Amazon supply chain
Download as PPTX, PDF8 likes29,567 views
The document discusses options for consolidating Amazon's distribution network across Europe. It considers creating a centralized European Distribution Network (EDN) and discusses how that would affect inventory placement, customer experience, staffing, and other factors. The main recommendations are to: 1) adopt centralized operations management with the EDN and a UK-based management office; 2) create cross-docking warehouses in Southern Europe; and 3) leverage techniques from Amazon.com to manage inventory and shipping costs across Europe.
Amazon supply chain
- 2. Amazon International What should be consolidated to the Europe level? What should remain localized by country? How should the distribution network be configured to support growth? Should a European Distribution Network (EDN) be created? How will inventory placement, the customer experience, staffing, etc. be affected by these changes?
- 3. Europe: An Aggregate Of Regional Markets Items displayed online are unique to each country Country laws Customer Service Representative localized to each country Fixed and control Pricing Payment options
- 4. Options Considered by Amazon 1. Keep three locations using them as backup alternatives when the primary country location cannot fulfill an order. 2. Selectively group inventory by categories at certain locations, reducing inventory costs. 3. Fully integrate all locations with a centrally managed European Distribution Network.
- 5. Wholesalers Amazon.com (US Division) has choices for suppliers and only uses wholesalers as a backup In Europe: Lack of wholesalers demands relationships with hundreds of publishers and distributors Expensive direct contracts Difficult and limited EDI penetration Difficult to maintain low costs for customers
- 6. Three Independent Distribution Centers They have unified many of the operations of the subsidiaries, including marketing, and customer service, and yet still keep three independent operations Each country has access to different kinds of products Repetitive Inventory at different locations. Excellent postal services for local shipping but unreliable cross- border logistics Future expansion will amplify these problems
- 7. Recommendations Adopt Centralized Operations Management Implement European Distribution Network (EDN) Centralize management office in the United Kingdom where most operations take place. Use strategic order fulfillment to minimize lead time Use strategic inventory distribution to reduce cost
- 8. Recommendations Create Cross-Docking enabled warehouses Preferably in Southern Europe where Amazon faces higher demand Amazon’s Infrastructure is already established for communication between the DCs Using the existing DC would be more cost efficient
- 9. Recommendations Leverage some Amazon.com techniques Drop shipping: May increase price but customer service level will remain high Pick profiles: Multi item orders may need to be fulfilled by more than one location Technology investments: “virtually” centralized inventory in a single system, EDI internally and externally
- 10. Recommendations Manage Shipping Costs Continue free shipping for local products, extending the use of Postal Injection for some high demand products Full truck loads from DCs to major cities Reduce postal service charges, maintain low shipping cost and offer free shipping in some new places
- 11. Questions? ?