AMAZON SUPPLY CHAIN

6 Ways Amazon Is Changing Supply Chain Management

Amazon supply chain strategy is a good-working system built by Jeff Bezos and Amazon staff. Any retailer can learn from it. Amazon has optimized every stage of their supply chain, they even have launched their delivery network, added drones and other hi-tech features to the whole pattern. Amazon's supply chain contains the whole logistics cycle.

 Let’s take a look at an example. Their FBA scheme works as follows:

·       Send inventory to Amazon.

·       They receive & store your products.

·       A customer orders your product.

·       Amazon picks, packs and ships it.

·       Amazon provides customer service.

·       A happy customer returns for more products from you.

 

What You Should Know About Amazon Supply Chain Management

 

 

Rapid Growth

In 2004, 10 years after Amazon was founded, its annual revenue was just under $7 billion. According to Statista, by 2018, revenue reached almost $233 billion. In fact, Amazon is the fastest company to reach $100 billion in sales revenue, taking only 20 years. From its inception, Amazon has been growing approximately 20% per year. It grew by 30% from 2018 to 2019. Currently, it enjoys more than 13% of gross global e-commerce sales. Many believe Amazon is aiming for $1 trillion in yearly revenue. If you take Amazon’s 20% yearly growth rate into the calculation, it should reach that goal by 2027.

Whether or not the company achieves that goal by then, its transformation from a simple online bookseller to the most formidable force in the retail industry is remarkable. One of the driving forces behind that transformation is its innovative and highly efficient supply chain. Amazon’s continuous efforts to deliver products to the customers in the shortest possible time are putting intense pressure on other retail industry giants across the globe and thus changing the way supply chain management works.

Push-Pull Strategy for Supply Chain Success

Amazon’s own warehouses are strategically placed and stocked, moving closer and closer to main metropolitan areas and city centers. As a result, it uses a pure push strategy for the products it stores in its warehouses, forecasting demand for the specific region. On the other hand, it uses a pure pull strategy when it sells the products from third-party sellers, using more of an order-by-order fulfillment model.

Classes and Zones
Amazon boasts more than 75 fulfillment centers in North America and greater than 125,000 full-time employees. To make good on increasingly fast delivery promises, the company has positioned many new warehouses in proximity to local urban markets. (Walmart's online strategy in China now similarly makes use of a closer-to-the-customer fulfillment model, operating a network of mini-warehouses.)

The location, size, and number of warehouses are important factors in Amazon’s supply chain success. Its warehouses are divided into five storage areas. Its library prime storage stores books and magazines. Next, its pallet prime storage stores full-case products that have very high demand. Next, case flow prime storage stores high-demand products picked in less-than-case quantities. Its reverse storage accommodates irregularly shaped and low-demand products. Finally, its random storage area stores smaller, moderate-demand items.

The Bottom Line

The rate of Amazon’s innovations in supply chain management has been mesmerizing, making it difficult for lower-volume competitors to keep up. Amazon is forcing its major competitors to invest more in supply chain automation, lessen the overall product delivery time, increase the number of warehouses, and even engage in product manufacturing.

 

ARTICLE: 

https://boxaroundtheworld.com/amazon-supply-chain-management/

https://sellernexus.com/amazon-supply-chain

https://www.thebalancesmb.com/how-amazon-is-changing-supply-chain-management-4155324









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