2. What is Amazon’s inventory management policy? Do you think that for a business like Amazon this is the best policy? Give two other inventory management strategies Amazon could use as part of its inventory management policy. Amazon believes in having products at the right place, in the right amount and at the right time, which will also help the company to reduce inventory carrying costs. Amazon currently has a competent inventory management system which control the costs associated with the inventory, for example they try to avoid split shipments in order to reduce the costs involved with the shipment when a customer orders multiple items. Ways of Amazon’s inventory management:
* They developed software to forecast customer demand on seasonal and regional demands thus reducing the risk of buying extra merchandise. * The inventory system Amazon had helped the customers to see directly the availability of the product by checking on the warehouses of the Amazon. It helped the company to promise the time required to send the products to the customer. For example, the stocks available in the store would be shown as 24 hours and the once which is out of stocks will be promised to upload within 2-3 days. * Amazon entered into contract with Ingram Micro Inc for distribution of desktops, laptops and other computer accessories. Drop shipment model was very successful so Amazon decided to extend this model to all categories too. * They also filtered the supplier by who sold the items for fewer prices and delivered on time, in order to give the customers best price. * Amazon partnered with other companies for example Amazon is handling the online selling of the company Toys RUs . Toys RUs managed the merchandise and owned the inventory which was stored in the Amazon’s distribution center. * Amazon did not stock every offered on its site. It stocked only those items that were popular and frequently purchased. If a book that is not so popular is ordered Amazon requested that item from its distributor who then shipped it to the company. The items were unpacked and then shipped to the respective customers. According to me, I think Amazon is doing good job at managing its inventory control. Although Amazon needs to redesign how they manage inventory across their supply chains to lower costs and improve customer service levels. Two Stargeties:
Developing a comprehensive inventory strategy involves a number of departments to co operate. By linking marketing plans to merchandising plans, it can help the inventory control of Amazon.
Marketers and merchants need to develop planning calendars for all promotions in all channels such as catalog, online, e-mail, stores, and ads. Merchants and the inventory control group can then plan product purchasing and availability of the products. In that way Amazon don’t have to store obsolete products. The idea is to stock the inventory just before you need to sell it, so that the money you've invested comes back into the business as quickly as possible
Invest in upgrading the systems
Provide Inventory Control with best systems which can help in efficient, accurate, and timely access to data. Ongoing training and report requests should be a management priority. This group spends more money than any other. Companies that recognize inventory management is typically provide higher levels of service to their customers and gain higher profits.
3. Identify and discuss some of the supply chain management issues Amazon faced in its European markets. What were some of the potential risks faced by Amazon in its European market supply chain, and how were they mitigating the risks. In the U.S. and Canada, Amazon has great distribution and markets, but in Europe they mean nothing to anybody. To enter the European market was challenging for Amazon but it helped to expand company’s customer base, sales and revenue. UK and Germany Amazon was a...
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