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The existing supply chain model of Amazon and the issues faced by the organization

The integrated process of involving various business activities ranging from the suppliers, manufacturers, distributors and the retailers who work together for the purpose of acquiring the raw materials and converting the same into the finished product and delivering it to the consumers is called the supply chain (Christopher 2016). Attention has been made on the performance, design and the analysis of the supply chain as a whole. This particular study aims at focusing on the supply chain activities and e-commerce of Amazon. Amazon has showed a new form of supply chain management with its Amazon Prime that has made it possible for the company to delivers its products to the consumers in the shortest possible time (Ahi and Searcy 2013). A detailed analysis of the network planning and the inventory and the supply chain management activity shall be carried on in this study.

If the existing supply chain model of Amazon is taken into consideration, the supply chain starts from receiving the order from the consumers’ end via website. The products that are stored in the warehouses receive the order and then the order is transported to the consumers. For the transportation process, the company depends on shipping. The product that is ordered is packed from the warehouse which is then shipped to the consumers. The complete process of the supply chain takes a long time to complete. However, recently it has been found that Amazon has been focusing on delivering the products in the least possible time. The introduction of delivering products by unmanned vehicle or the Amazon Prime is the new approach made by this online retailer. If compared with other existing online retailers like Target Pty, Temple and Webster or the Catch of the Day, it has to be said that being a local and domestic shop, these retailers have been able to deliver the products at a higher pace than multi-national retailers. So as identified, delivering the products in the least possible time is the main issue faced by Amazon.

If the network design plan of Amazon is taken into consideration, it has to be said that being an online retailer, the company had to maintain the complete inventory functionalities (Ahi and Searcy 2013). For instance, the company had to maintain a huge stock of products that would make it easier for the consumers to get the products whenever they would require (Govindan et al. 2014). It is for the same reason the supply chain involves a warehouse as well where all the materials or the products are stored before they are dispatched to the necessary location. Therefore, the supply chain networking can be broadly classified into a number of steps. It is explained in the supply chain mapping below (Winter and Knemeyer 2013). The supply chain starts from taking the order from the consumers, searching the same thing in the major ware houses of Amazon is another important thing under consideration for the organization (Jacobs et al. 2014). The products are picked up from the inventories and then they are dispatched to reach out the location where the delivery has to be made. The supply chain management is mainly focused on the transportation activity. The faster the company would be able to deliver the product it would be more acceptable among the consumers. The Amazon Prime is the concept of delivering the product within 30 mins of making the purchase.

Literature review/models and theories

As stated by Stadtler (2015), supply chain management is a heuristic algorithm that is meant for scheduling the production and distribution of the operation in the supply chain network. The major objective of this supply chain process is to minimize the cost and expenditure that the company has to pay in order to supply the product to the consumer. This approach is the deterministic analytical model (Fawcett et al. 2014). From the case study, it has been evident that Amazon has focused on delivering the products to the consumers as early as possible and to minimize the cost of delivering the products. The unmanned vehicle or the drone could reach out the consumers within 30 mins of the order being placed by the consumer. According to this model, the capacity of delivering products increases by a company when proper approach is made towards the supply chain management (Sun et al. 2016). This has been rightly evident from the case study as well. It has been found that the number of subscriptions of the consumers who want to get their product available within a short time increased (Monczka et al. 2015). Therefore, it can be clearly determined that with the right approach there can be easily increase in the supply of the product and so the success of the supply chain management can be easily achieved.

According to the stochastic analytical model, it is important to establish a methodology that would help to control the different stages of the supply chain management. The materials that are involved in this model are:

  1. Material control: Given the material order it is estimated that that the production requirement or the supply chain facility would be fulfilled by the supply chain management process (Brandenburg et al. 2014).
  2. Production control: The next step is to control the production of the goods in terms of its size, shape or the physical structure. This is important point of consideration in the supply chain management process because it requires the delivery of a product from one place to the other.
  3. Finished goods stockpile or the warehouse: The finished goods are then stored in the ware house from where it is expected that the product will be delivered to the prospected consumers (Mangan and Lalwani 2016).
  4. Distribution of the goods: The ultimate part of the supply chain is to distribute the goods to the particular consumer who has ordered the particular product. At this point, the importance of the transportation is felt and the major organizations often think of the ways that would make the distribution the easiest means of delivering the product to the people (Dekker et al. 2013).

If the delivering model of Amazon is taken under consideration, it has to be said that the Company has been focusing on the warehouse and the storage facility that would eventually lead to the situation where the organization would be able to deliver the product to the consumers in the shortest possible time. As it has been evident that the number of headcounts increased from 185 to 614 and the distribution capacity was also increased from 50,000 to 285,000 square feet (Fawcett et al. 2014). This is the reason that is responsible for the generation of greater profit for the organization. Recently, Amazon has $74 billion sales and has been turning profit since the last five years of its business operation. The Company has been making profit in its business operation and the credit can be easily given to the supply chain management that this organization uses as a part of its business operation.

The supply chain network design model is a significant model that results in the reduction of the actual cost spent on the overall supply chain management. The objective is to reduce the cost of the supply chain and deliver the product in the shortest time (Ahi and Searcy 2013). The network design is made keeping the overall cost of the supply of the product starting from the raw material to the delivery of the finished goods. In addition to this, Ross (2013) commented that designing a supply chain also falls under the increasing competitiveness of the market. The supply chain network is global and dispersed and it depends on a variety of structures that include tax, skills and the availability of the materials. As pointed out by Seuring (2013), supply chain activity of the organization has been made focused on the networking or the design of the supply chain management because in the recent time, with the capital optimization, it has become important for the organizations to consider certain aspects that would help it to meet the challenges of the increasing competition (Fawcett et al. 2014).

The recommended supply chain management for Amazon

Network design planning is the primary criterion for planning the supply chain management. As a result of the increasing competition, the largest online retailer has focused on delivering products directly to the consumers from the warehouses omitting the gap or the time required to reach the product to the consumers. The entire supply chain shall depend on the technology starting from ordering the product to monitoring the supply of the product. The organization shall completely depend on technology in order to carry out the supply chain activities. However, the complete process shall be shortened and the duration between ordering and delivering the product would be reduced to just half an hour.

Awareness of the Problem: Minimizing the time of delivering the products by reducing the time between the inventory and the warehouse to the consumers.

Suggestion: To incorporate technology in the entire supply chain management activity including the monitoring process.

Development: This can be achieved by developing better apps that can be used by the consumers to book or track the delivery of their products.

Evaluation: The success of the proposed idea can be evaluated by comparing the time of delivery or by taking feedback from the consumers about the service.

Conclusion: This would create a better opportunity for the online retailer to carry out their business activities and compete with the other existing organizations in the similar industry.

The increasing demand and the competition in the market has lead to the situation where the present supply chain management organizations have to think about better ways to compete with others. It is important to think of better strategies that would eventually lead to the situation that would help the particular company to overcome the challenges and issues faced by them. These recommendations are:

  1. Monitoring the complete process:It is indeed important that the complete supply management process should be monitored properly because it has been evident that there are certain cases when it was due to the lack of monitoring activity, the supply chain management had failed. For example, the product might get mis-placed or it might get delivered in the wrong place. Therefore, monitoring the complete process is an important criterion for the complete supply chain management process.
  2. Standardizing the supply management:If the complete supply chain management is taken into consideration, it has to be said that many organizations do not consider the standardization of the process. Therefore, it is expected that that a standard in the complete supply chain management process has to be maintained (Winter and Knemeyer 2013). For instance the standard ERP system can be maintained by the major supply chain management organizations that would benefit the employees and would encourage teamwork and reduce the miscommunication.
  3. Increasing transparency:The apps and other online means of carrying out the supply chain activity shall be improved in order to increase the transparency of the overall activity. In the present scenario, it has been found that the consumers can easily track the order but the expenses that is included in the complete supply chain management is not clear that needs to evident among the consumers.  
  4. Improving the return management: Return policy is not good among the major supply chain management companies. Keeping the same situation into consideration, it is recommended that the organizations should consider the return management policy as well that would make it more acceptable among the consumers and that the consumers can rely on the service as well (Ahi and Searcy 2013).

Managerial implication and Conclusion:

Managerial implication is no longer limited to a particular location, but it has gone global. The leader or the manager is also responsible to understand the cross cultural implication of the business (Ahi and Searcy 2013). It is when the leader is capable of understanding the perspective of the suppliers and as well as the distributors, it can be said that the leader is capable enough to undertake the challenges and deal with the changing scenario and attribute towards the factors of the changing scenario (Turker and Altuntas 2014). If the situation of the leader of Amazon is taken into consideration, it has to be said that Jeff Bezoz is indeed a far sighted leader who understands the importance of the increasing competition in the market and how the organizations should make better approaches in order to serve the consumers right (Fawcett et al. 2014). The concept of drone delivery and the Amazon Prime is the idea that had helped the Company to soar high in its business operation and increased the acceptability of the organization among the consumers. A detailed investigation has been made on the supply chain management process with reference to the Amazon’s supply chain management. It has been found that supply chain management is indeed a challenging and demanding part of business operation. The leaders have been facing lots of challenges in dealing with the activities related to the supply chain management. The role of technology cannot be denied in the complete supply chain management process.

In the recent time, many supply chain practitioners and manufacturers are found to face certain issues in terms of its supply chain management. As stated by Grant et al. (2017), businesses are not competing but supply chains are competing. The companies are gaining excellence if its supply chain networks are found to work better than the other. This is the reason, supporting the supply chain has become the most important mission for many organizations. Many small and medium sized enterprises are undertaking this approach to improve their business activities. For examples companies like AussieCommerce Group, Target, Wal-Mart and others have been concentrating on their supply chain activities in order to get things delivered on time. However, these companies have not been found to undertake any kind of technological advancement in their delivery option and they rely on road transportation facilities only. Keeping the changing circumstances and the demand of the business, many companies are taking the digital business support to support the supply chain planning. In fact, excelling the supply chain management is one of the key driving factors towards the growth of a company.

With the use of certain software, the leaders are able to know about the details of the suppliers, distributors, storage in the warehouse and any other thing related to the supply chain management. Thus, it can be easily said that there has been a development in leadership as well. In this respect the examples of a number of companies which are largely depended on the supply chain management can be given here (Jacobs et al. 2014). The global giant FedEx has come up with the best solution to the challenges and issues of the supply chain management and has proved its excellence by providing better solutions to the entire supply chain process. One of the key strategies that this company had undertaken is to come up with best possible communication strategy for the organization. Reading Fredendall and Hill (2016), it has been found that FedEx once worked with the US automotive part distributors who were found to successfully creating a warehouse in the sky. It was cost effective to rent a warehouse for a long term and supply parts of the automotives overseas. It was clear that the supply chain management has been changing its business operation and in fact they are leading towards a better responsive situation that can help to reach out people within very short span of time (Gilmour 2013).

Another organization that has been excelling in the supply chain management is the Amazon. In the fight on the online retailing, the most important point of consideration is to supply the product to the consumers in the shortest possible time and Amazon used the same method in order to create huge customer base (Swink et al. 2014). It focused on delivering the products by using unmanned vehicle also called the drones. Amazon named it Amazon Prime and made it possible to reach out consumers in the shortest possible time ever. Thus, it can be easily said that the supply chain management has been changing and so is the companies’ focus towards the same.

Supply chain networking is another approach of the major organizations to build a new paradigm that would help to extend the company’s four walls and turn things into reality. The supply chain management has become more responsive due to the increasing coordinating activities that this management has been found to provide (Fulconis et al. 2016). Many companies are undertaking the projects to make their business activities thrive in a better and secure way. The supply chain network works on certain metrics like the operating cost, inventory turns and the return on the invested capital. The ability of the organization to thrive through the changing nature of the supply chain management is the key to create a balance in growth and improve both the inventory cost and the return on the investment. There is no doubt that the balance sheets of many companies have improved and the reason is their determination and admiration towards the supply chain management.

The best suitable supply chains are usually characterized by the alignment of the best suitable strategies between the business and the execution of the supply chain. The service level alignment has been found to reach to meet the overall strategy of the supply chain management. Synchronizing the supply chain with the business activities is the best possible means of carrying out the business strategies (Cai et al. 2013). It has to be understood that reaching out the particular product to the customers at the right time is a means of customer servicing and it is indeed important part of the business. It is when the business excels in its service; there remain the possibility of better growth and opportunity for the business.

In terms of supply chain network design, it is the crucible that is tied at the high of the supply chain strategy. The networking needs to be aligned with the network design that would eventually help in improving the network where the particular organization operates. The ability of the organization to react as quickly as possible near term changes to meet the supply demand equation is what matters the most (Beske and Seuring 2014). In addition to this, the complete process of supply chain management shall also impact on both the cost and the revenue of the business operation. Here, lies the importance of quality leadership in managing the overall business operation and intelligently react on the particular situation. Talent management is the term used to determine the impact of the leadership on the major business activities. It depends on how well the particular business is managed and the role of the firm in the major investment dimensions. Technology management holds equal importance because of the wide range of approaches and the increasing need of technology based industries (Turker and Altuntas 2014). Keeping the increasing need and impact of technology, the supply chain organizations are investing more amount of money for the purpose of making things easier and compatible with the major business activities.

It has also been observed that at many times, major business organizations depend on outsourcing the supply chain activities rather than depending in house for the same because the procurement of the supply chain is not easy and it requires the involvement of many things step by step. Keeping this situation into consideration, many organizations are found to make collaboration with other companies and select a natural path to improve their business operation. For example, Flipkart has collaborated with eKart for delivering their products. Other 3rd Party logistics companies are FedEx, DHL, Deutsche Post and other. As commented by Peng et al. (2014), the companies that are better in collaboration with other companies are found to gain more benefits in their business rather than those that fail to make any kind of collaboration with others. This way, a supply chain management culture is also created among the different companies and with the hope of improving the business activities. Of course, the leadership is one of the most important criteria that support the overall culture and the impact of the supply chain management (Melnyk et al. 2014).

In the recent time, the supply chain has been undertaking the technology as the major tool for the delivery of the product. Starting with the development of apps or supplying products in the least possible time is completely depended on the technological perspective. It would definitely have certain economic, environmental and social impact:

Economic impact: Economically, it can be said that depending on technology would reduce the need of employability. In the recent time, the increasing means of delivering products at the door has given enough employability but if the same situation takes a technological turn, it would reduce the employability of a country. This would directly create a negative impact on the economy of the country.

Environmental impact: As stated by Bosona and Gebresenbet (2013), major organizations carrying out supply chain activities are often found to drag into certain issues regarding their supply chain activities. This is the reason that the importance of sustainability and environmental benefits has become important point of consideration for many supply chain management companies. In addition to this, the companies also have to abide by the responsibility to protect the stakeholders from the potential harm. This can only happen when there remains a positive approach of the companies towards creating a sustainable business activity that would promote better environmental condition and alas improve their business activities towards a sustainable and a clear image that supports a better environment (Pagell and Shevchenko 2014).

Social impact: Some of the major issues identified that have degraded the sustainability or the ethical approach of the organization include child labor, unfair price level or inadequate standard of living. Increasing demand of the supply chain activities has lead to the situation where the major organizations are facing certain challenges to meet the demand and as a result of which they have been found to get trapped in certain activities that are indeed unfair to the overall business activities.

The concept of e-commerce is not new and it has open multi channel facilities in order to supply the product to the consumers. Mackelprang et al. (2014) have proposed a number of ways to improve the supply chain management practice and make it possible to deliver the product in the shortest possible time. In order to do so, it is important to increase the number of inventories and at the same time improve the performance of the suppliers that it would be possible to reach out people easily and deliver them the product. As commented by Ross (2013), today, there are various methods that the business organizations can easily use in order to get information about the market and get involved in more integrated supply chain management. In fact, by taking adequate time, it shall help to build a holistic perspective of the corporate leaders and help to determine the redundancy or the inefficiency of building a better supply chain for the particular company (Govindan et al. 2014). Supply chain management is also facing major issues and challenges in terms of sustainability and the corporate social responsibility policies.

The best practice supply chain management includes certain activities that would eventually help in domestic and international sales. As stated by Globerson and Wolbrum  (2014), supply chain management is dynamic and it depends on certain factors for the better operational activities. For instance, supply chain management trend involves sending the products or the service directly to the market irrespective of the help of others involved in the supply chain process. Then is the supply chain that involves sending the product to the market or the retailers in order to sell it to the consumers. Therefore, it is another approach of the supply chain management (Heizer and Barry 2013). In any case, the importance of warehouse or the storage cannot be neglected. The warehouses are important for the purpose of storing bulk of products that would be exported to the market or directly to the consumers.

The procurement policy of the supply chain involves buying the goods and services. The procurement service requires sourcing of the raw materials from the suppliers worldwide and bringing the same into the organization for the purpose of selling it or reaching it out to the major consumers (Touboulic and Walker 2015). In this complete process, marketing and promotion play a significant role as well. The products are marketed in order to increase the reach of the product among the consumers and make it more acceptable among the consumers. The increasing competition in the market has lead to the situation where the supply chain management companies have to think of better logistic activities that would provide advantage to them and results in the overall success of the business (Barratt 2016). The major functional areas of logistics are network design, information technology, inventory or the storage, transportation and the packaging and re packaging of the products. The success of an organization depends on how tactically the organizations can undertake the management process and can transform the competitive advantage to the social control of opportunity (Meixell and Luoma 2015). If the organizations are capable of handling the situation and aligning the same with the technological advancement, then there would be no limitation for the supply chain based companies to overcome the increasing challenges of the market.

In order to make the supply chain more collaborative and secure, it is important to specifically design the supply chain platform in a way that would create better collaboration among the companies. There are many aspects of connectivity that has been helping the companies to coordinate in a better way. For example, cloud computing is the easiest and the secure way of providing the right information at the right time (Govindan et al. 2014). In fact, this process has also increased the visibility and the collaboration solution as well. If the future opportunities of the supply chain management are taken into account, it has to be said that the major organizations have to indeed consider the facts of sustainability and betterment of the environment that would only help the organization to compete and keep pace with the changing scenario of the supply chain management.

Another means of strengthening the global supply chain is by the means of involving the global supply chain management organization in the business. For instance, it has been found that the presence of the supply chain has increased globally and this is the reason that products and services are made available to the people easily around any corner in the world (Heizer and Barry 2013). Therefore, in order to make things easier, the global supply chain organizations can easily collaborate with each other and provide an integral service to the consumers. This would eventually reduce the increasing challenges of the supply chain management and would help the companies to serve people in a better way. It is expected that the supply chain management organizations should consider the various means of fulfilling the strategies and the expectation of the consumers that would help to meet the challenges that the major companies are facing in the recent time.

Supply chain management has definitely come up a long way and at the same time, it has become one of the most important parts of the business. With the increase in the e-commerce activities, the role of supply chain has increased considerably. All the major small or large manufacturers or retailers are involving supply chain management in their business activity to improve their business and earn more profit. People are becoming habituated to get things delivered on time and at their gate which has automatically increased the value of supply chain management. In this study the various dimensions of the supply chain management has been taken into consideration and this has helped to achieve the business activities that was not possible before. The impact of the technology cannot be denied at all. In fact, it is the advancement of technology that has helped to achieve the undue circumstances of the business.

Certain recommendations have been made to improve the supply chain management or other activities related to the business. For instance, partnership with the global supply chain management team is the best possible option to carry out the business activities. It is expected that there if the global supply chain is connected together, reaching out the consumers would become easier and it would help to improve the supply chain activities. Things would rather become easier and the availability of things would be made easier to the consumers. The coming days are definitely better for both the consumers and the companies in terms of the supply chain management. The method of procurement and business shall reach better height in the coming future.

References:

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