AFMR/Test Paper – AT2 /Strategic Supply chain Management/ FT 301C

December 2022, Batch 2021-23

1a. Explain the SCOR model in Supply chain.

1b. What do you understand by Multi echelon model of Inventory.

Question Word Marks BL CO PO PI

limit
1a 50-60 5 Memory+ 1 - -
Understanding
1b 50-60 5 Memory+ 1 - -
Understanding

2. Excess inventory is like a leech that slowly sucks resources and money out of a business. TO
kill the creature Dell Inc. is steadily replacing inventory with information. Inventory Is a Security
blanket’ says Lance Vao Hooscr, director of e-Commerce at Dell. 'The only reason company’s
build up inventory is because they don’t know about events that are going to happen. The more u
know, the less inventory you will have to carry." Right now, Dell carries about seven day of finished
product. The goal is to count that low figure in minute. The company is turning to the Internet to
collaborate and conduct business with suppliers and customers at unprecedented levels.

Dell recently created customer web pages for its top thirty suppliers, whoes employees can log on
to a secure, personalized site to view demand forecast and other customer sensitive information-such
as who the dell customers are-and how much equipment each is ordering-to help them better guage
demand. As a result, suppliers can more easily match their production schedule to Dell’s Making only
what is needed when it is needed.

Dell is also using the internet to create a community around its supply chain. The Web sites all
have links to bulletin boards where partners from around the world can exchange information about
their experiences with Dell and its supply chain. “The internet is the core of everything what are
doing," sails Kevin Rollins, vice chairman of‘Dell. It provides the capacity to improve the flow of
information, eliminate paper based functions, and link global.

Dell is using the Internet to form tighter links with customers, too. For many of a business users,
the company has created Web pages containing approved configurations, pre negotiated prices and new
work-flow capabilities, so when an employee request a new computer, the order is automatically routed
to the appropriate person within the buying organization for approval. Rollins says Ford Motor
Company saved about $2 million in initial procurement costs by using its customized web
 page. With information technology, the value of inventory being replaced by the value of information, he
says.

1. How Dell uses the information sharing concept?

2. Implement a suitable Supply chain strategy for Dell to achieve strategic fit?

Question Word Marks BL CO PO PI

limit
2a 7.5 Application 2 1 1.2.1
2b 7.5 Application 2 1 1.2.1

3. The production department of a company requires 3600 KG of Raw Material for

manufacturing a particular item per year. It has been estimated that the cost of placing an order is
35 Rs from supplier A and same is 32Rs from supplier B and cost of carrying inventory is 25%
of the investment in the inventories. The cost price is Rs 10 per Kg of supplier A and Rs. 11 per
Kg of supplier B. Help the purchase manager to suggest best ordering policy for Raw Material
from the given options and comment on your findings if company wants to maximize its profits
rather than minimizing the cost will your selection changes. Selling price is 15 Rs Per Kg.
Analyze the time period between orders and no. of orders per year from supplier A and B.

Question Word Marks BL CO PO PI

limit
3 - 5+5+5 Analyze 3 2 2.4.1, 2.4.2
 AFMR/Assignment – AT3 /Strategic Supply chain Management/ FT 301C

December 2022, Batch 2021-23

CO4
Report writing:
Make a report on Modern logistics practices on any one company of your choice.

Format of the report

1) Introduction to Modern Practices in Logistics
2) Description of chosen company, Modern practices in that particular company

3) Political, Economical and Societal Effect of use of Modern logistics

4) Conclusion and Presentation of report

This has to be individually answered

“Modern logistics is the only effective way to be sustainable in business” Give your opinion.

Instructions
Word limit of report 200 words/Section

A group of 10 members can do the research and will make the report

You will be evaluated as a team

Your report should have a front page with the title, company name and name of the
students in team

Question Word Marks BL CO PO PI

limit
1 200/section 5 4 3 3.2.1
5+5 4 4.1.1,4.1.2
5 5 5.3.1
Political

The effects of Amazon on employment in the CEP sector

Initially founded in 1995 as an online bookseller, Amazon started to expand its operations
quickly. Three years after launching its website, Amazon began to expand its choice of
products, started to sell music, videos and electronics and became an online retailer (Ritala
et al., 2014). Amazon’s business strategy was characterized by aggressively expanding and
diversifying its product offerings. In 1998, it had already expanded geographically and
launched its website in Germany, the United Kingdom and India. Amazon is known for an
aggressive expansion strategy, a particular strong focus on data-driven management and a
demanding workplace culture that marks a contrast to rival big tech companies such as
Google (Kantor and Streitfeld, 2015). Consequences are high worker turnover, not only
inside its warehouses but also in its headquarters. Originally, Bezos planned to name his
company relentless.com, which still links to Amazon’s website (Stone, 2013; Dumaine,
2020).

Today, Amazon is not only the largest online retailer worldwide, but also on track to
surpass Walmart as the world’s leading retailer, and accounts for an ever-increasing
revenue share in other industries, such as logistics or cloud services. Amazon became the
fourth most valuable company in the world in 2020, while its market capitalization has
increased in the last 7 years from $200 billion to $1.7 trillion (Statista, 2021b).

econd, regulation of employment matters for labour standards and the diffusion of
independent contracting. As the German example shows, employment laws make a
difference for the proliferation of platform-based organizational models, which
combine vertical integration with highly fissured work practices. The protection of
labour standards in legacy firms matter for the business models of competitors and
the role of labour. As companies also compete over workers and have to ensure a
reliable service, a pool of better-trained workers might opt for better employment
conditions at legacy firms. Only where the traditional postal services have been
outcompeted by private competitors are they not able to protect their labour
standards. Moreover, forcing firms to internalise some of the costs of
subcontracting and fissuring make extreme forms of precarious labour less
attractive.
Platform firms have already made many inroads in other sectors. The example of
Amazon in logistics can be complemented by the effects of Facebook for the media
industry, Google and Apple for the education sector, or Uber for the passenger
transportation sector. Not all sectoral platforms pursue the dissemination of
independent contractors as an employment model. But platforms are inherently
drawn towards contractors, as the platform business model is based on spot-
market trading and alien to long-term contracting.
While the platform effect will continue to disseminate into established industries,
policies and institutions will shape the process. 
Stance of governments towards Amazon

Most people either love or hate Amazon and this extends to politicians and government officials as
well. Former US President Donald Trump was vocal in his dislike of the tech giant and sometimes
criticised the company and its then CEO Jeff Bezos on Twitter. The current President Joe Biden also
criticizes Amazon for paying low taxes and its opposition towards formation of labour unions.   In
February 2021 Biden “released the 2 ½-minute video. While he omitted the name of the powerful e-
commerce giant, his remarks were seen as an unmistakable show of solidarity with a labour
movement that failed to secure anything similar from his recent predecessors.”

Efforts of Governments on Cyber-Security

Increasing integration of internet and internet-based products and services into various aspects of
personal and professional lives of people has prompted the emergence of cyber-crimes in various
forms. At the same time, governments are fighting cyber-crimes through various measures, although
the extent of range of measures employed and the extent of effectiveness of their application vary
from country to country. Efforts of governments around the world to enhance cyber-security have
positive implications on the performance of e-commerce companies such as Amazon through
increasing consumer trust on online transactions.

Amazon Lobbying Practices

The tech giant engages in lobbying practices to attempt decrease the negative implications of
political factor described above on the bottom line for the business.  As it is illustrated in figure
below, Amazon has been increasing its lobbying budget in the US for almost two decades with only
a slight decrease in 2008. In 2021 The e-commerce giant spent more than USD 20 million attracting
more than 80 lobbyists.  The largest internet retailer in the world by revenue focuses its lobbying
efforts on the whole range of policy issues including its tax battles, corporate tax reform, antitrust
lawsuits and others.

Economic

Economic Factors in Amazon PESTEL

Analysis
There is a whole host of economic factors such as taxation and inflation rates, overall and industry-
specific economic growth, unemployment levels and changes in currency exchange rates that
directly affect the volume of revenues and growth prospects of Amazon.

Changes in Currency Exchange Rates

In 2021, net sales from international business accounted for more than 31% of Amazon consolidated
revenues. Therefore, the business is subjected to currency exchange risks to a great extent. For
example, if the U.S. Dollar weakens year-over-year relative to currencies in Amazon international
locations, its consolidated net sales and operating expenses will be higher than if currencies had
remained constant.

Likewise, if the U.S. Dollar strengthens year-over-year relative to currencies in Amazon international
locations, its consolidated net sales and operating expenses will be lower than if currencies had
remained constant. For instance, as a result of fluctuations in foreign exchange rates throughout the
period compared to rates in effect the prior year, International segment net sales in Q2 2020
decreased by USD446 million in comparison with Q2 2019.[4]

Cost of Labour

Cost of labour is another important economic factor that affects the e-commerce and cloud
computing company. Amazon is able to operate with razor-thin profit margin of about 7,1% due to
saving in the costs of resources, including human resources. The median wages paid to 1,3 million
Amazon employees equalled to USD 29,007 in 2020, an increase of only USD 159 compared to the
previous year[5]. In contrast the median wages of Google and Facebook employees are USD
133,066 and USD 124,000 respectively.

Increase in the cost of labour is going to jeopardize the profit for the e-commerce giant with direct
implications on the long-term growth of the business. Amazon senior management decided to adopt
a proactive, rather than reactive approach towards external economic factor of cost of labour.
Specifically, in 2018 the largest internet retailer in the world by revenue increased hourly wages of
employees, including seasonal workers in US to USD 15,00.

Changes in Taxation

In June 2017, former US President Donald Trump spoke of a necessity to introduce ‘internet tax’,
specifically referring to Amazon. Analysts noted that “one possibility is that Mr. Trump was thinking
of a proposal to allow state governments to force internet retailers to collect sales taxes from their
customers”[6]. As of March 2022, The largest internet retailer in the world by revenue started
collecting sales tax nationwide. This instance can be referred to as an illustration of potential
implications of economic factor, namely taxation on Amazon.

Social/Sociocultural Factors Influencing Amazon

Social conditions are a determinant of Amazon.com Inc. This aspect of the PESTEL/PESTLE
analysis model identifies the impact of sociocultural changes or trends on the company’s
performance as a leading online retailer and provider of information technology goods and
services. Considering such trends in the remote or macro-environment, Amazon faces the
following sociocultural external factors:

1. Increasing wealth disparity (threat)

2. Increasing consumerism in developing countries (opportunity)
 3. Increasing online buying habits (opportunity)

The increasing wealth disparity refers to the increasing gap between the rich and the poor in
many countries. This PESTEL/PESTLE analysis considers such a sociocultural trend a threat
against Amazon.com Inc. in terms of the potential stagnation of disposable income levels and the
corresponding stagnation of the remote or macro-environment of the industry. Higher disposable
income levels are more favorable in increasing the e-commerce company’s potential revenues. In
addition, an increasing degree of consumerism creates opportunities for growing the e-commerce
and IT services business. For example, higher consumerism in developing markets increases the
potential success of Amazon.com Inc.’s generic strategy for competitive advantage and intensive
strategies for growth, as the company looks to expand its global online retail operations in these
locations. In relation, the company stands to benefit from increasing online buying habits, as
more people around the world prefer to buy products through the Internet. The external factors in
this aspect of the PESTEL/PESTLE analysis of Amazon indicate the benefits of focusing on
market penetration and expansion in developing countries.

Conclusion

mazon Supply Chain Conclusion

Amazon’s future is quite simple: more products, more services, more
countries, faster and simpler thanks to more data while being more
omnichannel with more presence near major cities, more powerful by
imposing its new standards and always less expensive.

Amazon Supply Chain has many strengths:

 Long term vision & “No limit” in the sense that nothing seems
impossible
 Customer focus
 Powerful and independent logistic network
 Data & Technologies: able to challenge Google
 Volumes to lower prices
 Monopoly company
 Risk appetite when it comes to innovation
But Amazon also has some challenges to face :
 Its monopoly, which could be a danger to the regulator
 Its establishment in China, particularly because of Alibaba
  The cost of transport for the last mile to make delivery
accessible to all
 Its number of employees in relation to its number of robots
 The customer experience of its market place because of an
oversupply
 Oversupply of choice kills choice
 The rate of Amazon’s innovations in supply chain management has
been mesmerizing, making it difficult for lower-volume competitors to
keep up. Amazon is forcing its major competitors to invest more in
supply chain automation, lessen the overall product delivery time,
increase the number of warehouses, and even engage in product
manufacturing.

 Its acquisition of Whole Foods is also a bold declaration of its move to

embrace brick-and-mortar retail, and further emphasizes the
convergence of traditional retail and e-commerce strategies. Most
importantly, Amazon’s unique supply chain strategies and continuous
technological innovations have already changed the way supply chain
management works. With impending advances in robotics, drones, and
other autonomous vehicles, one can only guess what innovations are
next for Amazon.-

 --------------------

Modern Trends in Logistics

Supply chain digitalization is at the top of the list in using logistics to build customer
satisfaction and save companies money. This concept is based on the idea of using the
latest tech programs to mesh with other physical and digital technologies to redesign
their logistic formula.
It is not enough in this modern era to add more hardware and software to the existing
system. There has to be a complete redesign of the approach to the logistics question
to be prepared for the future.
The Internet of Things (IoT) is the new terminology for the transfer of data from one
source to another without the use of human input. It helps companies manage the
warehouse, keep track of the inventory, preview delivery routes, and reduce dead
mileage. This becomes a critical element of reducing shipping freight rates and is a
direct benefit to the customer.
Artificial Intelligence
The logistic management system must redesign their practices to stay competitive. The
use of AI (Artificial Intelligence) has many uses in the modern approach. This thinking
includes the use of gesture recognition instead of a keyboard and mouse, and
autonomous vehicles (self-driving cars). All of this is designed to eliminate human error
in locating shipments and moving the cargo from one place to another.
Circular Supply Chain
The traditional logistics connected to moving goods was the linear track from the raw
material to the manufacturing plant to the consumer. A more modern approach will be
to use previously used products as raw materials. This system is known a reverse
logistics, and it helps companies reduce administrative and transportation costs, create
better customer loyalty, and conserve resources.
Wearable Devices
Another modern trend in logistics is the use of wearable devices by employees to take
inventory and maintain data in real time. Incorporated with the use of the Cloud
technology, this allows companies to keep on top of the stock, track the shipments that
keep the goods moving to the right locations, and stay in touch with product demand.