Introduction
Supply Chain Management (SCM) is the administration of the manner in which goods and services flow in an organization. It is the streamlining of the activities of supply of an organization. This is done as a means of maximizing customer value. For organizations to be successful, they must develop an efficient Supply Chain Management. Capacity Management is the means through which an organization ensures the maximization of its production output under different conditions (Trivedi & Madan, 2018). This paper will demonstrate the best practices and effects of SCM by examining Amazon, a company renowned for its excellent supply chains.
Effects of Supply Chain Management
An organization’s capacity is essential in measuring its ability to produce, sell and achieve in a specified period. Quality control is the continuous improvement of products and services to ensure they meet the standards established by the management. It involves regularly reviewing processes, finding improvement opportunities, and taking advantage of them. By repeating this process, the business can improve its overall results and create a more quality-oriented environment.
Supply Chain Management aims to deliver quality products and services to customers. The SCM process ensures delivery of the right quantity in a timely manner. It guarantees that customer support is of high standards. It also improves the efficiency of warehouses and plants. Lastly, SCM leads to an increase in cash flow within the organization as a direct result of the timely delivery of products to consumers. SCM also ensures that the demands and expectations of customers are met. For example, by 2018, Kellogg, a cereal retailer, plans to have saved $475 million (Trivedi & Madan, 2018). Through the SCM system, Kellogg is able to streamline its operation, production, and distribution.
An effective SCM system creates numerous opportunities for savings for organizations. It also makes it possible for organizations to treat disruptions and problems in the right manner. Numerous organizations fail to manage their risks correctly due to their inefficiency in dealing with problems. Investing in an effective SCM system ensures the sustainability of the organization in the long run. Amazon is an excellent example, recording steady growth for years and becoming one of the most valuable companies in the world.
Amazon’s Supply Chain Management
Since its inception in 1994, Amazon has been recording tremendous growth annually. Two decades later, Amazon’s annual sales revenue was slightly below $7 billion. Amazon’s sales revenue had grown to about $233 billion by 2018. This can be attributed to its incorporation of SCM strategies and advanced technologies. Currently, Amazon is the fastest-growing corporation, with a sales revenue of $100 billion. The adoption of advanced technology and the SCM strategies have facilitated its annual growth of 20% (Trivedi & Madan, 2018). Amazon is changing the shape of SCM through the use of bold strategies of supply. It is one of the multinational corporations that deploy advanced technologies in its operations. Its e-Commerce platform contributes about 14% of its total global sales revenue. The effectiveness of Amazon has been driven by a very efficient SCM system. The retail corporation has continuously delivered products to customers in a timely manner.
Amazon’s Capacity Management
Amazon has been taking advantage of the latest technologies to improve its productivity since its inception, starting as an innovative online business when the Internet was still a new concept. It has continued doing so since, spending substantial resources on research into productivity and operation optimization. As a way of managing its capacity, Amazon grants access to its website to suppliers (Trivedi & Madan, 2018). Through this measure, the burden of managing relationships is offloaded from the company. Moradi and Levy (2020) cite Amazon’s advanced worker productivity management tools, tracking their movements and issuing inactivity alerts. However, despite their effectiveness, these measures are sometimes considered excessive and oppressive to the workers. Lastly, the company has been making efforts to replace people with automated robot workers that do not rest and make fewer mistakes.
Amazon’s Quality Control
Amazon constantly tries to improve its services to stay ahead of the competition. To that end, as with capacity management, it takes advantage of the latest concepts, attempting to implement them before other companies. Amazon uses its culture as a means of supporting innovation among its staff. For example, the employees are encouraged to pioneer the creation of new ideas. These ideas act as solutions to problems and boost the corporation’s effectiveness. Amazon has also extensively automated its operation as a way of streamlining its procedures. Williams and Kelly (2017) describe its latest innovation, aerial drones that can deliver goods at unprecedented speeds without requiring dedicated workers to assist them. Through continued research and self-review, Amazon can deliver the quality its clients expect and continuously improve its performance in all aspects.
Conclusion
From the discussion above, it is evident that the corporation adheres to the principles and concepts of SCM. Amazon has invested heavily in developing a sophisticated system in a bid to dominate the retail industry. Currently, Amazon is among the leading multinational corporations in the retail industry. The supply chain management approach that enables it to inexpensively deliver products from their original locations to customers’ houses contributes strongly to this leadership.
Reference
Moradi, P., & Levy, K. (2020). The future of work in the age of AI: Displacement or risk-shifting? In M. D. Dubber, F. Pasquale, & S. Das (Eds.), The Oxford handbook of ethics of AI. Oxford University Press, Incorporated.
Trivedi, S., & Madan, M. V. (2018). Amazon supply chain management: A case study. NOLEGEIN Journal of Supply Chain and Logistics Management, 23-27.
Williams, C., & Kelly, M. (2017). BUSN (10th ed.). CENGAGE Learning.