What is Amazon's supply chain management?

New and small retailers can learn a lot from Amazon's supply chain management. Interestingly, Amazon's supply chain management model is fundamentally the same as it was back then. The only difference is it is now on a larger scale and empowered by state-to-the-art technology that streamlines the entire operation and increases efficiency.

 

What is Amazon supply chain?

Sellers who sell on Amazon can use Fulfillment by Amazon (FMA), a service available to the sellers who sell on Amazon. The entire FMA works in the six significant steps that include Send Inventory, Receive and Store, Customer orders product, Pick, Pack & Ship, customer service, and customer returns.

Amazon has even added robots, drones, and other high-end technologies to improve efficiency. And this makes Amazon one of the most popular retailers in the world.

 

The Amazon supply chain management or distribution strategy has four essential elements including;

• Warehouse
• Delivery
• Technology
• Manufacturing

 

Warehouse

Undoubtedly, faster delivery remains the top priority of Amazon. To deliver the order faster and maintain customer loyalty, Amazon has invested in establishing a strong warehouse strategy that ensures every order is delivered on time, with care. All warehouses are located near highly-populated areas, and every warehouse has a strong communication and logistic network that smoothly moves products from one place to another. Amazon has also set up small warehouses in small towns to serve customers who don't live in metropolitan cities.

No matter where you place an order, Amazon’s supply chain management model ensures every order is delivered to you in the best possible way. Warehouses are technology-driven. Each warehouse has at least five storage areas where robots can pick and pack the products and move from one place to another.

 

Delivery

Amazon has also focused on improving delivery by introducing many delivery options that include free, two-day prime deliveries, and Prime Now Option. Likewise, Amazon uses various transportation methods and delivery partners to deliver the orders effectively. Amazon's truck carries more than 2000 boxes, which brings the orders from fulfilment centers to sortation centers where packages are distributed to the customers.

To meet two-day delivery orders for Prime members, Amazon has deployed its airplane fleet. Each plane can carry more than 30 containers at a time. The company uses a fleet of vans, trucks, robots, bikes for the last mile delivery by ground. To speed up the delivery, Amazon has tested drones that can fly packages directly to the customer's home. 

Last year, the company had introduced the Delivery Service Partner Programs that aim to encourage employees to set-up their delivery businesses. For this, Amazon will fund start-ups and provide three-month pays to employees who wish to participate in this program. This program will expand the Amazon network, whereas the employees will receive training and clients for their delivery business.

 

Technology

Technology has played a significant role in improving Amazon supply chain management. The use of high-end technology can be seen in every element of the Amazon supply chain system. For instance, Amazon uses robots to pick and pack orders and drones to deliver the customer's doorstep orders. The technology has helped speed up delivery and improves company efficiency, cutting down staffing and warehouse costs.

The company has recently launched Amazon Prime Air that will allow 30-minute deliveries. The customers need to have an Amazon-branded landing mat within 15 miles of the nearest drone-enabled warehouse to avail of this service.

 

Manufacturing

As everyone knows, Amazon allows third-party sellers to sell their products on its platform. Still, Amazon has understood that they can manufacture products for lower prices and earn more profit. Amazon offers branded products right from all essentials to pets' products. This has created a whole lifecycle of its products from creation, marketing, storage to shipment.

Third-party sellers can still sell the products on Amazon, but gradually, Amazon increases the manufacturing of all types of products that buyers need in everyday life. It will keep everything in-house and bring transparency from procurement to customer delivery. Ultimately, it will help to keep the cost down and profit high. By manufacturing dozens of products, Amazon has proved that it can manufacture high-quality products keeping the manufacturing cost as low as possible. 

 

 

The entire Amazon supply chain model is based on these four key elements. Even though Amazon supply chain management is considered best globally, Amazon continues to bring innovation to its supply chain management and make it more effective and efficient. 

 

Indeed, one must require investing colossal money, time, and efforts to set-up such an enormous supply chain management model. Amazon has achieved this in more than 20 years of trial and error. With the same dedication, innovation, and customer-centric approach, small scale businesses can optimize their supply chain management. This way, businesses can expand their network, grow the customer base, and reach new heights.