Amazon’s growth is the result of successful implementation of “Supply Chain policies.”. It is one of the most complex and expensive aspects of Amazon’s business strategy.
Amazon maintains huge distributions or fulfillment centers, where it keeps its inventory. This sets Amazon.com apart from its competition. When customers place orders online, at Amazon.com, the company manages the flow of products from 15 million suppliers to its distribution and customer service centers, and then flow from distribution centers to individual homes or offices. In order to champion this procedure Amazon is working closely with their suppliers. They are focusing on increasing efficacy and improving inventory turnover. Amazon uses software to predict purchasing patterns by region, which allow its suppliers to give better information on delivery date and volume. Before development of this software 12% of incoming inventory used to be misplace, but now that number has dropped to 4%.
Amazon also improved the procedure of sorting products into individual orders. They performed in-house research to come up with solutions on increased productivity. With this, advancement in technology for order processing became easier. Once an order is received in the system, it is automatically placed in a box and all the shipping components inside the box are taped and labeled. This box is then ready to be shipped through a network of truck and regional postal hubs to its destination. This productivity and successful implementation of Logistic and Supply chain is especially visible in the holiday season.
Amazon must also keep in mind their stock. Having an effective supply chain management team ensures they keep a huge variety of products on their website while ensuring the stock levels are at the ideal level. Having products in stock ensures that the orders are processed and dispatched quickly, while replenishing goods that are out of stock quickly. With an effective supply chain management team, it will help to reduce the cost of processing and delivering orders, which ultimately allows the cost to the customers to be reduced while Amazon is still able to maintain their profit margin.
Overall, Amazon’s logistics and supply chain management activities provide value to customers. This is accomplished through the following:
Customer value is a unique combination of benefits received by targeted buyers that includes quality, on-time delivery, and both before-sale and after-sale service at a specific price. But, in terms of supply chain, customer value can be specified with four specific and measurable criteria’s such as time, dependability, communication, and convenience.
Time: - Amazon minimized the time in processing online orders. With your login you can store all of your shipping and payment information. This make shopping easier and cuts down order placing time. With Amazon’s business creditability, customers are not hesitant to store their information on the company’s website. With their accurate forecasting of the demand, reduced out-of-stock rate, efficient utilization of the third-party logistics providers, the company is achieving the timely deliveries. They also provide shipping options, as per customer need, and they have successfully fulfilled their demand with one day shipping also. Following are the options offered by company on website for shipping
-Two Day shipping
-One Day shipping
Dependability: - Amazon.com uses software to predict purchasing patterns by region which allow its