Wednesday, February 27, 2013

Amazon's Supply Networks Strategy


Amazon.com, Inc. is an American multinational electronics commerce company with headquarters in Settle Washington, United States. It is the world's largest online retailer. They started as an online bookstore but have diversified to so many other products like music downloads, furniture, food and basically almost all consumer electronics. Currently, Amazon is a major a provider of cloud computing services. Amazon’s has a separate retail online stores for different countries for example the USA, UK, China, Italy, Germany and others.   

According to a research by Gartner with in a period of 3 years Amazon moves from the 1oth spot in the world ranking in the best top 10 supply chain company to the 2nd in the year 2012 that is just behind the world technology company and smartphone giant Apple. The figure below shows the customers centric approach of Amazons business model.



                                              [1]FIG 1 Customer Centric Model

In the supply system of Amazon, there is a unique approach about how they handle their customers which they describes it as starting with the customer and moving backwards.as depicted in the diagram above they are customer focus and they are frugal which means, they spend much money on things or items customers really like and lastly they are very innovative in their supplynetworks where they constantly, brings in new technology to assist with their supply chain network.

 The customer centric nature and the success has also been partially dependent and their largeness and corporate image. Amazon from its beginning have acquired some many companies which includes mdb,  Lexcycle,askville,buy.vip,shelfari,smallparts,woot,cdnow,zappos,alexa,audible,pets.com and others.The replenishment strategy of Amazon reflects mostly with understanding customers needs first and formost. They do their stocking and inventory with customer preference than have more variety of goods and than lower cost.  Amazon offers a very wide range of products through the use of wholesale suppliers and independent producers which includes the companies shown like Etsy,ticketmaster,foursquare,ppaya,ftopia,Quora,Flipboard,Netflix,airbub ,Tapjoy,zynga,esa,Dropbox,Unicredit Bank,Nasdaq,yelp,the guardian,Ericsson ,Hitachi Systems, Schneider Electric,reddit and other.



                                             FIG 2 Supply Network
                                                         (http://files.myopera.com/CHIEMKIMNGAN/blog/amazon.JPG

The diagram above illustrates the total supply networks of the global retail giant Amazon. Step 1 shows when the customer places an order in wherever location he may be. The order is than assigned to the closest of the seven major distribution centers in the United States of America  .The next step is as shown in the diagram indicates that the order is been shown red in the person whose item is ordered in the warehouse it than creates ride conveyors through DC, the items is been sorted out by a bar code and than the creates arrives at the central point and bar codes of the products matched with orders, the items sorted are than sorted automatically into ne of the many boxes chutes into a box. As shown in the diagram the bar code identifies customers order and than the customer order is packed taped and weighed. The taped and weighed boxes are shipped by the United Parcel Services and sent to customer between seven days.    


In a nutshell looking at the trend and successes Amazon.com has been able to achieve in this relatively short period as compared to other companies in the industry, do readers belief Amazon can overtake Apple in the list of best supply chain companies in the very new future (5 – 10 years) and to what extent is this saying true “Amazon.com the Hidden Empire“.

REFERENCES:









[1] http://www.slideshare.net/faberNovel/

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