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Group 7A Role of Logistics in Success of Amazon.com

Group 7A Role of Logistics in Success of Amazon.com

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Published by Arun Sharma

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Published by: Arun Sharma on Sep 29, 2009
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08/01/2013

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ROLE OF LOGISTICS IN SUCCESS OF AMAZON.

COM

AMAZON.COM
Amazon.com : a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Largest online e-tailer of books, music, videos, toys, and gifts. Aspires to become a one-stop shop for merchandise on the Web. B-web type: Aggregation (e-tail) Agora (auctions/Zshops) hybrid model

COMPETITORS

WHAT MAKES AMAZON STAND OUT?

DRIVERS OF SUCCESS
Only Online retailing: Cost efficient and one click ordering Selling an expanded selection of products online Lean Manufacturing and TQM methodologies for services Continually adding new product lines or capabilities Integrating technologies like CRM, SCP, WMS, OMS Launching Innovative products like Kindle

AMAZON’S STRATEGY
AMAZON.COM STRATEGY CONVENIEN CE
CUS TOMER EXP ERI EN C E PIL LA RS

SELECTION

PRICE

SUP PLY CHAI N LEV ERS

SERVICE SCALE SCOPE

DIFFERENCE BETWEEN BRICK-AND-MORTAR & CLICK-AND-MORTAR

SUPPLY CHAIN CHALLENGES
Supply Chain Design Number and location of distribution centers (DCs) Ever expanding product line Order Cost Minimization Internal facility or external partner used to fulfill order Finding the lowest cost solution Inventory Segmentation and Policy Inventory stored in its facilities Vs. Inventory stored in upstream tiers

SUPPLY CHAIN DRIVERS
Facilities: Low expenditure on real estate, employees, inventory and utilities Inventory: Low inventory costs due to direct shipment from to customers from Fulfillment centre. Transportation: Transports orders for delivery, via US Postal Service (60% of orders) or UPS (40% of orders) Information: IT systems in place for faster information flow. Sourcing: Sourcing directly from publishers reduces intermediary costs and ensures

INVENTORY ANALYSIS

E-TAILERS MODEL

IT SYSTEMS

AMAZON’S SUPPLY CHAIN STRUCTURE
INFORMATION FLOW
TIER II I VENDOR / SUPPLIER PUBLISHER / MANUFACTUR ER INDEPENDEN T SUPPLIERTHIRD PARTY TIER II WHOLESALER DC TIER I AMAZON.CO M DCs CUSTOMERS AMAZON.CO M WEBSITE AND IT SYSTEMS

PARTNER DC

PHYSICAL FLOW

DC INBOUND PROCESS
RESERVE STORAGE PUT AW AY PRO CES S STORA GE DECISI ON RANDOM STORAGE PALLET PRIME STORAGE CASE FLOW PRIME STORAGE LIBRARY PRIME STORAGE

PRODUCT RECEIVED STORAG E DET ERM INAT ION

DC OUTBOUND PROCESS
PALLET PRIME PACKING CASE FLOW PRIME PICKING LIBRARY PRIME PICKING

FULL-CASE NONCONVEYABLE SINGLE UNIT ACCUMULATIO N

ITEM SORTATION

PACKING SHIPPING

PACKING

TRANSPORTATION

LOGISTICS DIFFERENTIATORS
Core competence in one-to-one inventory management and distribution Electronic Data Interchange (EDI): For order management, sales reports by vendor Free shipping offers over a certain amount. Six Sigma approach to its distribution services Effective b-web relationships with distributors and suppliers like Ingram Customer Fulfilment Networking (CFN): Direct sourcing from publishers, Efficient delivery system, WMS, OMS, SCP,

LATEST DEVELOPMENTS
Launch of Kindle 2 - a digital-reading device Increased global reach: 6 countries Introduced AmazonBasics, AmazonWireless, AmazonMP3, Amazon Outdoor recreation stores Frustration free packaging initiative Acquired Zappos.com - leading online apparel and footwear retailer Amazon Web services: (AWS) and Elastic Compute Cloud (computing capacity- EC2) – Databases & Data Storage

INSIDE THE AMAZON WAREHOUSE

REFERENCES
• • • • •

http://www.davechaffey.com/E-commerce-Internet-marketing-cas http://logisticstoday.com/global_markets/outlog_story_6813/ https://vendorcentral.amazon.com/gp/vendor/sign-in/183-512235 www.amazon.com www.andyde.com/amazon.pdf

THANK YOU

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