How Do Amazon.Com's Logistics and Supply Chain Management Activities Help the Company Create Value for Its Customers?

Question 1: How do Amazon.com's logistics and supply chain management activities help the company create value for its customers?

In today’s highly competitive global marketplace, it is very important to recognize needs and wants of customers and constantly increase their satisfaction level. Amazon.com recognizes the growth of customers’ pressure and finds new ways to create and deliver value to its customers through logistic efficiency and effective management of the supply chain. Amazon.com offers organized and cost effective way of delivering the end product to its customers on timely and efficient basis. Since Amazon.com actually stocks products by maintaining seven distribution centres and keeping inventory of more than 2.7 million products in addition to collaboration with its suppliers that help effectively maintain inventory turnover, it gives a company competitive advantages over its rivals and an ability to generate greater value for the company and its customers. By making their supply chain work quickly and effectively Amazon.com can control the flow of existing and newly released products. Also, it helps to reduce processing and delivery costs and maintain the company’s profit margin. The optimal level of Amazon.com’s stock is achieved through sourcing and supplying the broad variety of products on its website.

In order to create interactive relationship with the company’s suppliers and customers, Amazon.com creates and uses software, hardware and processes required to optimize both time and cost of getting packages delivered to customers.

Therefore, several logistics and supply chain management activities help Amazon.com create value for its customers:

1. Customer Service that helps to deliver the best possible support experience;

2. Logistics Technology and Delivery Strategy that help to build the best delivery network to exceed the expectations of Amazon.com’s customers;

3. Supply Chain that helps to oversee Amazon’s inventory and everything that moves through the fulfillment centers.

Question 2: (a) What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centres? (b) What systems improved the flow of orders from the distribution centres to customers?

(a) Amazon developed software to help track consumer trends and behaviour. The software helps Amazon and its suppliers accurately forecast purchasing patterns by region, allowing suppliers to better plan for product requirements, delivery dates, and expected demand. This allows suppliers to plan production so that Amazon can fulfill sales during peak times. Suppliers know where inventory is required and in what quantity, resulting in appropriate stock at Amazon's "fulfillment centers".

The software has improved inventory handling and reduced related costs. Mishandling of inventory has dropped from 12% to 4% since the software was implemented.

(b) Amazon employs several systems to improve the flow of customer orders from their seven distribution centres to customers. These systems included ERP (enterprise resource planning), CRM (customer relationship management), PLM (product lifecycle management), SCM (supply chain management) and SRM (supplier relationship management). Prior to Amazon developing these systems, 12% of their inventory were delivered to the incorrect distribution centre causing inefficiencies in their delivery process. However, with these systems implemented Amazon went from 12% to only 4% of their inventory being mismanaged. In addition, Amazon decided to spend a year focusing on improving their productivity level with the help of these systems. Now, with a combined improved product sorting process and systems in place, Amazon is able to deliver customer orders in an efficient and effective manner. Customer orders passes through the systems in real time ensuring a speedy delivery process from their distribution centres to customers.

Question 3: Why will logistics and supply chain management play an important role in the future success of Amazon.com?

Logistics and supply chain management play an important role in the future success of Amazon. Amazon.com maintains seven huge distribution or “fulfillment” centres where it keeps inventory of more than 2.7 million products. The effective logistics and supply chain management can help Amazon keep their products flowing to the customers quickly, efficiently, and as cost-effective as possible. With a continuous improvement of its logistics and supply chain using technology, Amazon can create more value to its customers by shipping orders to them in a fastest way possible and reducing waiting time. In addition, an effective logistics and supply chain can lower the cost of inventory which is being passed on to the customers through lower prices. Keeping customers happy, Amazon will increase customer retention as well attracting new customers that will help the company in increasing future sales growth.

Question 1: How do Amazon.com's logistics and supply chain management activities help the company create value for its customers?

In today’s highly competitive global marketplace, it is very important to recognize needs and wants of customers and constantly increase their satisfaction level. Amazon.com recognizes the growth of customers’ pressure and finds new ways to create and deliver value to its customers through logistic efficiency and effective management of the supply chain. Amazon.com offers organized and cost effective way of delivering the end product to its customers on timely and efficient basis. Since Amazon.com actually stocks products by maintaining seven distribution centres and keeping inventory of more than 2.7 million products in addition to collaboration with its suppliers that help effectively maintain inventory turnover, it gives a company competitive advantages over its rivals and an ability to generate greater value for the company and its customers. By making their supply chain work quickly and effectively Amazon.com can control the flow of existing and newly released products. Also, it helps to reduce processing and delivery costs and maintain the company’s profit margin. The optimal level of Amazon.com’s stock is achieved through sourcing and supplying the broad variety of products on its website.

In order to create interactive relationship with the company’s suppliers and customers, Amazon.com creates and