creating competitive pricing strategies and streamlining inventory flow (Amazon Business, 2019). This framework facilitates bulky orders through attractive discounts, resulting in efficient inventory management and improved profit margins.

Market Dynamics and Customer-Centric Approach

With an intricate understanding of market dynamics, Amazon utilizes innovative technologies to gather consumer data, enabling tailored shopping experiences. The incorporation of feedback loops through product reviews and ratings cultivates a sense of community while generating trust among new customers (Forbes, 2013). Consequently, this customer-centric approach aligns perfectly with Amazon's SCM, ensuring that user demands and preferences dictate product offerings.

Challenges and Areas for Improvement

Nonetheless, the scale and complexity of Amazon's SCM come with challenges. Late deliveries remain a concern, as statistics reveal that 16.6% of products were delivered late in 2018, up from 4.6% in the previous year (Aouad, 2019). Prompt interventions and strategic adjustments are essential to mitigating customer dissatisfaction arising from delivery mishaps.

Conclusion

In conclusion, Amazon's SCM stands as a benchmark for businesses worldwide. The company has successfully integrated advanced logistics, global sourcing, and customer-centric principles at its core to maintain an unprecedented level of operational efficiency. Continuous learning and adaptation to market needs, along with deliberate tactical adjustments in logistics, ultimately fortify Amazon’s commitment to delivering quality service. By addressing challenges such as delayed deliveries, Amazon can reinforce customer trust and loyalty while ensuring its flagship SCM model remains relevant amidst evolving market demands.

References

• Amazon Business. (2019). Integrating your existing eProcurement system with Amazon Business. Retrieved from [URL]
• Aouad, A. (2019). Amazon is facing challenges in its in-house logistics buildup (AMZN). Retrieved from [URL]
• Farahani, R. Z., Asgari, N., & Davarzani, H. (Eds.). (2009). Supply chain and logistics in national, international and governmental environment: concepts and models. Springer Science & Business Media.
• Forbes. (2013). 6 Things Online Retailers Can Learn From Amazon. Retrieved from [URL]
• Hullinger, J. (2015). 13 Secrets of Amazon Warehouse Employees. Retrieved from [URL]
• Jacobs, F. R. & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New York: McGraw-Hill.
• Martínez-López, F. J. (2014). Handbook of Strategic e-Business Management. Berlin, Heidelberg: Springer.
• Schreiber, Z. (2016). Amazon Logistics Services - The Future of Logistics? Retrieved from [URL]
• Statt, N. (2019). Amazon is spending billions on shipping as it makes Prime one-day delivery a reality. Retrieved from [URL]
• Zanjirani, F. R., Asgari, N., & Davarzani, H. (2009). Supply Chain and Logistics in National, International and Governmental Environment: Concepts and Models. Heidelberg: Physica-Verlag Heidelberg.