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Amazon.

com has come a long way since its founder and chief executive officer, Jeff Bezos, envisioned the company as a
virtual bookstore. It has evolved into an online retail giant that generated US $74.45 billion in revenues in 2013, much of
that coming from its support of more than two million companies that used Amazon to sell their products online and
distribute them to customers. Under the company's various programs, Amazon not only provides its customers with a
means of advertising and selling their products, but also offers to store those products in its fulfillment centers; pick, pack,
and ship them; and provide customer service, including handling returns.
Amazon keeps the most popular products in inventory. This gives Amazon an advantage that its rivals find hard to replicate.
Manages and ships not only its own inventory but that of other retailers such as Eddie Bauer and Target, giving it an
economy of scale that dwarfs its rivals. As it stands, Amazon can currently ship some 10 million products, compared with
Walmart's 500,000
In the process of developing its network to support those services, Amazon has built out an infrastructure that by one recent account now includes 145
warehouses around the world (84 in the United States, four in Canada, 29 in Europe, 15 in China, 10 in Japan, and seven in India), which collectively
account for more than 40 million square feet of space. Amazon has also has made substantialINVESTMENTSin material handling systems, including
the acquisition of Kiva Systems for $775 million in 2012. 1Kiva, now a wholly owned subsidiary of Amazon, designs robots, software, workstations, and
other hardware that has been used in the distribution facilities of companies such as Staples, Office Depot, and The Gap. The systems produced by Kiva
are expected to be an integral part of the distribution network now being developed by Amazon. Amazon has also made majorINVESTMENTSin cloud
computing. At the same time, the company has been developing transportation capabilities to support its Amazon Fresh same-day grocery business.
Much of Amazon's recent growth has been fueled by its Amazon Prime program and Amazon Supply operations. Amazon Prime, which offers "free" twoday delivery to its more than 27 million subscribers for US $99 dollars per year, doesn't come close to recovering Amazon's related transportation costs,
but on average Amazon Prime customers buy twice as much merchandise per year as do other customers. 2Amazon Supply, which provides a
marketplace for thousands of industrial suppliers, represents a major move by the retailer into the business-to-business space. Amazon advertises it as
offering 750,000 "essential" products for business and industry, with free two-day shipping for orders of US $50 or more and a 365-day return policy.
Amazon's increasing presence in this industrial space poses a real threat to incumbents such as W.W. Grainger and Fastenal.

warehouse management
transportation management
inbound and outbound shipping
demand forecasts
inventory planning

Amazon.com strategy of
inventory management
In 1999, Amazon had ten warehouses after adding new six
warehouses which increased capacity became over five million
square feet.
To develop its network, Amazon has built out an infrastructure that
includes 145 warehouses around the world (84 in the United
States, four in Canada, 29 in Europe, 15 in China, 10 in Japan, and
seven in India), which collectively account for more than 40 mn
square ft of space.
very well maintained and fully computerised inventory system
which led to easiness in dealing with management inventory
In addition Newton (2001) found that product distribution from
merchant to consumers would influence consumer decision to
order next items.
by increasing the number of inventory, Amazon increased
availability to satisfy customers

In addition, by adding several new facilities, Amazon


could increase its outbound transport performance by
reducing the distance and delivery time as the
warehouses were closely located to customers' houses
or offices.
By stocking a wide range of items and managing its
own inventory as well as adding several warehouses,
consequently Amazon could increase cost
responsiveness in order to satisfy customers
supply chain responsiveness is a capability to:
a. respond to wide range of demand
b. fulfil order in short lead times
c. manage a huge variety of items
d. develop highly innovative items
e. provide a high level of service
f. manage supply uncertainty

overall, increasing inventory on the basis of speculation and


increasing in the number of warehouses without improvement
in dealing with inventory led Amazon did not achieve
successful in managing the inventory in 1999.
In holiday season 2000, Amazon tried to increase efficiency of
inventory management. Pillai (2004) highlighted several
decisions they made such as:
a. Reduced the number of inventory based on demand
uncertainty
b. Increased range of product offering
c. Increased of efficiency of logistic by deciding which distribution
centre should stock particular inventory by considering
demand of distribution centre region.
d. Bought the books from publishers instead distributors to get a
good margin
e. Developed new software to accommodate region demand to
assist decision which distribution centre should stock products.
f. Reduce split shipment by reducing order which were delivered
from different warehouses and stocking several items which
customer usually buy together in one point.
g. Outsourcing shipping activities

In 2000, Amazon also improved itsinventory management performance


through location postponement. In location postponement, inventory
could be centralized in one strategic location where it could be
transported to possible destinations when demand is coming
When holding service levels is steady, location postponement can
reduce safety stock
Amazon has reinvented customer experience and expectations through
supply chain innovation, enabling it to ship packages to customers
within minutes of a received order while realizing significant savings
over a traditional labor-intensive distribution center. By strategically
placing distribution centers and leveraging revolutionary technology like
Kiva Systems, Amazon can cost-effectively deliver goods to the vast
majority of U.S. households within 48 hours for little to no shipping cost.
Amazons innovation has enabled it to significantly increase its market
share while putting enormous pressure on competitors.

In the supply system of Amazon, there is a unique approach about how


they handle their customers which they describes it as starting with the
customer and moving backwards.as depicted in the diagram above they
are customer focus and they are frugal which means, they spend much
money on things or items customers really like and lastly they are very
innovative in their supplynetworks where they constantly, brings in new
technology to assist with their supply chain network.
The customer centric nature and the success has also been partially
dependent and their largeness and corporate image. Amazon from its
beginning have acquired some many companies which includes mdb,
Lexcycle,askville,buy.vip,shelfari,smallparts,woot,cdnow,zappos,alexa,a
udible,pets.com and others.The replenishmentstrategyof Amazon
reflects mostly with understanding customers needs first and formost.
They do their stocking and inventory with customer preference than
have more variety of goods and than lower cost.

The diagram above illustrates the total supply networks of the global
retail giant Amazon. Step 1 shows when the customer places an order
in wherever location he may be. The order is than assigned to the
closest of the seven major distribution centers in the United States of
America .The next step is as shown in the diagram indicates that the
order is been shown red in the person whose item is ordered in the
warehouse it than creates ride conveyors through DC, the items is
been sorted out by a bar code and than the creates arrives at the
central point and bar codes of the products matched with orders, the
items sorted are than sorted automatically into ne of the many boxes
chutes into a box. As shown in the diagram the bar code identifies
customers order and than the customer order is packed taped and
weighed. The taped and weighed boxes are shipped by the United
Parcel Services and sent to customer between seven days.

From Scratch: Amazon Keeps Supply Chain Close To Home


Amazon's supply-chain applications communicate in real time, a
rarity when most companies have to integrate a variety of software
tools and manual processes such as phone and fax orders.

Amazon's supply chain is so tightly integrated that when an online customer


buys a couple of books and a CD, the order-management system
communicates with inventory- and warehouse-management systems to find
the optimal distribution center or centers for fulfilling the order. The
customer knows in less than a minute how long it will take to ship the items
and whether they will come in one package or separately.
Amazon, which spends about $200 million a year on business technology,
last year launched a business unit to resell its Web-commerce and back-end
fulfillment services to retailers. And it continues to seek technical
advantages in its supply chain. For instance, certain Amazon applications
can use radio-frequency identification technology, and the online retailer will
turn on the capability when it's needed, Wilke says. "RFID is most useful
when you have one of a number of conditions: if you have poor inventory
accuracy, if you have a high shrink rate, or if you have a need for more realtime information." RFID isn't a priority because those aren't problems for
Amazon today.
"RFID will add the most value to us when it's used on every item," rather
than on cases and pallets, as Wal-Mart Stores Inc. and Target Corp. are
planning. "Then we'll just position the antennas in our operations."