Amazon.com Supply Chain Project
BUS3004: Supply Chain Management
Professor Dr. Robert Goldwasser
December 10, 2012
Amazon.com Supply Chain Project
In today’s society, Online Shopping and the industry of e-commerce has become very popular and mainstream. Many individuals have integrated online shopping into their normal routine and have replaced traditional shopping altogether. Online shopping has become so popular, there has been a shopping holiday called “Cyber Monday” which is the equivalent to “Black Friday.” Traditional brick and mortar retail stores are now forced to offer their products online in order to remain competitive. This is a new position for most businesses to be in, so businesses are forced to make the necessary adjustments to conform to the consumers’ demands. Complying with the demands of technology has become a problem for some of the smaller businesses due to the lack of resources and infrastructure to produce these changes. Amongst the many online retailers that have emerged, Amazon.com has set itself apart as the industry leader in Online E-commerce. Since 1994, Amazon.com has built a successful empire that has become the default name for when one thinks about buying anything online. Through their documented success, Amazon.com has created the blueprint for those to follow in order to become a successful Online Retailer. In this assignment, I will discuss Amazon.com as it relates to their success and the structure of its company. Business Model
Amazon.com sells books, music, and other items over the Internet and is one of the pioneers of consumer e-business. Amazon, based in Seattle, started by filling all orders using books purchased from a distributor in response to customer orders. This practice differs from that of a traditional bookstore, which usually purchases directly from publishers and stocks books in anticipation of customer orders. In 2008, Amazon had eight warehouses in the U.S. and another fifteen in the rest of the world. Amazon stocks many books, though it still gets other titles from distributors or publishers. It uses the U.S. Postal Service and other package carriers such as UPS and FedEx to send books to customers. Amazon has continued to expand the set of products that it sells online. Besides books and music, Amazon has added many product categories such as toys, apparel, electronics, jewelry, and shoes. (Chopra, et. Al, 2012)
In addition to adding more products, the strategy of Amazon.com is technology based as it relates to consumer demand. Amazon's supply chain is so tightly integrated that when an online customer buys a couple of books and a CD, the order-management system communicates with inventory- and warehouse-management systems to find the optimal distribution center or centers for fulfilling the order. The customer knows in less than a minute how long it will take to ship the items and whether they will come in one package or separately (Bacheldor, 2004).
Unlike most companies, Amazon.com has positioned itself to remain competitive in the national and global markets as well. Shipping is one of the most main expenses of e-commerce and shipping internationally can be a lengthy and expensive process. As mentioned earlier, Amazon.com has built new warehouses and changed the markets supplied by each warehouse as its customer base has grown. Currently there are 15 warehouses in total; 8 of those are located in the United States and the other 7 are located internationally. As a result, it has lowered shipping costs and improved responsiveness (Chopra, et. Al, 2012). There is a trade off because inventory and facility costs increase as the number of facilities in the supply chain increase; and transportation costs decrease as the number of facilities increase. The...