Master of Engineering in Logistics at the Massachusts Ist of Technology

An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and
Amazon.com
by Colby Ronald Chiles and Marguarette Thi Dau Bachelor of Science in Industrial Engineering (2001, 2004) Georgia Institute of Technology Submitted to the Engineering Systems Division in Partial Fulfillment of the Requirements for the Degree of

Master of Engineering in Logistics at the
MASSACHUSTS IST
OF TECHNOLOGY

E

Massachusetts Institute of Technology
June 2005 © 2005 Colby Ronald Chiles and Marguarette Thi Dau All rights reserved JUL 15 2005

LIBRARIES

Signature of Author Signature of Author

J '

,.................

.... ..................................... Engineering Systems Division
May 6, 2005

Certified by .................
Gabriel R. Bitran

Nippon Telegraph and Telephone Professor oflanagement Science 1 //l Thesis Supervisor

Accepted by .......

If..(..... ......................

Profess - 'w( '

Yossi Sheffi

Professo" 'o Civil and Environmental Engineering Professor of Engineering Systems Director, MIT Center for Transportation and Logistics

ARCHIvvct

An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and
Amazon.com
by Colby Ronald Chiles and Marguarette Thi Dau Submitted to the Engineering Systems Division on May 6, 2005 in Partial Fulfillment of the

Requirements for the Degree of Master of Engineering in
Logistics

Abstract
In support of the Supply Chain 2020 Project at MIT, this thesis identifies current best practices in retail industry supply chains, with a specific focus on mass merchandising and internet retailing. Using a survey of current literature for context and industry expert interviews, this thesis assesses the current state of the retail industry and analyzes case studies of Wal-Mart and Amazon.com to illustrate retail supply chain best practices. Topics covered in each case study include supply chain

Bibliography: (1995). Flow-through DC yields savings for Fred Meyer. Chain Store Age, 71(10), 64. (1999, June). Controlling the HBC Aisle. Discount Merchandiser, 39(6), 54-60. (2000, November). Industry Surveys Retailing: General. Standard and Poor 's. (2000). Customer Fulfillment in the Digital Economy. Amazon.com: E-tail Customer Fulfillment Networks Pioneer. Digital4Sight Corporation. (2003, April). 2002 Annual Report. Amazon.com. (2004, February). 2003 Annual Report. Netflix, Inc.. (2004, February). 2003 Annual Report. Overstock.com. (2004, April). 2003 Annual Report. Amazon.com. (2004, April). 2003 Annual Report. Barnes and Noble, Inc. (2004, June). US Online: Access, Demographics, and Usage [WWW document]. URL www.emarketer.com (visited 2005, January 31). (2004, September). Industry Surveys: Computers: Consumer Services and the Internet Standard and Poor 's (2004). 2003 Annual Report. Borders Group, Inc. (2004). 2004 Annual Report. Wal-Mart Stores Inc. (2004). Mission Statement February 9). [WWW Document]. URL http://www.nrf.com (visited 2005, (2005, January) Anderson, C. (2005, January). The Zen of Jeff Bezos. Wired Magazine. Crum, C. & Palmatier, G. E. (2004). Demand Collaboration: What 's Holding Us Back? Supply Chain Management Review, 8(1), 54-60. D 'Innocenzio, A. (2003, September 21). Wal-Mart Suppliers Flocking to Arkansas. The Associated Press, Published in thestate.com. De Graves, D. (2004). Framework for the Study of Governance in the Supply Networks Wal-Mart: the "Enlightened Despot" Model Thesis., Ellram, L. M., La Londe, B. J., & Weber, M. M. (1999). Retail Logistics. International Journal of Physical Distribution & Logistics Management, 29(7/8), 477-494. Griffith, D. A. & Krampf, R. F. (1997). Emerging trends in US retailing. Long Range Planning, 30(6), 847-852. Hammer, M. (2004). Deep Change: How Operational Innovation Can Transform Your Company Johnson, C. (2002). US E-Commerce: The Next Five Years. Forrester Research. Kent, J. L. & Mentzer, J. T. (2003). The Effect of Investment in Interorganizational Information Technology In A Retail Supply Chain Kirkpatrick, D. (2004, November 11). Amazon 's Invisible Innovations. Fortune Magazine Maltz, A., Rabinovich E., & Sinha R. (2004). LOGISTICS: The Key to e-Retail Success.