Amazon supply chain management
Download as PPTX, PDF8 likes5,001 views
Amazon operates as an online retailer without physical stores. It has around 50 warehouses globally to store inventory and fulfill customer orders quickly. Amazon uses various inventory management strategies like keeping popular items in standard inventory and fulfilling less popular items through just-in-time inventory and third-party sellers. Its supply chain focuses on high responsiveness through multi-tier inventory, efficient transportation, and information systems.
Amazon supply chain management
- 1. Introduction Amazon.com is American international electronic commerce company with headquarters in Seattle, Washington. Amazon was founded in 1994 by Jeff Bezos. Amazon.com in 1995 started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry. Amazon operates as a pure internet retailers that does not have retail store at all.
- 2. Supply chain strategy of Amazon. Amazon has identified their customers as highly responsiveness. In order to respond with high uncertainty demand and availability of products, the four main components drive the outcome of Amazon are having several distribution centers as a storage facilities multi-tier inventory management highly efficiency transportation and implement information systems to provide real time information within its supply chain
- 3. Why is Amazon building more warehouses as it grows? How many warehouses should it have and where should they be located? As it grew the company added warehouses allowing it to react more quickly to customer orders. Increasing the number of warehouses near customers will reduce the response time. Amazon aims to be able to deliver most items the day they’re ordered, so it can keep rivals such as EBay and Wal-Mart Stores from peeling off customers. Amazon has around 50 warehouses, 20 in US and rest in Canada, France, Germany, Italy, UK, China, Japan
- 4. What advantages does selling books via internet provides over traditional book store? Are there any disadvantages to selling via internet It is proved to be a more convenient option for the customer. The customer did not have to drive or walk to the store to buy a book. The reader received a catalog containing reviews about books and information about popular books in the market. Don't have to advertise and find the buyers, post the message at any book purchasing website, and concerned buyers would automatically get in touch with. Can get the best money, as one can select from the buyers that hit on the book. the elimination of costs related to maintenance of retail stores and the direct contact with the customer online.
- 5. Online trade removes geographical barriers and allows the customers to shop 24/7. Customers can view all the information about the book, book reviews and books on similar topics. This gives them far more information than looking at the single book at the bookshelf of a retail store. The security of online payments is a problem preventing many people from shopping online. The totally secure system has not been introduced yet, and customers might find it confusing revealing their payment data online. Delivery of books also might not happen timely, due to many factors. The customer never has the chance to see and “feel” the book; many people dislike buying books online because they cannot sense the book, turn over the pages and read a few lines.
- 6. Should amazon stock every book it sells? No If Amazon stocked every book it sells, it would need a warehouse the size of Nevada. It would also have gigantic inventory costs. Amazon uses three basic methods for selling books standard inventory "just in time" inventory third party sellers Physical inventory of the most popular books it sells. Less popular books are subject to "just in time" inventory management.
- 7. Amazon doesn't have the books, but has arrangements with the publishers to ship the books as soon as it receives orders. Results in a slight delay in shipping to the customer, but Amazon saves a lot of money in inventory costs. Has network of third party merchants who sell through Amazon. These third party merchants generally specialize in out-of-print books or books that deal with relatively arcane subjects. Those books are shipped to the customer directly from the third party and are billed by the third party to the customer's credit card or PayPal account. Amazon takes a small commission for acting as a middleman. Stock only those product with high demand
- 8. What advantage can brick-and-mortar players drive from setting up an online channel? How should they use the two channels to gain maximum advantage? Stand out from the competition Saving customers a trip to the store Low-cost way to expand your business. Inexpensive yet Highly Targeted Marketing Channel Complete Range of Products Selection & In-Depth Information Easily Automate Cross-Sell and Make more Money Pre-order done easily Increase Customer Value over Lifetime
- 10. Transportation rely primarily on national parcel couriers UPS, FedX Own logistics network
- 12. Inventory High inventory Multi-tire inventory network.
- 13. Pricing Amazon does make millions of price changes daily In March 2014, Amazon changed prices on an average of 15-18 percent of its assortment every day and this number is growing. Many retailers today are struggling to emulate, or even react to, this level of price dynamism. Price dynamism varies by season Some categories are more price-dynamic than others. Amazon's price dynamism varies between categories,
- 15. Strategic fit Competitive strategy Respond to wide range of demand Fulfill orders in short lead time Meet high service level Supply chain strategy Both cost effective and responsive
- 16. Facility: more towards centralization Inventory: high Transportation: Faster Information: high investment
- 17. Should traditional bookseller like integrate e- commerce into their current supply chain or manage it as separate supply chain? It is better to integrate e-commerce supply chain to their current supply chain. Advantages: Common warehouse. Global market More competitive