A Case Study of Amazon on Its Supply Chain Management Essay Example

 

case study supply chain

Aug 25,  · Supply Chain Case Studies. October 31, · Watch the Mail Call case study video, achieving efficiencies to improve their business through an Intermec & BCDS solution. Leading Global Logistics Provider HAVI Discovers the Benefits of Auto-ID Technology. June 26, ·. Logistics and Supply Chain Case Studies A National Wholesale Distributor Case Study. A national wholesale distributor of heating and air conditioning supplies was struggling to manage its complex supply chain and maintain high levels of customer service, which is a top priority. Case studies are laboratories where you apply what you learn in lectures and readings to solve supply chain problems in highly realistic simulations. There is a "CASE STUDY CONCEPT" for each case showing the supply chain principles and practices that are highlighted in each case. SEE WHAT PEOPLE ARE SAYING ABOUT SCM GLOBEAuthor: Mhugos.


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We use cookies to give you the best experience possible. Essay Topic: ManagementCustomer. Every company has their own supply chain in order to sort or produce goods. However, the company needs to manage supply chain to maximize case study supply chain highest benefits.

By having effective supply chain management, the company can ensure that the right product or service will be available at the time to the right place and at the right price Kamal Amazon is case study supply chain of the companies that have best supply chain practices in order to respond high level of responsiveness for the customers. Don't use plagiarized sources.

The company used to be only a bookstore, but now it diversified into different type of products. This operation makes the company able to provide wider range of goods and lower cost of products with high quality.

Moreover, it also increases customer satisfaction as it supports customer convenience. An effective supply chain strategy makes the company is able to respond high level of responsiveness.

Amazon balances between cost of distributions and level of services by having the efficient distribution centres and multi-tier inventory networks. However, there is a competition from substitution brands that provided the same service as Amazon, which are eBay and Walmart.

Most of the companies need successful supply chain management to create sustainable competitive advantages. There are various benefits from having an effective supply chain management such as inventory reduction, delivery service improvement and shorter product life cycles Fawcett et al According to Chopra and Meindlsupply chain strategy and competitive strategy should have aligned goals. Amazon has identified their customers as highly responsiveness. In order to respond with high uncertainty demand and availability of products, the four main components drive the outcome of Amazon are having several distribution centres as a storage facilities, multi-tier inventory management, highly efficiency transportation and implement information systems to provide real time information within its supply chain, case study supply chain.

The advantage of outsourcing is to help the company to focus on its core activities and cost savings Bucki N. Amazon is one of the companies that need to gain those benefits from inventory outsourcing. However, there is another side of outsourcing deals as well. Chandra argued that the company should not outsource even it was not their core activities when the demand level case study supply chain increasing.

The company case study supply chain able to optimize the service if the stock is owned and case study supply chain efficiently, case study supply chain. So Amazon decided to outsource only some part of its inventory in order to mitigate risks and optimize services, case study supply chain.

The products that are frequently purchased or popular were keeping and managing in-house while other products are stocked by distributors. The products will be shipped after Amazon has requested. Managing the supply chain with its wider context and organization context.

Dispatch and delivery options were used to divide customers into each category based on responsiveness because difference customers need difference service levels and difference prices. Amazon has provided many types of deliveries in difference costs such as free super saver delivery, one-day delivery, First-class delivery and etc Amazon Each type of delivery reflects how fast the delivery is, case study supply chain.

It means if the customer needs very high responsiveness, get the products by tomorrow, the buyers are willing to pay more, case study supply chain.

So Amazon divided customer segments to match with its distribution systems and inventory strategy in order to control cost and service level, case study supply chain. The company also received increased flexibility Duran et al Moreover, there is a membership programme called Amazon prime. It provides unlimited one-day delivery for one year and it costs 49GBP. Once the buyers are members of prime, buyers will get discount if the buyers want to get express or evening delivery.

The members will also able to borrow kindle books for free Amazon prime Amazon has started with pull systems. There is no inventory, no warehouse and no overhead. The company acts as a middleman who is taking the orders and it will be filled by Ingram book group Simchi-levi et al When the time has passed, the growth of the company has forced Amazon to hold some inventory in order to respond customer needs by having several distribution centres.

So the strategy has changed to push-pull. The inventory is hold using a push strategy while orders are shipped using a pull strategy. The decoupling point of Amazon is distribution centres. However, case study supply chain, some of slow items are still used pure pull strategy as there is no inventory.

By having several distribution centres, the case study supply chain cost for Amazon is increased as well. The inventory network of Amazon is multi-tier inventory management. This will help the company plans and offers real time optimization service that allows Amazon to have minimal amount of inventory needs to achieve its service level One network N.

By having this network, Amazon is able to offer nearly unlimited selection. Nonetheless, the problem is each tier operates separately while not concerning about inventory of another echelon. Then bullwhip effect occurs which is inventory holding higher in each tier because there is no sharing information across the tier Lee The first tier is Amazon distribution centre.

The inventory will be aggregated in distribution centres, case study supply chain, which enables the company to hold fewer inventories. The second tier is wholesaler and partner DCs. By doing this, the customer service will be high as there is no stock out experiences. Lastly, publishers, manufacturers, vendors and third-party sellers are included in third tiers. All these parties help the company to fulfill unlimited selection of goods offer in Amazon Chiles and Dau Amazon case study supply chain many choices of delivery to balance cost of transportation and level of service.

The company does not have large scale case study supply chain contact full truckload. So the company provides free shipping in order to achieve longer lead-time of transportation. This will help company able to reduce cost and achieve economy of scale Robinson However, the company is provided highly responsiveness options as well, which is cost company a lot. Even though the customers are willing to pay higher price to get the products faster, it should not cost Case study supply chain anything but it is not like that.

Amazon cannot utilize the benefits of its transportation systems. That is why the company needs to design its supply chain networks to minimize the costs. The challenge of Amazon is to make decision which internal warehouse or external partnership should be the one responsible for a particular customer order. Once the order has been placed via website, a customer is expected to get products on time.

Finding the cheapest solution in short period of time is the hardest thing when there are many items located in different places and they need to be delivered in a single delivery. So, the company decided to case study supply chain technology such as warehouse management systems to get real time and single view of inventory for effective sourcing RedPrairie N. Case study supply chain are selected base on distance to markets, close to transportation modes such as motorway and main rail link, airport and river Amazon Location According to Melendezseveral DC would help the company provide quicker delivery, lower transportation costs and easy access.

Furthermore, sometimes transportation hubs, also known as injection points, have been used to reduce the cost of transportation in high customer demand areas. The products will be shipped from DC to transportation hubs with full truckload. Moreover, Amazon adopted drop shipment approach. The order will be picked, packed in Amazon package and delivered by supply chain partners, which are manufacturers, wholesalers and third parties. By doing this, the company is able to survive from its huge losses but it causes negative case study supply chain as well.

Nonetheless, it needs to pool specific goods from different location and ships the collective goods as one delivery, which takes time and causes a delay that leads to customers being dissatisfied. Pilai and Dutta The most difficult factor of transportation is to gain efficiency due to large numbers of small order from customers, so the company cannot gain advantage of the scale at all, case study supply chain.

Amazon uses transportation hub to reduce the cost of transportation. The hub acts as a cross docking to transfer goods to last-mile delivery. Amazon will aggregate the demand and ship case study supply chain to transit hub together in order to achieve less than truckload or full truckload. Nevertheless, it needs to accumulate goods in term of region zone.

So it takes longer time to complete this strategy. By doing this, Amazon is able to achieve economy of scale which lowers its cost and the customer satisfaction stays on acceptable level. However, sometimes goods are not available to the customer on time because the time spent to accumulate them took longer than it should be and when the demand is high Amazon ; Chiles and Dau ; Robinson ; Barzeski As Amazon does not have a storefront, so it needs to provide a perfect visual store experience to compensate the touch of products.

The company utilizes its own technology innovations to differentiate itself from other e-commerce companies. The innovation includes A9 and one click ordering. The former aspect is a subsidiary company, which provides product search engines and search inside the books whereas the latter aspect is used to speed up ordering process, and introduce product recommendations, which determine customer interest from previous purchases A9 ; Curtis Amazon also needs an innovation to support back-end supply chain integration and execution.

The company hase advance warehouse management systems to support order sourcing, labour management, load balancing, process alternative and supplier collaboration. All these factors make an efficient process to support multi-tier inventory of Amazon Chiles and Dau Besides, Amazon has been critiqued about unbearable working conditions, mandatory overtime and using human as a robot which is pushing workers to their physical limit.

Employees within its DC walked more than 15 miles a day to look for products and every move was checked by computers. Therefore, the company decided to use Kiva robot to deliver shelves stocked with merchandise to DC workers instead of workers having to walk around and find products. There are 1, Kiva robots in three DCs. By having these robots, Amazon can improve productivity and reduce cost up to 50 percent annually in area of warehouse efficiencies Soper ; Kaiser Nevertheless, this robot costs Amazon large amount of money.

 

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case study supply chain

 

Featured Supply Chain articles page, from SCDigest is the industry's best publication and web site for supply chain management and logistics practioners to find information, news, insight, education, opinion and tools. We cover supply chain, logistics, distribution, RFID, material handling, transportation, supply chain software, manufacturing, supply chain strategy and much more. Case studies are laboratories where you apply what you learn in lectures and readings to solve supply chain problems in highly realistic simulations. There is a "CASE STUDY CONCEPT" for each case showing the supply chain principles and practices that are highlighted in each case. SEE WHAT PEOPLE ARE SAYING ABOUT SCM GLOBEAuthor: Mhugos. Logistics and Supply Chain Case Studies A National Wholesale Distributor Case Study. A national wholesale distributor of heating and air conditioning supplies was struggling to manage its complex supply chain and maintain high levels of customer service, which is a top priority.