Question

There are many (new) trends in listed in the management of supply chains . Take one of those trends and explain a selected company (pick your own) has successfully exploited that trend.

Answer 1

Like many other business processes, the efficient supply chains of the modern era have also evolved from the very first and basic assembly line, and now take the form of advanced robotic and software solutions. The new trends of the supply chain, warehousing, and logistics framework are tech-driven and smart, and aim to increase the efficiency and customer happiness while lowering the underlying operating expenses. The supply chain may include vital aspects including procurement of good quality and affordable raw materials. efficient and productive manufacturing process. and the packaging, storage, transport and tracking of finished goods.

Some of the latest trends in supply chain management as of now include digitization, use of artificial intelligence, greater collaboration among stakeholders including suppliers, and a focus on making the supply chain resilient. The trends also reveal the remarkable efforts in the area of management of risks, knowledge and information usage, use of SaaS (Software as a Service) model, enhancement of visibility, and customer segregation among others.

Amazon- Innovating Faster Delivery Trend for Better Supply Chain Management and Enhanced Customer Satisfaction

Leading E-commerce stores including Amazon and eBay are competing with each other to reach to the customers and provide to them the delivery in the least amount of time. Consumer expectations are very high today and both online and offline businesses want to retain the customers by making their supply chain more tuned to the needs and aspirations of the end customer. A delivery period greater than 2 days may lead to the rejection of the product.

Amazon has been known to adopt the most innovative technology and implement boldest of strategies for improving its supply chain. The company was founded in the year 2004 when it had revenue of around $7 billion. The same figure was $ 136 billion in the year 2016. The company grows at a rate of more than 20% annually, and its efficient supply chain is one of the factors contributing to the fast growth.

Amazon has always tried to ship the deliveries to the end customers in the least amount of time. The online shoppers and customers first got the taste of this efficiency in the year 2005, when the Prime membership program of Amazon was launched. All customers who joined Amazon as a Prime member got the guarantee that the products they buy at Amazon website/App would be shipped to them in 2 days or less. When the other competitors were still following, Amazon offered the one-hour delivery facility to the customers through the Amazon Prime-Now service.

The firm has a wide and extensive warehouse network in almost all countries it operates and also uses the sophisticated and advanced software and IT resources to bring more agility to its supply chain and distribution network. Top-notch transportation and a multi-tier scheduling and inventory management systems ensure that the ordered products can be picked and shipped fast. While more than 82% of the products sold on Amazon are through the third-party sellers, the firm has good experience in building an efficient system. Amazon may also outsource its inventory management business processes to the third parties. Still, it only uses its own logistics network for the Prime or the “Prime Now” orders. Therefore, it has well-established channels to make the deliveries speedy for all kinds of products it sells.

Efficient Warehouse Network

Amazon has different warehouses where different kinds of products are stored. While storing the products, customer delivery options are also considered. Prime, one-day, first class, and the free super-saver delivery options are available to the customers of the firm. The warehouses are located strategically, and in many instances, close to the city or Metropolitan areas. The firm uses a “pull” strategy for the products of third-party sellers and the “push” strategy for the products stored in its own warehouses.

Manpower

More than 90,000 employees are a part of Amazon’s 70 service and fulfillment centers in the USA. The firm has round-the-clock efficiency to ship the products, and computers and information technology are used at the warehouses as well to place/store the products according to priorities. The proper arrangement ensures that the products can be easily identified, picked, packed, and shipped in the least amount of time. The trained manpower can store the products in different storage areas. For instance, the pallet Prime area stores the products in highest demand. There are also other areas like the random storage or for the Library Prime storage Area that store smaller items and books respectively. Proper classification provides for swift operation and savings of time.

Automation

Amazon adopted “Kiva Systems” robotic and automated warehouse solution in the year 2012. Apart from the human staff, the robots can also pick as well as pack the products at Amazon warehouses, which makes the supply chain operations very fast. The company is also increasing the use of these robots in the warehouse and had around 45,000 robots in the year 2017. The company is also working on a Drone-based delivery system. These drones will ship the products of up to 5 pounds within a 10-mile radius of an Amazon fulfillment center. The drone will also have the capability to self-destruct itself if human life is threatened in any way. This Drone delivery service may also be called as Amazon Air, but there has not been a regulatory approval for it at this point of time in the USA.

The economies of scale, the growing customer base, and the well implemented and wise supply chain strategies have helped Amazon increase its profits while keeping the costs low. More than 66% of the world population would be living in the cities by the year 2015. Therefore, faster deliveries will help companies like Amazon get a better reputation and greater customer loyalty.