INDEPENDENT UNIVERSITY, BANGLADESH

MGT-330

SECTION-1

REPORT ON Supply chain management

Submitted to

MD MAMUNUR RASHID
Assistant Professor

Department of General Management

SUBMITTED BY : Team High Flyer

Name ID
Md.Farhad Ahmed 1710542
Mahmud Kaiser Naffee 1620179
Nadim Zaman 1610426
Jahidul Islam 1710890

LETTER OF TRANSMITTAL
April 01, 2020
MD Mamunur Rashid

Assistant Professor

Department of General Management

Independent University, Bangladesh.

Subject: Amazon’s Supply Chain Management

Dear Sir,

We submit herewith the attached report on Supply chain management of Amazon.com

The following report was prepared to overview the insights of supply chain management of
Amazon.
In the process of bringing this report, the members of the team (Respective names stated) have
endeavoured to their utmost to maintain the highest of qualities in terms of writing, information
collection and data analysis. The members have furthermore striven to make this report as
comprehensive and relevant to the course as possible.

We would also like to take this opportunity to put forward our most heartfelt thanks for giving
this opportunity.

We hope you find this report satisfactory.

Regards,

Jahidul Islam

On behalf of the group members.

ACKNOWLEDGEMENT
We wish to express our sincere gratitude to MD Mamunur Rashid sir for providing us with an
opportunity to research on the supply chain management of Amazon.com. This project has
enriched our knowledge and skills.

It is our pleasure to work on it and complete this report successfully. The report would not have
been efficient without the guidelines from him. Also, we would like to thank everyone who has
directly and indirectly helped us in completing this report.

We are also thankful to them who made their contribution in our research methods, providing
useful information, data and analysis.

Table of Contents
Cover Page...................................................................................................................................................1

Letter of Transmittal....................................................................................................................................2
Acknowledgement ...................................................................................................................................... 3
Table of Content ..........................................................................................................................................4
Executive Summery .................................................................................................................................... 5

Case study

Introduction of SCM............................................................................................................................6-9

Company Overview(Amazon)..........................................................................................................10-13

Analysis and Finding

SCM Procedure of Amazon............................................................................................................13-14

Conclusion..................................................................................................................................................15

Reference...................................................................................................................................................16

Executive Summary
In today's global marketplace, effective supply chain management is seen as a significant
competitive advantage for a business. The enterprise that conducts robust supply chain planning
activities, delivers increased efficiencies. Supply chain managers plan, schedule, and control that
flow of goods to help the company stay competitive and control costs. They build the bridges
between suppliers, companies, and consumers. Amazon is an American multinational technology
based company, has been contributing to the economy by providing quality consumer product in
a comparatively reasonable price. If the winning factor for Amazon has been investigated, the
result would be its outstanding supply chain procedure. The report tries to highlight how the
supply chain activities of Amazon help the company to be more efficient and competitive in the
market. The supply chain of Amazon has been described in this paper with the light of this
concept.

Increasingly, supply chain management is being recognized as the management of key business
processes that comprise the supply chain. Optimized supply chain management can decrease
total system cost, inventory and cycle times while significantly increasing stock availability and
inventory turns. If these issues can be solved then, it will provide greater profits, improved
customer service and competitive advantage to the company. Amazon has been continually being
benefitted by its outstanding supply chain management. It offers invincible professionalism and
expertise in the entire commercial activities as well as gaining comparative advantage over it
competition and gaining more customer trust and share.

Supply Chain Management

Supply Chain Management is a management of a network of interconnected businesses
involved in the provision of product and service packages required by the end consumers in a
supply chain. Supply chain management spans all movement of raw materials, work-in-process
inventory, and finished goods from point of origin to point of consumption.
What is Supply Chain Management?

Supply chain management (SCM) is the combination of art and science that goes into improving
the way your company finds the raw components it needs to make a product or service and
deliver it to customers. These are the five basic components of SCM:

1. Plan: This is the strategic portion of SCM. Companies need a strategy for managing all the
resources that go toward meeting customer demand for their product or service. A big piece of
SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient,
costs less and delivers high quality and value to customers.

2. Source: Next, companies must choose suppliers to deliver the goods and services they need to
create their product. Therefore, supply chain managers must develop a set of pricing, delivery
and payment processes with suppliers and create metrics for monitoring and improving the
relationships. And then, SCM managers can put together processes for managing their goods and
services inventory, including receiving and verifying shipments, transferring them to the
manufacturing facilities and authorizing supplier payments.

3. Make: This is the manufacturing step. Supply chain managers schedule the activities
necessary for production, testing, packaging and preparation for delivery. This is the most
metric-intensive portion of the supply chain—one where companies are able to measure quality
levels, production output and worker productivity.

4. Deliver: This is the part that many SCM insiders refer to as logistics, where companies
coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers
to get products to customers and set up an invoicing system to receive payments.

5. Return: This can be a problematic part of the supply chain for many companies. Supply chain
planners have to create a responsive and flexible network for receiving defective and excess
products back from their customers and supporting customers who have problems with delivered
products
 Types of Supply Chain Management:

1. Service supply chain management:

The process of proper fulfillment of customer while preserving your profit margins to continue
in a business at a high level of satisfaction. This will include from information about product till
delivery about the product.

Components of service supply change management:

1. Delivery of product
2. Returns of product if customer is unhappy
3. Guaranteed delivery time
4. Quick delivery
5. Information of product

2- Manufacturing Supply Chain Management:

Efficient supply chain management helps forward-thinking manufacturing companies reduce
their costs. The need for a tighter integration and data standards, better manufacturing
intelligence and visibility becomes readily apparent. on expertise in master data management and
supplier relationship management to help you improve your manufacturing supply chain.

Components of manufacturing supply chain management:

1. Production of the product

2. Order of product
3. Timing of production
4. Supply of product

Differences in Supply Chain Designs For A Manufacturing Industry

vs. a Service Industry
The end goal of any company is a satisfied customer. The process of locating, obtaining and
transporting the inputs needed to do this is the core function of supply chain management.
Supply chain design in the manufacturing industry requires a great deal of focus on physical
product and a broader supplier base, while service firms typically have little need for physical
inputs other than office supplies, and often work with a much smaller group of suppliers.

Inputs:
Both the service and the manufacturing industries require an input of labor to complete the
processing necessary to satisfy their promise to the end customer. Additionally, companies in
both industries require inputs from suppliers of various types. Finally, both industries require
capital investment in equipment that allows their employees to do their work.

Most of the cost of manufacturing labor is involved Almost all service industry labor is expended
on procuring, transporting and manipulating physical in manipulating information and material
because of it capital investments in developing relationships.

Machinery and equipment are typically much higher in the manufacturing industry.

Logistics:

Traditional manufacturing supply chain management focuses on logistics in terms. The size and
weight of objects being shipped and the distance from the supplier to the manufacturing facility
can play a major role in the cost of the product. So the manufacturing industry tries to negotiate
better shipping rates and fill containers with product to reduce unit cost,

In service organizations, particularly in the financial sectors, moving of physical material from
one location to another are irrelevant because no physical product is moving except perhaps a
few sheets of paper. So the service industry upgrades servers and installs new software to speed
the flow of communication, thereby reducing the labor costs necessary to produce a finished
product.

Optimization:

In a manufacturing organization, optimization of the supply chain is accomplished primarily by

improving speed of delivery and reducing cost. Companies work to reduce physical bottlenecks
and inventory, and negotiate better pricing on raw materials. The main way to speed production
is to find a faster way to move or manipulate the components.

A research paper published by Eastern Illinois University points out that the main drivers of
optimization in a service model are relationships and information flow. By building partnerships
with companies whose strengths complement its own, a corporation can reduce costs. By
eliminating virtual bottlenecks caused by duplicate approval loops or other intangible delays, a
service company can realize the same goal as the manufacturing company: a lower-cost finished
product, delivered to the customer more quickly.

Overview of Amazon
History:

Amazon.com, is an American multinational technology company based in Seattle, with 750,000

employees.It focuses on e-commerce, cloud computing, digital streaming, and artificial
intelligence. It is considered one of the Big Four tech companies, along with Google, Apple, and
Microsoft It has been referred to as "one of the most influential economic and cultural forces in
the world.

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, 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.

Amazon was founded by Jeff Bezos in Bellevue, Washington, in July 1994. The company
initially started as an online marketplace for books but later expanded to sell electronics,
software, video games, apparel, furniture, food, toys, and jewelry. In 2015, Amazon surpassed
Walmart as the most valuable retailer in the United States by market capitalization.In 2017,
Amazon acquired Whole Foods Market for US$13.4 billion, which vastly increased Amazon's
presence as a brick-and-mortar retailer. In 2018, Bezos announced that its two-day delivery
service, Amazon Prime, had surpassed 100 million subscribers worldwide.

Amazon distributes downloads and streaming of video, music, and audiobooks through its Prime
Video, Amazon Music, and Audible subsidiaries. Amazon also has a publishing arm, Amazon
Publishing, a film and television studio, Amazon Studios, and a cloud computing subsidiary,
Amazon Web Services. It produces consumer electronics including Kindlee-readers, Firetablets,
Fire TV, and Echo devices. In addition, Amazon acquisitions include Ring, Twitch, Whole Foods
Market, and IMDb. Among various controversies, the company has been criticized for
technological surveillance overreach, a hyper-competitive and demanding work culture, tax
avoidance,and anti-competitive practices.

Jeff Bezos founded Amazon in July 1994. He chose Seattle because of technical talent as
Microsoft is located there. In May 1997, the organization went public. The company began
selling music and videos in 1998, at which time it began operations internationally by acquiring
online sellers of books in United Kingdom and Germany. The following year, the organization
also sold video games, consumer electronics, home-improvement items, software, games, and
toys in addition to other items.

In 2002, the corporation started Amazon Web Services (AWS), which provided data on Web site
popularity, Internet traffic patterns and other statistics for marketers and developers. In 2006, the
organization grew its AWS portfolio when Elastic Compute Cloud (EC2), which rents computer
processing power as well as Simple Storage Service (S3), that rents data storage via the Internet,
were made available. That same year, the company startedFulfillment by Amazonwhich managed
the inventory of individuals and small companies selling their belongings through the company
internet site. In 2012, Amazon bought Kiva Systems to automate its inventory-management
business, purchasing Whole Foods Market supermarket chain five years later in 2017

Products and services of Amazon

Amazon. com's product lines available at its website include several media (books, DVDs, music
CDs, videotapes and software), apparel, baby products, consumer electronics, beauty products,
gourmet food, groceries, health and personal-care items, industrial & scientific supplies, kitchen
items, jewelry, watches, lawn and garden items, musical instruments, sporting goods, tools,
automotive items and toys & games. In August 2019, Amazon applied to have a liquor store in
San Francisco, CA as a means to ship beer and alcohol within the city. Amazon has separate
retail websites for some countries and also offers international shipping of some of its products to
certain other countries.

Amazon.com has a number of products and services available, including:

Amazon Fresh

Amazon Prime

Amazon Web Services

Alexa

Amazon Drive

Echo

Kindle

Fire tablets

Fire TV

Video
Kindle Store

Music

Music Unlimited

Amazon Digital Game Store

Amazon Studios

Amazon Wireless

Mission statement of Amazon

Amazon’s mission statement is “We strive to offer our customers the lowest possible prices,
the best available selection, and the utmost convenience.” This corporate mission promises
attractive e-commerce services to satisfy target customers’ needs. The company focuses on the
variables of price, selection, and convenience. In this regard, the following characteristics are
identifiable in Amazon’s corporate mission statement:

Lowest prices

Best selection

Utmost convenience

Vision statement of Amazon

Amazon’s corporate vision is “to be Earth’s most customer-centric company, where

customers can find and discover anything they might want to buy online.” This vision
statement underscores the business organization’s main aim of becoming the best e-commerce
company in the world. In this regard, the following characteristics are identifiable in Amazon’s
corporate vision statement:

Global reach

Customer-centric approach

Widest selection of product

 Supply chain of Amazon
Supply chain is the group of various processes which enables delivery of goods to the customers.
It includes planning, controlling and executing measures ensuring satisfying customers as cost-
effectively as possible. Amazon’s central focus is on customer satisfaction and thus they have
disciplined their supply chain management processes so that their customers get good shopping
experience.

Supply Chain Management – Strength of Amazon

For giving good shopping experience to the customers, Amazon presents wide variety of
products at competitive prices, enables convenient payment options and reliable delivery
process.

Amazon had known that the secret of success is to provide quick and hassle-free delivery to the
customers. Thus, the company started investing on its shipping process and warehouses. Amazon
kept on reducing its shipping time. From 3 days delivery time to same day delivery – they
managed to keep their customers happy and win more and more sales day by day.

Now, Amazon has also managed to enter the very competitive grocery market in US and UK
regions. They are selling more than 4,000 grocery and household products now. All that is
possible only because of their customers’ trust they have won by providing them quick and
reliable delivery.

Amazon supply chain management is based on 4 main points:

 Warehousing.
 Technology.
 Delivery.
 Manufacturing.
Warehousing in Amazon Supply Chain

Company’s warehousing strategy takes the first place, and all sellers have to know why. Amazon
wants to make sure that products sold on their marketplace are accessible anytime from any
place on Earth.
All Amazon’s warehouses are situated near large population hubs. They have well-formed
communications and logistics network allowing to transport products from one place to another.
Amazon has even put small warehouses near not very large towns to improve the customer
experience of those people who don’t live in megapolises. No matter what and where is
purchased, Amazon strives to make every purchase the best one. Inside Amazon warehouses,
everything is also strategically structured. Each warehouse has 5 storage areas, there are robots
which pick and pack products and move them from one place to another if necessary.

Delivery in Amazon Supply Chain

Plenty of various delivery options is what makes Amazon different from other retailers and
marketplaces. Users of Amazon Prime can receive their orders in several hours or less. People
who don’t want to wait for several days while their order is arriving can use fast Prime delivery.
As for other logistics network, Amazon uses a great variety of shipping ways. For example, we
were discussing one of them not so long ago. Their Last mile program shows that fast delivery
means much to the eCommerce giant.
Except for trucks, air, and sea delivery, they own drones (for Prime Air users) which can land
orders on shoppers’ backyards.
UPS, FedEx and USPS companies deal with Amazon logistics as well.
All this allows the company to manage hundreds and thousands of orders every day and stay one
of the best eCommerce players ever.

Technology in Amazon Supply Chain

Amazon’s supply chain management includes technology, as you could already understand from
the previous points about drones and robots. These automation solutions are here to pick and
pack orders, as well as deliver them to your customers.
Technology helps Amazon fulfill orders as quickly as possible and save on staffing costs. So,
they free funds for investing them in improving other supply chain areas.
As for the Prime Air program, it is not full-functional yet, but we assume this a matter of time.
Customers who want to take advantage of using this program with drones need special Amazon
landing mats.

Manufacturing in Amazon Supply Chain

As we all know, Amazon cooperates with third-party sellers, still, the company has found out that
they can produce all these products for cheaper prices and get more profit if they order their own
procurements. Manufacturing of such low-cost items and white-labeling items from third-party
sellers have become part of the whole Amazon supply chain strategy.

Conclusion
A company's supply chain stretches from the factory where its products are made to the point the
products are in consumer hands. A typical supply chain has five different steps. Products start out
as raw materials. In the second step, the manufacturer takes raw materials and turns them into
products. The third step occurs when the finished products get shipped to the distribution facility.
In step four, the distribution facility uses the products to stock a retail store. In the final step, the
products get delivered to the hands of the consumer. The supply chain of Amazon has been
described in this paper with the light of this concept.

Increasingly, supply chain management is being recognized as the management of key business
processes that comprise the supply chain. Optimized supply chain management can decrease
total system cost, inventory and cycle times while significantly increasing stock availability and
inventory turns. If these results can be achieved, it can provide companies with greater profits,
improved customer service and competitive advantage. It has been continuously benefitted by its
outstanding supply chain management Department. It offers invincible professionalism and
expertise in the entire commercial activities of Amazon as well as gaining comparative
advantage over it competition and gaining more customer trust and share.

Reference:
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Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive
advantage: The relevance of resource‐based theory. Journal of Supply Chain Management, 48(2),
3-6.

Bozarth, C. B., &Handfield, R. B. (2016). Introduction to operations and supply chain

management.Pearson Higher Ed.

Christopher, M. (2016). Logistics & supply chain management. Pearson Higher Ed.

Hax, A. C. (2013). Hierarchical production planning (pp. 708-712).Springer US.

Heizer, J., Render, B., & Munson, C. (2016). Principles of operations management: sustainability
and supply chain management. Pearson Higher Ed.