Supply Chain Analysis of Amazon.com

Topics: Supply chain management, Amazon.com, Logistics Pages: 9 (930 words) Published: December 4, 2014
Supply Chain Analysis of
Amazon.com

Outline





Amazon Background
Amazon’s Logistics Delivery
Amazon’s Warehouse
Amazon Fresh

Amazon Background

History
• American international electronic commerce company
(Founded by Jeff Bezos in 1994)
• Largest Internet-based company in the United States
• Products:
Products Selling
Selling Products:

Books, DVDs, CDs, MP3 Downloads

Also produces consumer electronics:

Amazon Kindle e-book readers, Fire
TV

Amazon’s Business Model

Amazon’s Business Model: FBA

Amazon Logistics

Compare E-logistics and Tradition
Logistics

Characteristics of E-commerce
logistics distribution
• Virtuality
• Personalization
• Accretive

The way of distribution network
• Outsourcing. Amazon distribution link in the United
States is most through third party logistics company
operating
• With its own unmanned aircraft support short
distance delivery

The third party logistics company
• Domestic distribution business entrusted to us
postal service ,UPS and Fedex.
• International logistics entrusted to the international
shipping companies and other professional logistics
company.
• Can reduce investment, reduce operating risk.

Drones

Drones can travel over 50 miles per hour, and will
carry 5-pound payloads, which cover 86% of
products sold on Amazon

Amazon Shipping Rate

Reasons to try its own deliveries
High fee to deliver, so make innovation to deliver
Amazon, threat to UPS and Fedex. Because it will be
delivering fewer package over a wider area

Establish different distribution center
Amazon's distribution center set up in
commodity categories
Improve the efficiency of the distribution
center operation
Reduce the management and operation
costs of distribution centers.

The Amazon distribution core idea is accuracy and
timeliness, which are crucial factors of company
reputation and customers satisfaction

Number of distribution and warehouse
Road transportation conditions
Quality of express company

Location of distribution Center

It is relatively easy
to select
warehouse sites

The tax rate of
each state is
different

Large warehouses are concentrated in
Central of America and duty-free area

Analysis of Amazon's
Warehouse
Introduction of Amazon's Warehouse
Characteristics of Amazon’s Warehouse
Problems with the warehouses
Suggestions for improvement of the Warehouse

Introduction of Amazon's Warehouse
 Purpose of building warehouse:
• to increase responsiveness and improve customer satisfaction

Development of its warehouse





By 1999, 10 warehouses
By 2012, 89 warehouses globally
So far, around 100 warehouse globally
Still plan to build more warehouse

All the warehouses are supported by very well maintained and fully computerized inventory system
Introduce automation technology to the existing warehouses infrastructure in 2012

Characteristics of Amazon’s Warehouse
Random Storage Strategy
• Amazon adopted a
“Chaotic storage”
strategy, namely,
products are shelved at
random.
• At present, Amazon must
rely on barcodes and
human hand s to find the
ordered items and drop
them into the proper bins

Characteristics of Amazon’s Warehouse
Applying Robots to move
goods shelves
• Kiva Systems, specializing
in automated materials
handling in the
warehouse
• In 2012, Amazon bought
Kiva
• Kiva innovated Robots for
Amazon only

Pros and Cons of Random Storage Strategy
Pros
• High utilization of the space
• Saving time to stock goods
• Reduce the distance of picking
goods
• Much better flow of material
• More flexible

Cons
• Taking time to find the ordered
item even with the help of the
advanced technology
• Increasing the material loss due
to too much touch

Pros and Cons of Using Robots
Pros
• increasing the work efficiency three
times
• Grant Amazon the competitive
advantage
• Reducing the labor...
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