Amazon Supply Chain: Strategy and Competitive Edge Case Study

Introduction - Optimizing Amazon's Supply Chain Management

As defined by Felea (2013), supply chain management is the administration of the movement of product as well as amenities as well as comprises of the entire techniques which changes the crude product into final items. By dealing with the store network, organizations might reduce abundance expenses as well as convey items to the customer quicker in addition to all the more productively. The 5 most fundamental components of supply chain management are

1. Fostering a methodology,
2. Obtaining natural substances,
3. Creating,
4. Circulation,
5. As well as returns

Usually, supply chain management endeavors to midway control or connection the creation, shipment, and conveyance of an item (Felea, 2013).

Thus, it can be identified from the above discussion that one of the main aims behind conducting this study is to critically evaluate the supply chain of the selected company that is Amazon in order to comprehend the main function that the organizational strategy and the supply chain executives plays inside the company. The report will additionally look into how supply chain management influence the attainment of competitive advantage of the company. Some recommendation for improvement will also be provided as to attain the actual supply chain management goals.

The company that has been selected for this study is Amazon which is an US-based worldwide innovation organization zeroing in on web-based business, distributed computing, web-based promoting, advanced streaming, and man-made consciousness. It has been alluded to as "one of the most persuasive monetary and social powers in the world”, and is one of the world's most influential brands. Amazon utilizes individuals to work at its stockrooms, mass appropriation communities, staffed "Amazon Center point Locker+" areas, and conveyance stations where drivers get bundles. As of December 2020, it isn't recruiting conveyance drivers as representatives (Yasar,Kinza , 2018)

Supply chain of the selected company

The supply chain management of Amazon is quite famous worldwide because of its smooth functioning which gives a tough competition to its competitors like Walmart, Tesco, Flipkart etc. Amazon is focused on directing its business in a legal along with in a capable way, incorporating drawing in with providers that regard basic freedoms, give protected as well as comprehensive work environments, in addition to advance a sustainable upcoming time (Zaid, 2022). Amazon's supply chain management is liable for acquiring client orders from point A to point B as fast as well as productively as could really be expected. Among those two focuses is a ton of moving parts, for example, getting stuck, arranging stock, warehousing, item picking robots, distribution center partners, transporters, Amazon Prime Air, conveyance drivers, etc. On the client side, one should simply click a button, then two days after the order, their request shows up close to home (Sharanya, 2018 ). Below described the proper supply chain management of Amazon company.

1. Firstly, the customer of Amazon makes a shipment in Vender Focal determining the number of units or items that will be delivered in addition to the size as well as weight of your shipment, ensuring every unit has a searchable standardized identification.
2. An Amazon-joined forces transporter or delivery organization conveys your mass item shipment to the Amazon satisfaction center(s) determined in the shipment data.
3. Amazon partners unload and accept the shipment by filtering a remarkably standardized identification that interfaces each product to the dealer account.
4. The units are unloaded from the shipment and examined separately by a partner to recognize everyone so it is appropriately added to the stock. The item ought to have either a UPC standardized tag or an FNSKU, which are extraordinary Amazon standardized tags that recognize the seller items.
5. As acknowledged Amazon stores or potentially circulates the customers units to other Amazon satisfaction focuses.
6. At the point when a client puts in a request for an item, Amazon robots and partners cooperate to precisely pick, bundle, and name the item.
7. The item is then arranged and stacked onto a truck as well as a plane to arrive at its conveyance station where client orders are ready for last-mile conveyance.

In nutshell the table below will represent the entire SCM of Amazon

To create this conceivable, Amazon's all's satisfaction network comprises the north of 100 structures the nation over for stock administration in addition handling a huge number of requests each and every day. The term Amazon store network basically alludes to Amazon's whole interaction from item warehousing to stock administration, estimating, and conveyance, in addition that's just the beginning. Amazon has advanced every one of these components to guarantee that everything is working without a hitch as well as proficiently. With outsider vendors being answerable for 55% of all deals made on Amazon, Amazon offers two satisfaction choices to merchants - FBA as well as FBM. With regards to Amazon's supply chain management, there are two principal components basic to its prosperity - Amazon Satisfaction Focuses in addition the Amazon Conveyance Armada.

Role of organizational strategy and managers within the supply chain development

To compete, the SCS describes how Supply Chain should operate. The BS entails leveraging the organization's core competencies to achieve a specified increased goal or objective. It also contains the analytical and decision-making process for determining what and how to provide (products and services), to then provide (timing, economic trends), and what to give (markets and segments) as part of a competitive strategy (Fernando, 2022). The first step for Supply Chain executives is really to understand precisely how the enterprise intends to compete. This is significant not only for the explicit purpose of working in the same way but also because Supply Chain must encourage the Business Strategy; it is more than just an operational department.

SCS is not merely a linear modified version of the BS; in most cases, the SCS is developed after BS has already been defined. While this approach may provide some value, it needs more powerful Supply Chain involved in planning that could greatly enhance the BS (Castiglia, 2017).

Figure 1: Link between business strategy and Supply chain strategy

The organisation of the flow of products and services is known as supply chain management, and it encompasses all procedures that convert raw materials into finished products. It entails actively streamlining a company’s supply-side activities in order to enhance customer value and achieve a competitive edge in the marketplace.

Amazon differentiates its customer base and uses a cost differentiation strategy. One-day delivery, free super saver delivery, first class delivery, and prime customers delivery are all options. Amazon offers customers the choice of spending more for speedy delivery or keeping the traditional lead time for all of these segments. When combined with inventory outsourcing, customer segmentation into cost customers provides the company with market nimbleness and agility that keeps changing with dynamic changes in the market. One important aspect of Amazon’s Supply chain is that it evolved over time in response to the company’s market growth. For example, Amazon began as a bookstore that serves as a middleman between buyers and sellers but does not stock products (MSG, 2022). Amazon's warehouses are strategically located, getting closer to major cities and city centres. As a result, it employs a pure push strategy for the products stored in its warehouses. On either hand, it employs a pure pull strategy when it sells products from third-party sellers.

Amazon merchants can use the company’s vast fulfilment network for their own operations through the Fulfillment by Amazon (FBA) programme, which necessitates sellers to send their goods to Amazon fulfilment centres, where Amazon will pick, pack, and ship orders and provide any necessary customer support. Furthermore, Amazon provides its FBA Onsite programme, a hybrid of FBA and Seller-Fulfilled Prime (SFP), wherein Amazon optimises the seller's warehouse using its own warehouse management software. Sellers retain control over their own products and continue to purchase their stock in their own locations, while Amazon is willing to take responsibility for picking up order information from a seller’s warehouse and determining the most effective fulfilment method. This allows the organization to put its business and supply chain strategies together to improve the overall customer experience (Siruvuru, 2019). By combining business operations and supply chain management strategies, Amazon can achieve higher sales and sales value by using this collaborative effort. This will further increase customer acquisition for the company and will increase their overall business while maintaining an effective and efficient supply chain throughout the business operations and life cycle of the goods and services. Thus, leading the managers of the organisation to lead the supply chain management by utilising the strategies of business operations can be profitable and can also bring opportunities in the future.

Impact of supply chain management on the achievement of competitive advantage

Supply chain management aims to effectively integrate different businesses, including suppliers, manufacturers, wholesalers, retailers, and customers. In order to reach the lowest system overall cost and the required service quality, items must be produced in the proper quantity, at the proper time, and in the proper location (Siahaan et al., 2020). A corporation with a competitive edge can outperform rivals in a given industry in terms of earnings. The focus on lowering the COGS or the costs of goods sold by optimising the spending on the elements of the supply chain, as well as the streamlining of the supply network through just-in-time or JIT techniques of retaining inventory, all result in a scenario where it might be very advantageous for the businesses (Siahaan et al., 2020). This is the reason many businesses, like Wal-Mart, Proctor & Gamble, Tata Motors, and Unilever, have concentrated on streamlining the supply chain's constituent functions. The key idea here is that with smart supply chain management, businesses can get value out of the process, which may lead to more profits and lower expenses.

Additionally, as logistics and supply chain costs make up a sizable component of the cost of goods sold, or COGS, supply networks can also be of both strategic and competitive benefit (MSG, 2022).

• Plan your supply chain in real-time - Real-time data from all areas of the company, including POS terminals and the mines where raw materials are harvested, may be brought through supply chain analytics tools. Businesses may evaluate vast amounts of contextual information for precise forecasting and adjust in response to quickly shifting market needs (River System, 2023). The demands made on providers should adapt to changes in demand expectations. A contingent at the supplier's end must alter factors that influence demand, including product prices.
• Create a cooperative supply chain plan - Stakeholders should not be operating in separate silos. To enhance supply chain value and guarantee customer satisfaction, all parties should cooperate (rather than compete) with one another. Success for a business also means prosperity for its suppliers. As crucial as keeping good customer connections is cultivating and maintaining excellent ties with suppliers. A business must assure the profitability of its distributors and suppliers just as it must please customers.
• Use cutting-edge supply chain automation techniques - Collaborative mobile robots are one type of automation to minimise picking mistakes, order fulfilment time, and associated walking distance. These advantages help warehouse employees operate more productively and complete more tasks in less time. Collaborative robots, such as Chuck from 6 River Systems, help employees through each job by travelling to the proper pick spots and presenting the goods and quantities to select, keeping employees focused.
• Demand Supply Management - Maintaining adequate inventory to ensure that goods reach all customers is the outcome of effective demand-supply management. Utilizing your company's data insights to control inventory levels will give you a competitive edge. Knowing when new items are released, creating products that address market trends, assessing seasonal demand-supply trends, stepping up production in response to rising demand, and improving supply chain management are all covered in this.
• Relationship and Operations Management - Nowadays, suppliers and most industrial businesses have tighter layers. This is the outcome of productive teamwork. As a result, a partnership is formed as opposed to a hierarchical one. Early reimbursement to suppliers, information openness, integration to minimise communication barriers, and finance product optimization are additional requirements for managing supply chain partnerships (ORBIS, 2022). A corporation's efficiency and profitability may benefit greatly from an understanding of the supply chain. Every part of the supply chain must be managed, and any potential inefficiencies must be found. The ideal technique to control sustained damage and avoid any delays is in this manner. As part of this management, procedures, documentation, information transmission, and production optimization are all integrated.

The improvements areas

• Prioritize training and development - Create continuous standards for supply chain certifications, training, and even full accreditations for professional areas. Keeping workers who have worked for the firm for a while up to date on the most recent technologies and allowing individuals in supply chain management is especially crucial.

Utilize this tool to evaluate your business against the leading trends and traits for attaining supply chain excellence:

• Building risk - Adjusted, cost-effective operating models that provide segmented customer service is step one. Step two is to move beyond the current system of bottom-line profits by turning your company into one that is purpose-driven (Veneziano, 2021). Step three is to develop a multi-year, interconnected digital coordination strategy and roadmap.
• Utilize Expert Resources - The Association for Supply Chain Management (ASCM) is the world authority on supply chain organisation transformation, innovation, and leadership. As a neutral partner, the organisation links people and businesses with industry professionals, frameworks, and international standards to improve supply chains. Benefit from the many transformation, education, and certification programmes offered by ASCM.
  Companies strive to reset their operations and simplify their supply chains as product demand soars to increase efficiency and build a robust supply chain management that can survive any upcoming crises. Building a technology that can resist time and COVID-like interruptions requires constant adaptation. Particularly for e-commerce business logistics platforms, an effective supply chain management system may alter the game. These are based on these, so read on (Stevens, 2022).
• Adaptive inventory control - Another area whereby brands, especially new ones, sometimes need help is inventory management. Brands will be able to improve business supply chain management with dynamic inventory management. Waste may be decreased with the effective application of smart, data-driven SNOPs (Sales and Operations Planning). To optimise the value chain, businesses can also adopt just-in-time or vendor-managed inventory with high-quality control (The Economic Times, 2021).
• Automation - Unquestionably, technology has transformed how businesses run. Automation is now crucial to enabling competent and quite well supply chains because of how quickly the pandemic has boosted technological use. Investments in robotic processes, intelligent systems, robotic sorters with put and pick to light, employing RFIDs & linked gadgets, and drone deliveries are all good ideas for businesses. The best investment you can make in your supply chain administration is automation.
• Communication - Without effective communication, a supplier-business owner relationship is bound to collapse. So, evaluate the success of supplier communications as a starting point. Good vendors are communicative. The last thing businesses want is to wind up losing money on products that cannot be sold because the vendor needed to be quicker to react to a crucial design modification.
• Reliability - Suppliers must always be trustworthy; the supply chain will only improve if the supplier consistently follows up on the purchase requisitions, dispatches items slowly, or otherwise breaks their commitments. In such instances, cutting relationships with suppliers that have shown themselves to be liabilities would be a quick method to enhance the supply chain (IBM, 2022).
  The handling of a product or service's full manufacturing flow, from the raw materials through the delivery of the finished product to the customer, is known as supply chain management. A business establishes a supplier network (or "links" in the chain") to convey the product from raw material suppliers to businesses that interact with customers directly. Systems for managing the supply chain efficiently reduce costs, waste, and manufacturing cycle time. A just-in-time supply chain, where retail sales instantly transmit replenishment requests to manufacturers, has become the industry norm (Stevens, 2022).

Conclusion

So, it can be concluded from the supply chain management plays a very important role in Amazon in making connection with the customers. For any company be it s MNC or SME supply chain management plays a very crucial role starting from manufacturing of the goods till its get delivered to the client location. But from the overall study it has been identified there are few issues which the Amazon is facing while maintaining its supply chain due to which they are loosing few of the clients also. Thus, in order to deal with those issues few of the improvement process has also been discussed in this study that might help Amazon in dealing with those issues. Overall, after the completion of the study it can be said that managing the supply of a company is not an easy an and, in that case, proper organizational strategy and the supply chain managers plays a very key role so that it can be maintained in a proper manner.

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