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Independent University Bangladesh (IUB)

Group Name: Avengers
Course Title:Introduction to Production and
Operation Management
COURSE ID: MGT330
Section: 02
Semester: Summer2020
Date of Submission: 19th September 2020
Company: Amazon
Topic: Logistics and warehouse
SUBMITTED TO
Dr. Md. Kharshiduzzaman (SIR)
Lecturer of School of Business at Independent University, Bangladesh.
Group Members
Name ID
Tehsin Ahsan 1730112
Amina Sultana 1731559
Aklima Akhter Promi 1810057
MD. Asif kabir 1710324

LETTER OF TRANSMITTAL
To,
Dr. Md. Kharshiduzzaman
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Lecturer
Independent University, Bangladesh
Bashundhara R/A
Dhaka, Bangladesh
Date: 19th September, 2020
Subject: Submission of the report on Amazon’s logistics solution and warehouse
Dear Faculty,
With due respect, it is our pleasure and honour to be your students and have this opportunity
to present the report. While preparing the report, we gave our best effort throughout the topic
regarding the report. We have provided all relevant information regarding the logistics and
warehouse and we believe and hope that our report will provide you a clear conception about
our topic.
We all gave our best to accumulate required information and we will be more than happy to
answer any question and clarify it fully to your understanding. Thank you for all your help and
support which helped us significantly in preparing the report.
Sincerely yours
Team Avengers

Acknowledgement
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Foremost, we would like to express our sincere gratitude to our instructor Dr. Md.
Kharshiduzzaman for the continuous support, patience, motivation, enthusiasm and immense
knowledge. His guidance has helped in all the time of planning and writing of this report. Our
journey with him in this course has been truly a worthwhile learning experience.
Besides my advisor we thank our fellow mates, for the stimulating discussion, for the sleepless
night we were working together before deadlines, and for all the fun we have had in the last
few days. Without their contribution it would have been an incredibly difficult job to
accomplish. We hope and firmly believe that our faculty will be pleased with the work we are
presenting with.

Executive Summary
Amazon.com is world’s largest international online retail shopping service which was founded
in 1994 by Jeff Bezos. For Amazon and Jeff Bezos, the mission is to become the company most
focused on customer satisfaction, selling absolutely everything, anywhere in the world. In this
report we are going to talk about Amazon logistics solution and warehouses of their supply
chain and inventory management.
From its beginnings in 1995 as one of the first online shopping websites, Amazon.com, under
the stewardship of CEO Jeff Bezos, has focused on the logistics of distribution as central to the
online retail experience. Its growth has been monumental. While the firm started off hand-
delivering books, it now sells almost everything, processing in excess of 400 orders a second at
peak times, and bringing in revenues of nearly $90bn a year. Much of Amazon’s success comes
down to its highly effective supply chain management. Amazon is increasingly becoming a
logistics company, as it facilitates the storage and sale of goods from third party vendors.
Amazon’s supply chain process is simple, yet effective. It starts with the customer placing an
order. The order prompts a red light to come on in the warehouse which shows the worker the
products that have been ordered, and the bar code is matched with the order. The product is
then placed in crates on a conveyor, which goes through the distribution centre before being
sorted by bar codes. Crates arrive at the central point, and bar codes of products are matched
with orders and sorted automatically into one of several thousand chutes before going into a
box. The bar code then identifies the customer order, boxes are packed taped and weighed,
and they are shipped by either US postal service or UPS for the last mile, arriving at the
consumerwithin 1 to 7days.
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Table of contents

Contents

Section 1 : Introduction 4
Section 2 : Warehouse 5
How many warehouses are there, and where are they located-Amazon operates more than
175 fulfillment centers around the world in more than 150 million square feet of space, the
majority located across North America and Europe. 5
What is it like inside an Amazon warehouse-No matter the season, Amazon warehouses are
well ventilated and kept at the same comfortable temperature we do find at home. Skylights
combine with artificial lighting to keep the environment bright, while conveyance systems
shuttle items across the building and boxes from packing stations to awaiting trucks. 5
Amazon holds six different kinds of warehouses or fulfillment centers. Here they are- 5
1. Sortable: Sortable fulfillment centers, around 800,000 square feet in size, can employ
more than 1,500 full-time associates. In these buildings, Amazon associates pick, pack, and
ship customer orders such as books, toys, and housewares. 5
Amazon Flying Warehouse 8
Section 3 : Amazon Logistics 9
As a result, Amazon continues to invest in a logistics network that is ever faster, more
efficient and closer to the customer. The company also remains focused on the United
States, as evidenced by the fifty or so sites under construction in the United States. 10
Amazon FBA (Fulfilled By Amazon) 10
Amazon Transport 11
Amazon Prime Air 11
The last mile battle 12
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Amazon Drones 12
Amazon Key 12
Section 4 : Analysis and Findings 12
Section 5: Conclusion 14
Reference 15

Section 1 : Introduction
Amazon.com is an American multinational technology company based in Seattle, Washington.
Amazon focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence.
It is considered one of the Big Four technology companies, along with Google, Apple, and
Facebook. It has been referred to as "one of the most influential economic and cultural forces
in the world" as well as the world's most valuable brand.
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Amazon is known for its disruption of well-established industries through technological

innovation and mass scale. It is the world's largest online marketplace, AI assistant provider,
live-streaming platform and cloud computing platform as measured by revenue and market
capitalization. Amazon is the largest Internet company by revenue in the world. It is the second
largest private employer in the United States and one of the world's most valuable companies.
To organize and run the complex operation and the whole supply chain of this giant tech
company, it follows some certain pattern of logistics infrastructure to organize one of the
the biggest warehouses in the world. The whole process of logistics infrastructure and
warehouse is discussed below

Section 2 : Warehouse

In the mid-1990s, the Amazon warehouse and its office were one and the same. Over time, one
warehouse became hundreds, and they are now called Amazon fulfillment centers.
What is an Amazon fulfillment center- The name reflects the function: Amazon fulfillment
centers are charged with fulfilling customer orders. In other words, Amazon warehouses not
only store products but also serve as distribution centers where associates pick, pack, and ship
orders quickly and efficiently. Amazon robotics, scanning machines, and computer systems in
fulfillment centers can track millions of items in a day. 
How many warehouses are there, and where are they located-Amazon operates more than
175 fulfillment centers around the world in more than 150 million square feet of space, the
majority located across North America and Europe.
What is it like inside an Amazon warehouse-No matter the season, Amazon warehouses are
well ventilated and kept at the same comfortable temperature we do find at home. Skylights
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combine with artificial lighting to keep the environment bright, while conveyance systems
shuttle items across the building and boxes from packing stations to awaiting trucks.
Amazon holds six different kinds of warehouses or fulfillment centers. Here they are-

1. Sortable: Sortable fulfillment centers, around 800,000 square feet in size, can employ more
than 1,500 full-time associates. In these buildings, Amazon associates pick, pack, and ship
customer orders such as books, toys, and housewares.
2. Non-sortable: Ranging in size from 600,00 to one million square feet, non-sortable
fulfillment centers employ more than 1,000 full-time associates. In these centers, associates
pick, pack, and ship bulky or larger-sized customer items such as patio furniture, outdoor
equipment, or rugs.
3. Sortation centers: At sort centers, associates sort customer orders by final destination and
consolidate them onto trucks for faster delivery. Amazon’s sort center network provides
full- and part-time career opportunities and is powering our ability to provide customers
with everyday delivery, including Sunday delivery, which customers love.
4. Receive centers: Amazon’s receive centers support customer fulfillment by taking in large
orders of the types of inventory that we expect to quickly sell quickly and allocating it to
fulfillment centers within the network. Full-and part-time roles are available in these
buildings, which are about 600,000 square feet in size.
5. Specialty: Amazon’s fulfillment network is also supported by additional types of buildings
that handle specific categories of items or are pressed into service at peak times of the year
such as the holiday season. Many of these buildings feature part-time opportunities with
the option to convert to full-time.
6. Delivery stations: In these buildings, customer orders are prepared for last-mile delivery to
customers. Amazon delivery providers enable our fast, everyday shipping.

As per high customer demand for low price and great choice, Amazon build capacity to meet
this demand.Their logistics network is agile, over 110-buildings strong, and supports more than
250,000 employees making $15 an hour or more, with full health benefits, generous parental
leave, career training, and retirement savings opportunities

Automated warehousing system

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In 2012, Amazon acquired the company that makes its robots, called Kiva Systems, for $775
million, and since 2014 it has deployed more than 100,000 of the machines in 25 of its 149
warehouses worldwide.Inventory at warehouses with robots is stored using the same strategy
as in Amazon’s non-robotized warehouses. The difference is that Amazon workers in robot-
equipped warehouses don’t need to bring items to the shelves for stocking—the robots bring
the shelves to them. Rather than humanoid robots, they’re small box-like machines that pick up
shelves and move them along a grid, shuffling other shelves within the grid to make way for
whichever shelf the computer system says contains available space. As with non-robotized
warehouses, the workers then scan the item, place it on one of the shelves—wherever there is
free space—and scan the shelf so the computer knows where the item is located.

Kiva’s robots have taken Amazon’s random organization strategy and made it even faster.
Deutsche Bank estimated in 2016 that the “click to ship” cycle—the time it takes to pick a
product from the stacks, pack it, and ship it—was around 60 to 75 minutes when employees
manually handled the process. With the aid of robots, the same job could be done in 15
minutes. Warehouses equipped with Kiva robots can also hold 50% more inventory than those
without them.

In the process of building this elaborate system, Amazon has completely redefined warehouse
efficiency and customer convenience. Through its Prime membership, it has promised tens of
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millions of customers free two-day shipping on more than 100 million products, and, last year,
it shipped 5 billion items to them. “That was the major innovation,” says Daniel Theobald, who
cofounded a warehouse robotics company called Vecna in 1998 and counts major retailers and
logistics companies as clients. “As soon as people realized, you can order something and get it
tomorrow, that turned the industry upside down.”

Amazon Flying Warehouse

It is a somewhat surrealist patent for the moment filed by Amazon of an airship that would act
as a floating warehouse from which drones would come to deliver directly within a certain
radius around the airship. This clearly shows the Amazon Group’s extremely long-term vision to
always try to deliver its customers ever faster at the lowest cost.

Do products sold on Amazon Warehouse come with a manufacturer’s warranty?

No. Used products generally do not come with a manufacturer's warranty but all of our items
are backed by Amazon’s standard 30-day return policy, and a 90-day return policy for Renewed
items.

What is the replacement policy for Amazon Warehouse products?

Amazon Warehouse offers free replacements within 30-days from purchase when there is a
product with the same listing condition available in our inventory. Due to the unique nature of
each used product sold on Amazon Warehouse, we may not have similar conditions available.
Customers can return any item within 30-days of receipt for a full refund.

Robotics in Amazon Fulfillment Centers:

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In some fulfillment centers, robots work alongside human workers. Conceptually, the “chaotic”
process is the same, but the robots add some speed. For example, in robot-equipped fulfillment
centers, robots bring shelves to workers instead of workers looking for shelves. It’s essentially a
faster version of Amazon’s randomized put away system.

Section 3 : Amazon Logistics

Amazon Logistics is a shipping and delivery service meant to complement existing providers like
UPS, USPS and FedEx.

In 2018, Amazon had more than 800 logistics sites counting around 20M m^2 worldwide, with
half of its sites based in the US:

● Fulfilment centre (round 300 worldwide)

● Delivery stations (round 300 worldwide)
● Prime Now Hubs (small warehouses close to cities, they allow Amazon to achieve
deliveries within 2 hours and represent the future for Amazon – round 80 worldwide)
● Sortation Centres (distribution centres that allow parcels or pallets to be sorted, they
are generally located next to fulfilment centres – around 80 worldwide)
● Pantry/Fresh Food DC’s (fresh produce distribution centres – round 20 mainly in the US)
● Whole Foods Retail (12 warehouses gained after Whole Food Group takeover)
● Airport Hub (in construction in Kentucky)
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As a result, Amazon continues to invest in a logistics network that is ever faster,

more efficient and closer to the customer. The company also remains focused on the
United States, as evidenced by the fifty or so sites under construction in the United
States.
Amazon FBA (Fulfilled By Amazon)

Amazon FBA (Shipped by Amazon in French), one of Amazon’s weapons, works very simply:
people send their products to Amazon, they store the products until they are purchased on the
platform, then Amazon takes care of shipping and delivering those products to the end
customer.This technique allows Amazon to increase its product offering while outsourcing the
high inventory cost. This allows Amazon to optimize its financial ratios in order to be able to
invest more and more in technology and services.

FBA now represents nearly 53% of Amazon’s sales, which allows the company to continuously
increase its size with new incoming products and its profitability with the outsourcing of
inventory costs.

1. Products will be sent to Amazon

2. Amazon stocks those products
3. Customers buy those items
4. Amazon prepares the order
5. Amazon send sold goods to customers
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Amazon Transport

In terms of transport, the majority of deliveries are now subcontracted by Amazon. But their
objective is to develop their own service to deliver 50% of orders in advance.

4 types of delivery exist at Amazon for the moment:

● Drop Shipping (delivery by the supplier, however, this mode is not highlighted on the
Amazon site because the customer experience is not controlled, i.e. Amazon never sees
the products and can never control their delivery time)
● “Slow Free Delivery” (3/5 days)
● Prime: Delivery in less than 48h (for subscribers – 40€ in France)
● Prime Now: Delivery in less than 2 hours (under certain conditions, notably
geographical). Prime Now also has only 30,000 references, mainly on so-called “urgent”
products (Beauty, Health, etc.). Once again, the strategy is to develop these Prime Now
Hub throughout metropolitan France.

The problem with these fast deliveries is the cost of transport. While the cost of storage has
remained stable for about ten years, the cost of transport has exploded.

Amazon Prime Air

Amazon is building its own fleet of express aircraft to build its air delivery network. The fleet
currently consists of 40 aircraft (Boeings 767-300) but is currently expanding. In parallel,
Amazon acquired an air hub in Kentucky for $1.5 billion.

● 40 Boeing 767-300 fleet

● Goal: Develop its own air delivery network
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● Air Hub in Kentucky acquired for $1,5 B

The last mile battle

The last mile before delivering the customer. This is a very expensive point in terms of logistics.
To solve this, Amazon has acquired 20,000 Mercedes vans that Amazon will resell as a credit to
small entrepreneurs who will handle deliveries for Amazon, under the name Amazon Flex Kit.

Amazon Drones

A very good communication boost from Amazon because delivery by drone remains impossible
in urban areas for several obvious safety reasons. Based on the Amazon principle, it claims to
be able to deliver in less than 30 minutes within a 16km radius of the delivery centre.
Nevertheless, Amazon is putting in place strong lobbying to achieve its goals.

Amazon Key

Amazon offers to change customer’s lock so that the delivery person can drop off a package at
home even if the person is not there. The delivery person would be filmed to ensure safety.
This innovation could enable Amazon to significantly reduce its “last mile” costs.

Section 4 : Analysis and Findings

Analysis of Warehouse

Amazon failed to hold ethic position during corona virus outbreak:

•A dozen Amazon workers told CNBC they’re terrified to go to work during the pandemic, while
others have expressed frustration over how their employer has handled the situation.

•Warehouse workers and delivery drivers say they’re forced to choose between going to work
and risking their health or staying home and not being able to pay their bills.
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•At some facilities, essential supplies like hand sanitizer and disinfectant wipes are rationed or
there’s none available, leaving workers at risk of catching the corona virus.

Amazon treats their warehouse workers as robot:

Group of workers with their fists raised in solidarity hold a scrawled sign: “We are humans not
robots!” They and others at an Amazon warehouse in Minnesota protested in March and on
July’s Amazon Prime Days. They were speaking against the day-to-day dehumanizing reality of
their workplace.

This company built one of the world’s most efficient warehouses by embracing chaos:

Other than that, Amazon holds the best warehouses or fulfillment centers on the world. It tries
to adopt every new and modern technology every time to make themselves more efficient and
reliable. It is now the biggest online shopping center in the whole world. Even before they goes
for automated warehouse a worker places something on a shelf, she uses a handheld computer
to scan a barcode on both the product and the shelf. This allows the computer to keep track of
where every item is located. Amazon has also focused on improving its delivery process over
the “last mile,” from warehouse to doorstep. The company is building its own cargo airline and
has been experimenting with drones around the world, both efforts that have attracted the
attention of tech enthusiasts. But while the key to a speedy delivery is making it as streamlined
as possible, it all starts at the warehouse, where Amazon’s strategy rests on a simple decision to
leave stuff wherever there’s space

Amazon Logistics Analysis

Advantages:
■ Over 200 million Amazon customers worldwide.
■ Many potential buyers are looking for products only on Amazon.
■ A fair bit of Traffic from the very first minute without having to pay for extra advertising.
■ Hassle- Free order processing
Amazon will be the one to communicate their customers who want to purchased product and
they will also process for the products returns.
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■ Affordable shipping
■ Amazon prime shipping qualification
When you fulfil through Amazon’s FBA programme ,all prime members can advantages of the
two-three days shipping.
■ Selling using Amazon’s fulfilment service have higher chances of winning the buy box.
■ Amazon added live map tracking following to Amazon Logistics for clients to follow their
request
And get photograph affirmation once the order is received.
■When other delivery service like USPS FedEx are slowed down during seasonal or high volume
deliveries Amazon logistics still keeps up with the demand.
Disadvantages:
■ Amazon use third party logistics partners, these partners are not amazon employees as FBA .
These partners are not Amazon employed. If the orders are not delivered Properly it will affect
seller feedback score and affect the chances of winning buy box.
■ Seller don’t control logistics partners .
■ Losing track of inventory
■ Pooled inventory
■ Product shipping concern
The last and remain concern is the difficulty in sending the customer items to any of the
Amazon warehouses. Deciding whether to use fulfilment by Amazon or not is a tough decision
to make.

Section 5: Conclusion
Amazon's slogan is "Work hard. Have fun. Make history." It is meant to signify a company
which is aspirational and enjoyable. The reflect of this slogan can also be seen in the company’s
overall infrastructure. In the recent pandemic of covid 19, Amazon increased its minimum
warehouse wages by $2 to $17 per hour last month and fulfillment centers temporarily stopped
accepting shipments of non-essential items so that the company can restock household goods
and medical supplies.
Amazon is requiring warehouse workers to maintain a distance of at least six feet from one
another and has canceled daily stand-up meetings which bring employees into close proximity
with each other.
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It is difficult to conceptualize the sheer size of an Amazon fulfillment center, which can range
from 400000 to 1milion square feet A typical Amazon warehouse is comparable to 10 football
fields lined

During the recent pandemic, amazon announced plans to hire 100000 new warehouse workers
to cover for sick employees and respond to the surge in orders from customers practicing social
distancing.

The percentage of consumers who said they are spending more on Amazon jumped from 14
percent to 34 percent. Consumers are spending less on other sites, like eBay, Chewy, and Etsy,
according to the analysis.
Amazon is spending more than $350 million on its response to the pandemic, lucrative cloud
arm, growing advertising business, and grocery store chain.

Amazon’s relative resilience could reshape the e-commerce landscape when the coronavirus
threat passes. Millions of Americans are reporting job losses at a time when Amazon is hiring.
Retail stores are shutting down at a time when Amazon’s demand is surging. Though the tech
giant is not immune to economic turmoil, it could come out of the crisis in a more dominant
position than before.

Reference