Introduction
Amazon is the largest online retail company providing cloud business services. The business started with bookselling and has expanded to other services and consumer goods, electronic equipment, and digital media. It sells e-books, tablets, televisions, Kindle Fire and adapters for media streaming. Its web services are elaborate, changing and developing cloud-computing platforms. Amazon’s first services were initiated and launched in 2006 to provide business services for client applications and websites. The company’s backbone rests on its EC2 (Elastic Compute Cloud) and S3 (Simple Storage Service). This structural design supports the increasing collection of web activities and services. The company has its website, customer service, software development, and fulfillment centers in different locations and operation offices.
Methodology of Amazon Appraisal
- Review of supply chain management approaches and functions
- Review of approaches to material management
- Analysis of material management concerning competitive advantage
- Research on Amazon delivery reports
- Analyzing the roles of its integrated business systems
- Analyzing the contribution of the business system roles to material management and logistics
- Analyzing the contribution of integrated business systems to achieve competitive advantage
- Review of the roles of emerging technologies to the organization supply chain;
- Application of IT, material planning, and system development on new emerging technologies
Amazon’s Approach to Materials Management
A review of the supply chain looks at the planning, implementation, and control of the efficient and effective movement of goods and services. The review also depends on the associated information from the point they originate to the point of consumption by the intended consumers to achieve their purpose. There exist a robust supply strategy for Amazon, and the pieces include warehousing, delivery, technology, and manufacturing.
Amazon has an expert warehouse strategy that allows flexible access to products and services. Notably, their warehouses are strategically located near large cities, which are densely populated. The inventory is equally spread, which ensures supply and demand meet. Amazon also has mini-warehouses in other smaller locations, which ensure effective distribution and delivery of products to the intended customers and users. The warehouses exhibit internal optimization; each has five unique storage zones and allows staff and robots to freely pull products instantly as they are moved to the delivery point. Fulfillment centers play a crucial role in the supply chain system. Some storage zones are for small, large sortable products, footwear, apparel and returns. Some centers handle large and sortable products for faster identification, packing and delivery. The fulfillment centers’ arrangement allows for proper material management from creation to delivery to the customer on time.
Amazon’s product delivery involves several delivery options compared to its competitors. The delivery options have free and two days prime deliveries. There is a Prime-Now provision which delivers products within two hours. Amazon uses branded trucks, delivery vans, bikes and drones to deliver items to the customers in a timely fashion. Amazon has also capitalized on other delivery companies such as UPS and FedEx to meet their demand and customer needs. It has a wide range of strategies that enable the company orders to be dispatched faster and more efficiently to every destination. Having looked at Amazon’s processes that range from storage arrangement, packaging and dispatch, to the available provisions for delivery, it is evident that the process is efficient and cost-effective.
Amazon’s supply chain and management use technology in its operations. There are robots and automation solutions for packing, picking orders, stacking, and storing inventory. The use of technology reduces staffing and warehousing costs and increases efficiency in operations and delivery speed. The freed-up funds are used in other supply chain requirements. The drone deliveries and the launching of Amazon Air facilitate efficiency and timeliness in deliveries (Hove-Sibanda and Pooe, 2018). However, drone services are limited to distance and requirements like proximity to drone-facilitated warehouses.
Consequently, Amazon is flexible to allow third-party sales because of its high manufacturing ability. It also manufactures its products at lower costs which are cheaper and more profitable. It also does the labeling of products from other sellers to meet market expectations. The retailer offers branded product lines for all its products enabling it to own the product life cycle; from design, marketing, storage, and shipment. Its robust supply chain management system allows sellers to expand their businesses internationally and with levels of independence.
Amazon has 11 marketplaces representing the largest e-commerce business opportunities. Sellers have the mandate to sell after registering as well as access to customers who know the brand and possibilities of expansion into other market places. The seller enjoys the brand without upfront payments and costs of building recognition and business name. In this way, the consumers can also receive cost-effective products within their convenience of time or place. The supply chain approach allows for shipment of inventory to Amazon warehouses or fulfillment centers, making it possible for customers to receive their shipment as ordered.
Amazon material management in the supply chain follows the basic principles. They include space utilization, safety, flexibility, environment and standardization. The quality of products and the materials used in production are of the highest standards. This helps in keeping the operation and production running effectively, thus improving the quality of dispatched products. Quality products attract more customers in the global market because of their durability. The packaging and storage by Amazon are exceptional, allowing for sorting that reduces the lead time. Short delivery time brings customer satisfaction; hence, the company is able to retain its customers on a daily basis.
Products with reduced time of delivery and efficient inventory systems determine the levels of competitiveness in the market. A supply chain management system with a shorter product cycle reduces the risks of having an enormous inventory. The company can sustain itself in the market due to the fast delivery time and effective material management (Du et al., 2018). This makes it unrivaled compared to other companies with the same products within the market. The company also considers the availability of resources, raw materials, production, transportation, material, warehousing, design, delivery, and materials preparation. Amazon is, therefore, able to compete effectively and efficiently with other businesses and organizations in the market.
Due to its enormous economies of scale and comprehensive supply chain strategies, Amazon can keep its per-unit cost to a bare minimum that attracts its customers, enabling it to remain on the lead amongst the industry players. The innovations in the supply chain remain remarkable; as such, the low-volume industry competitors cannot cope with the standards. The competitors are now concentrating more on the automation of their supply chain to reduce product delivery time, increase their stores, and begin manufacturing products.
The Role of Integrated Business System Approach
Amazon’s business integrated system has features that facilitate its production, sourcing, inventory, purchases and other features that make faster delivery by reducing lead time. The system has the purchase workflow, sales flow, inventory and manufacturing, enterprise-level features and customizable templates. The system has a simple setup that takes few seconds to get it running. It has an automated design feature, and there is seamless synchronization of products, sales, and customers in real-time.
The automated order processing allows the customers to do faster ordering while fulfilling the pick, pack and shipment. There is integration with the shipping applications whereby the customer or seller can estimate the shipping cost, printing labels, and the postage stamps. The business integration system prioritizes customer’s details that can be sent via accounting software and limiting double entries. At the same time, the daily sales can also be consolidated into a single sale order. The stock level updates from various sale channels, internal sales, stock and purchases are all synced automatically to Amazon.
The integrated material management has a role in coordinating the planning and sourcing, purchasing products, moving, product storage, and controlling the materials in an optimized manner. This helps provide services to customers efficiently, effectively, and at low costs.
The integrated business system features are embedded in an Enterprise resource planning and the inventory management system (Krajewski and Ritzman, 2009). The business can manage its finances, operations, logistics, inventory, placing orders for materials, tracking of products, procurement, suppliers, all done in a single place to reduce the lead time so that products reach customers at the shortest time.
Amazon’s logistics is concerned with managing the flow of products and services from the warehouses to the consumers to meet their needs. Amazon logistics handles electronics, food, equipment, materials, among others. This aspect is made possible by integrating the flow of information, handling materials, manufacturing, production, packing, packaging, transport, inventory, warehousing, and security (Aćimović et al., 2020). The automated software has integrated all the processes and functions, thus reducing complexities and delivery time. Resources are therefore minimized, and the savings are subjected to other operations.
The Amazon warehouses are automated fully to ease their operations, making them more effective and efficient. The use of robots and integrated systems is expensive for the business; the robots perform several similar tasks and are trained to understand the environment. Automating and integrating business processes to deliver products may be expensive, but it reduces the time to deliver items hence customer satisfaction.
Amazon uses outsourcing inventory management and insourcing of logistics. The supply chain utilizes the outsourcing services of its inventory. The products that are not frequently requested are not kept in the regular stores. It depends on its logistics, and that ensures timely delivery to the expectation of the customer. It also understands that if it depends on third-party logistics for delivery, there will be a costly delay. The integrated system allows for access to all the stores with different products preferred by customers. The one-day delivery, prime delivery, first-class delivery, and free-super saver provide faster delivery to the customers’ taste and preference, making it a giant in logistics. The integrated system provide monitoring of supplies in all the stores, a strategy referred to as push and pull (Push-pull). The stores are strategically located, stocked towards the centers or metropolitan zones, thus forecasting the specific areas’ demands.
Integrated business systems help to improve competitive advantage over the competitors. There are efficiency, effectiveness and timely delivery of quality products to the customers. Logistics allow for the access and delivery of products from any warehouse accessible by the customers through the system. Sourcing of materials, processing, packaging, manufacturing, and orders is factored in the system, thus reducing production lead time and customer lead-time. There is a variety of delivery options for the delivery of products from any warehouse. The options give the customers opportunity of choice over other industry players. Efficiency in logistics has brought good customer relationship that has increased revenue and customer loyalty. Amazon offers free shipping due to its timely integrated business operations, the number of products, branding, packaging, easy experience of check-out, free hassle returns after delivery, thus increasing the number of customers over the competitors.
The Role of New Technologies in Amazon’s Supply Chain
In the contemporary world, the emergence of new technology has helped solve the business turmoil. Similar to other companies, Amazon utilizes Information technology in its operation of the supply chain. It has adopted several new emerging technologies that help in efficiency, effectiveness, and reduction of time in production (Slack, Brandon-Jones and Johnston, 2013). This technology also aids in efficient picking, packing, and delivering items to the customer. It has adopted advanced information infrastructure in every business operation and processes to achieve competitive advantage through operational, low-cost and resourceful collection. To understand Amazon’s supply chain, it is crucial to analyze the company’s information system, business processes, retention of their clients and their decision-making through the use of information technology.
Amazon has implemented high standard information system that has led to its success. It has an integrated business information system which helps in analyzing and visualizing information hence contributing to its decentralization of faster decision making of its operations. In this regard, Amazon has two intertwined information management applications that include SSS (Simple-Storage-Service) linked to the integrated database and the web services of the company. The SSS allows easy transactions with the e-commerce component or platform. Amazon web services give the customers, the sellers and users the ability to create tailored and individualized profiles that help improve efficiency in the aspects of processing transactions. Amazon web-service (AWS) has varied systems with different functional components that promote efficacy in managing information and delivering the business functions and processes. The AWS system has a high level of advancement, thus promoting greater interoperability extents since it interacts with any internet-facilitated devices. Therefore, it enhances faster and effective communication in the supply chain, which includes sellers, buyers, and staff members.
The extensive and robust web services have unique features; security, scalability, reliability, and efficiency. This enables the company to deliver business processes using the Customer Relation Management System (CRM). CRM is a smart search and analysis system integrated to give maximum security for the user information. It also allows personalized services to customers based on their profile hence bringing convenience in delivery. The CRM is also built on SOA (service-oriented architecture), which promotes its services’ decentralization leading to dynamic scalability of its system.
The transaction and process system are vital in the Amazon integrated business and information system which enables customers, sellers, and buyers to make purchases efficiently and in a secure environment. The 1-click feature of purchase is secure; credit-card transactions are encrypted, reliable, and easy to use. The company’s information management system is integrated with unique components and functions like Intelligent-Recommendation-System (IRS). IRS helps the company analyze recent product searches and queries from customers, which helps make recommendations for the searched items through the data-mining process (Adaji and Vassileva, 2017). These functions make the system considerably interactive and improve customer interaction and satisfaction. The buyers’ and sellers’ order information is processed via a supply chain information management system, which is integrated with the web services and the payment system.
Amazon has an Enterprise Resource Planning System (ERPS), which stores the information collected from production, warehousing, delivery, manufacturing, logistics and data collected through web services. Enterprise Resource Planning System runs on Oracle database and management system. It allows for the automation of sellers’ and buyers’ order processes and enhances accurate tracking and scheduling of orders. ERP system also plays a role in decentralizing business processes, reducing managerial functions, and supporting the logistics and the supply chain (). Customer Relations Management System, which is integrated, also collects information like credit data, history of transactions, records of previous orders by using an algorithm that prioritizes sorting and stores information in the buyers and sellers profile. CRM also gathers information on feedback queries and reviews about the products, hence helps in adjusting proficiency and scalability.
Amazon uses business intelligence systems and applications that enable it to understand the internal and external business environments. The systems help formulate ways to improve its productivity, fasten the decision-making process, and increase orders per unit of time. Integrated communication functions with the system enable efficient processing of customer queries and resolving issues in a timely fashion. The delivery system and order processing are linked hence real-time action to the customer requirements, queries and the flawless flow of business processes and activities.
From the special procedure, the customer, seller or buyer has an interface to place orders through the website. The information system then transmits the information to the data warehouse, hence presenting the product information to the buyer or seller consol. When satisfied, the customer picks the item, makes the payment, gives the location and completes payment via electronic channels. Customers can get notifications of their payment process through short messaging or email. The transaction system records payments and sends details to the supply chain system. The logistics then ensures product shipment through the available and preferred methods the customer desires.
Consequently, Amazon guarantees improved business process analysis which aid is in customers satisfaction and retention. Automated systems can analyze the interests and present appealing products to the customer. The utilization of the customer relationship management (CRM) approach to acquire products and retention has been made workable, efficient, and effective. It allows faster delivery and resolving queries and allows Amazon to gain a competitive advantage over its competitors.
The new technologies have facilitated advanced automation of business processes and increased value creation and satisfaction. The sellers and buyers are able to purchase products within their comfort zone and time. Amazon has more inventories ranging from electronics, clothing, movies, games, music, books and other materials. There is customer care which is enhanced through security, efficiency, scalability of the integrated information systems. The rich and extensive customer experience is enabled as the sellers and buyers get real-time information that improves the satisfaction and the desire to buy more products. The strategy of high-margin and low prices plays a significant role in attracting, maintaining and retaining clients, thus ensuring a more significant competitive advantage. The company sells at low prices and can increase the number of customers, which in return increases the sales volume in a short duration and the revenue.
Amazon has varied components that gather information from all business operation processes and stores such information in a centrally placed database in the right format for faster synchronization and decision making. The IT system can aid in faster decision-making in myriad ways which include secure information access (Russell and Taylor, 2008). Amazon management can get information about inventory, marketing, finance, and employee performance information. The information is kept safe, and they are important in determining the gaps, weaknesses, opportunities and strengths that are vital in making strategic decisions to improve the business operation processes. The technologies automate the information gathering, storage, sorting for faster retrieval for analytics and visualization for decision making and reporting.
The employees of Amazon work in an environment that is technology-enabled. It improves business processes and helps in carrying out daily routine roles such as pack and pick. These technologies also allow many teams to operate on common tasks such that there will be a series of decisions that can be acted upon to improve the daily business process. The emerging technologies have enabled a decision process that involves the interactions between client-server machines through video, audio, and other group channels.
Amazon uses AI (Artificial Intelligence) as an approach to upgrade bonding with its clients, sellers and buyers. Using intelligent virtual agents sets the future for its information system and determining the scope of its future operations. The intelligent system can help monitor the Amazon activities to identify gaps and clarify objectives that help validate new approaches for the ineffective ones. The monitoring helps in knowing the right suppliers, customer needs, their locations and queries for prioritization. Cloud technologies, the internet of things (IoT), e-commerce and big data are among the emerging technologies used by Amazon (Hewage et al., 2018). It helps Amazon business processes and the supply chain handle a large amount of data.
The overarching warehousing and inventory technologies that Amazon has adopted to support its supply chain and material management functions include digitizing the warehouse, distribution, and fulfillment centers processes and procedures. The business has leveraged automated technologies due to the fast-changing demand and uncertainties in the business environment. The barcoding of products by mobile phones increases product visibility and accuracy. Amazon optimizes its shipping practices by partnering with merchants that enable the company to trade directly from stores and manage the local shipment. Inventory movement can, therefore, be captured in any location; Inventory and accuracy of data are an enabler of a functional supply chain.
E-commerce has facilitated the decentralization of warehouses in a way that allows orders to be paired with convenient warehouses and location which eventually accelerates the delivery process and reduces the time the consumer receives the item. This is possible in Amazon due to the emerging technologies in data collection and mobile inventory. The seamless and real-time integration with other backend systems and central systems like Amazon’s ERP and WMS applications ensures the accuracy of data and information in diverse geography (K. Laudon and J. Laudon, 2007). Solid information technology and digitization enable Amazon to gain resilience during uncertainties. The advanced and quality inventory understands trends when demand and supply are unpredictable. High-level predictability and resilience support the supply chain due to mobile automation, hence increased efficiency and costs. The supply chain applications that range from advanced technology for warehousing and wireless-barcode applications establish automation of data and facilitate identification for information accuracy in the ERP system. The hardware infrastructure and the mobile inventory extend the functionalities to the end-users in any location in real-time.
Recommendations
Integration of the Amazon websites and other social media networks will help the company to enhance its collaboration within the market. The incorporation of social media platforms will help the company to collect vital information from advertisements, post-sales-services, and sales. The Management Information System should be able to feedback to the clients at any point and convenience. Using a customer relationship management system, it is vital if there is integration with other social media and networking websites. This aspect can be compared to other competitors like e-bay and other emerging e-commerce business organizations whose customers dominate the social space. This opportunity will increase customer base, sales volume, increased interaction, efficiency and increase product visibility.
Conclusion
Amazon has an effective supply chain that is supported by efficient information and technological infrastructure. The report has evidence in the organization scope that enhances customer relationship and management via elaborate, effective and efficient Enterprise resource planning. The integration of business processes has been enabled in all the supply chain components and logistics regarding production, sourcing, warehousing, planning, controlling security, and delivery. The use of emerging technologies has greatly revolutionized the ways business is done, with efficiency, time and customer satisfaction being the determining factor in achieving a competitive advantage over the competitors.
Reference List
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