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Presented by: Group No 3
Salil Raibole- 09020242027
Sadanand Kadam- 09020242033
Susrita Sen- 09020242036
Swati Randhawa- 09020242042
Avinash Tirkey- 09020242044
Ô Describe the logistics practices adopted
by Amazon in it¶s domestic (US) market
giving reasons for the same, their pros &
cons and suggestions for improvement if
any with focus only on inventory
management & procurement.
4 |
  
   
uold modest inventories and rely on wholesalers. (2000 titles in-house but 2.5
million titles offered).

Customer order

Check in stock

Not in stock

PO to wholesaler

Wholesaler send to Amazon DC.

4 uigh inventory returns are achieved
because the order is picked and
packed as soon as it reaches the
warehouse.

4 In 1996-97, the company expanded

its infrastructure and systems.
 
K Added new product line (Music CD, VideoCD and DVDs)
but following two things were kept constant.
1. Procurement model
2. Procurement strategy

K Adding product line led to reduction in inventory returns from

56 in1997 to 24.8 in 1998.

K In 2001, DMAIC (Define, Measure, Analyze, Improve and

Control) review approach was used to improve inventory
record accuracy.

K Inventory accuracy was used as one of the key metrics to

measure worker performance.
 
K   

  



 




[ Refined the s/w for demand forecast by 

   
  



 
, so as 
 


   

[ Integrated its suppliers¶ management systems with its own inventory, warehouse
and transportation systems. e.g. it introduced  


   


[ 
established their own buying rule for 
  






 



[ Implemented a set of  
   
that determined  

  
 
   



 

 

  


   .
 
K





 


  


[  Drop ship´ orders, i.e. shipping order directly to consumers

from wholesalers. It led to following benefits
Reduced lead times.
Acting as  capacity valve´ to augment Amazon¶s own DC
capacity.
Made storing and handling of complex items easier.
Reduced costs.

[ Partnering with other companies with onus on partner to

cover the inventory costs. e.g. ToysR¶Us in August 2000
Financial risk of inventory obsolescence transferred to partner.
 



 

   
  
K Decrease in Amazon¶s inventory carrying costs.
K Accurately pinpoint demand in different regions.
K Prevent the company from making split shipments.
K Created safety net for slow velocity items and quick surge in demand.

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K Rise in obsolescence cost of inventory lying at Amazon DC (Distribution
Centres)
TuANK YOU!