Distribution and Replenishment Processes Amazon.com replenishes its distribution centre inventory through a variety of suppliers.

Suppliers for their media product segment are large book distributors such as Ingram Book distributors, Baker and Taylor, as well as other smaller book distributors. CD and DVD distributors also are utilized as well as other wholesaler partners. Publishers, CD, and DVD manufacturers are also parties that replenish products to Amazon.com distribution centres Amazon.com utilizes a Sales and Operations (S&OP) planning process to determine forecasts for each product that it stores in its distribution centre inventory. Amazon.com keeps track of its inventory position in real-time based on warehouse receipts and shipments. Purchase orders are placed to suppliers based on the forecasted amount needed minus the current inventory on hand in the warehouse. The distribution process is initiated by a customer ordering from the Amazon.com website or an affiliate website. Amazon.com's IT systems determine which Amazon.com distribution centre to ship the item from or whether to ship the item from a drop shipper. The order sourcing decision is determined by product availability and the desire to minimize transportation costs in fulfilment costs. Drop shippers package items in Amazon.com packaging and deliver it directly to customers. Amazon.com distribution centres can ship items directly to customers or through transportation hubs. Orders are delivered to transportation hubs by Amazon.com contracted LTL or TL carriers. Upon arrival in the hub, packages are sorted and routed to small parcel carriers. Distribution centre Inbound Process Amazon.com receives products from its distributors, partners, manufacturers, and publishers. Receiving is typically at the pallet or case level. In some cases, Amazon.com receives mixed cases that include many SKUs. Product is received and routed for put away to a location type based on its SKU profile Items are received and routed directly to prime storage locations or sent to reserve storage. Item types are also taken into account at receiving. If an item is "sortable", it comes in a mixed case with other items and needs to be sorted into unique SKUs before putaway. "Full Case" items arrive as a case of homogeneous products and can be putaway as such. "Non-conveyable" products are too large or awkward to flow smoothly on automated conveyors and thus are routed to unique locations.

Distribution Centre Outbound Processes. Amazon.com's DC outbound processes support the fulfilment of customer orders placed through Amazon.com or affiliate websites. Picking, sorting, packing, and shipping constitute the outbound processes of customer fulfilment in Amazon.com distribution centre operations. In Amazon.com operations, pickers select products from forward pick locations (prime locations) to start the order fulfilment process. Depending on the item and the volume requested, an item may be picked from library shelving, case flow racks, or pallet racks. Picking accounts for 50% of operating costs in typical warehousing environments. Therefore, picking productivity is generally the highest priority initiative when companies assess warehouse productivity improvements. Picking productivity is defined as the number of units picked divided by the number of labour hours involved in picking. Among the costs associated with picking, travelling to and from picking locations accounts for 55% of labour. For this reason, initiatives to minimize picker travel and improve picking productivity are essential to reducing Amazon.com's fulfilment costs. Amazon.com uses both full-path picking and zone picking to determine the scope of picker travel. Full-path picking is when a picker can travel to all locations within the pick area to pick items for orders. Zone picking confines the potential travel to a subset of locations within the picking area known as zones. Amazon.com uses single-order, batch, and cluster picking in their operations in an effort to reduce fulfilment costs. Single order, batch, and cluster picking are ways to pick orders. Full-path and zone picking are methods to define the scope of the pick area. Transportation Due to order profile, Amazon.com has relied heavily on small parcel carrier partners to deliver orders to customers. Gaining transportation efficiencies in the internet retail model is difficult due to a large customer base that is highly distributed and the small number of units per order by the each customer. However , Amozon.com has determined an innovative way to save on transportation costs through leveraging their scale and service windows.Amozon.com has several transportation hubs located throughout the US that they call injection points .Amozon.com does not disclose the exact location of these hubs, but it is understood that they exist in heavily customer concentrated areas.these hubs serve as crossdocking facilities to transfer packages from lower cost long-haul carriers to their lastmile delivery partners to save on overall transportation costs.

The process begins in the distribution centre where orders are sourced based on their proximity to the customer location to save on transportation costs. Orders are aggregated and released in batches so that there are efficiencies in internal & outbound distribution centre processes. Amazon.com does not have the opportunity to achieve the scale to justify LTL or TL carriers on a per order basis. However, by aggregating their orders going to a specific customer region, Amazon.com can contract LTL or TL carriers to provide long-haul transportation from the distribution centre to the transportation hub. Once the long haul carrier arrives at the transportation hub, the packages are routed to the appropriate parcel carrier for last mile delivery. In order to succeed with this strategy, Amazon.com needs a sufficient scale of customers in an area and a service window that allows for order aggregation. The service window is the amount of days within which Amazon.com promises delivery. Amazon.com offers customers different shipping options for different prices on its website as well as free shipping for most orders over $25. In this way, they provide customers with an incentive to increase the service window. Order aggregation at the DC and longer lead time long-haul transportation both are dependent upon a certain service window to achieve the scale necessary for transportation hubs to succeed.