Supply chain strategy of Amazon Assignment Answers
supply chain strategy of Amazon and how it makes extensive?
Overview of the chosen topic
A supply chain can be defined as a network between suppliers and companies to manufacture and distribute a particular product to its final user. This network comprises different activities, information, resources, and people. The main role of the supply chain is to reduce the operating cost of the company, providing effective services to a customer, quality products, solving the issues related to quality management, reducing logistics costs, avoiding inflexibilities of the supply chain, and long lead times (CHRISTOPHER, 2017). The pros associated with supply chain includes it helps in bring efficiency in cost of production, enhance output, avoiding delays in a process, identification of areas of problem and others, whereas the cons include expensive and complicated to implement, poor coordination between departments, require personalized and trained staff and lack of reliability in this system. The supply chain allows an organization to integrate all its functions and it allows to maximize the partnership with the supplier, hence by involving innovations and technologies in the supply chain, the company can get a competitive advantage along with the support of suppliers (Lambert and Enz, 2017).
Discussion
Amazon has related to innovations through utilizing information technology systems which help the company in lowering the prices every day. The company’s point of sale information and bar code scanning system helped a lot in its huge data warehouses. Even in the mid1980s, the company introduced its own satellite network which managed to an insightful business practice that favors its supply chain process. Other strategic systems like retail-link, enabled data integration, organized by industry achiever Kevin Turner, and sharing between its suppliers and Amazon. All these systems also supported the notion of vendor-managed inventory (Michelson et al. 2017).
However, it cannot be said that each technology project in which the organization makes investment requires significant resources as some of its initiatives like radio frequency identification tags (RFID) technology was not successful as others were. It was mainly used to scan numerical codes from a particular distance to monitor pallets of goods moving alongside the supply chain. As the company’s inventory was managed by both Amazon as well as its suppliers where it encouraged its suppliers to use this technology.
Apart from this the company also started using smart tags that allow reading the data of product through a handheld scanner that assist employees to immediately identify which goods are required to be replaced so that in-store shelves are constantly stocked, and its inventory can be closely monitored.
Today, the company's supply chain management strategy has given it different sustainable competitive benefits including minimized carrying costs of inventory, reducing the product costs, enhancing the variety as well as a selection of in-store goods, and above all, it provides competitive pricing for its loyal and potential customer. This strategy must assist Amazon to become a leading force in the global competitive market. Further, with the evolution of technology, Amazon continuously started investment in innovative systems and processes to enhance its supply chain and attain greater efficiency (Heller, 2017).
Another technological use of Amazon is its Retail Link, an enormous database. Over a global satellite system, its new technology i.e., Retail Link is linked to an analyst who predicts the demands of suppliers through supplier networks which help in showing real-time data of sales from the cash registers to the distribution center of Amazon.
It also helps in synchronizing the demand projections of both manufacturers and suppliers through collaborative planning, predicting and replenishment scheme and try to connect every chain through technology in its central database, satellite network and store-level point of sale system. This innovative information technology system enabled to share of all important information to all associated partners. The approaches adopted by Amazon allow informal and frequent information cooperation among suppliers, distribution centers, stores, and less central control.
Issues Identified
In the present scenario, the biggest challenge that Amazon is facing is to enter the ecommerce industry along with having a strong parcel delivery system. The e-commerce industry is increasing at a very fast rate where the customer demands fast and quick delivery of goods to their doorstep. It has been identified from the study of McKinsey that last-mile delivery costs more than 50% more than the usual delivery to cover a short transportation distance (Technology and Operations Management, 2017). Apart from these customers are also demanding quick deliveries but they are also sensitive to price changes of delivery mainly in the sector of grocery and retail. With the increasing process of delivery and fewer available resources to the market, it becomes complicated for Amazon as well to deal innovatively and efficiently with the issue of last-mile delivery along with reducing the prices of delivery. However, this problem can be solved through partnering with its suppliers to bear the cost of delivery together so that the burden of delivery costs can be divided among different parties and will not affect any single party.
Further, another challenge that the company is working on is developing the futuristic warehouses as well as consolidation centers so that they can shift more volume with fewer workers. The company is looking to solve this issue through technology that comprises selfdriving delivery vehicles and automated item credentials. The company is looking to upgrade this technology and upgrade its present facilities for its workers and employees. apart from this, the company also aimed to bring sustainability by reducing the emission of greenhouse gases through its vehicle delivering goods from one place to another (Michelson et al. 2017). Thus, the company's initiative to solve this issue was the Project Gigaton initiative that mainly aims to safeguard one billion metric tons of the greenhouse gases which emerge from the supply chain of Amazon and contribute to protecting the environment completely till 2030.
Conclusion
This report was based on the supply chain strategy of Amazon and how it makes extensive use of information systems and technologies to improve its supply chain. This report included the theoretical perspective of the supply chain as well as an information system and the link between the two, but the next section of this report included a list and description of different technologies used by Amazon to improve its supply chain and coordinate and synchronize its supply chain activities and stakeholders involved in the supply chain including, suppliers, distribution centers, employees and most importantly customers. The company ensures to try every possible effort to provide the best services to its customers and retain for a long time through its low-price strategy.
Reference list
CHRISTOPHER, M. I. (2017). Logistics & supply chain management.
Heller, F. K., 2017. Technological innovation applied to Amazon and tesco’s supply chain (Doctoral dissertation).
Kurbel, K. E. (2016). Enterprise resource planning and supply chain management. springerverlag berlin an.
Lambert, D. M., & Enz, M. G. (2017). Issues in supply chain management: Progress and potential. Industrial Marketing Management, 62, 1-16.
Michelson, H., Boucher, S., Cheng, X., Huang, J., & Jia, X. (2018). Connecting supermarkets and farms: the role of intermediaries in Walmart China's fresh produce supply chains. Renewable Agriculture and Food Systems, 33(1), 47-59.
Nakasumi, M. (2017, July). Information sharing for supply chain management based on block chain technology. In 2017 IEEE 19th conference on business informatics (CBI) (Vol. 1, pp. 140-149). IEEE.
Technology and Operations Management, 2017. Race to the Last-Mile: Challenges to Amazon E-Commerce Deliveries online available at https://www.inc.com/johnswanciger/the-last-mile-how-small-business-can-win-delivery-race-with-amazon.htmL
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