Key Success Factors of Logistics Enterprises Digital Transformation

Case study (Amazon)

[Customer Experience, Supply Chain, the Internet of things etc.]

Student name: Tural Arif oglu Number:46407

Field of study: Master in International Business (Cracow)

Contact: tural.arifoglu@student.wsb.pl

Abstract:

The rise of new digital technologies such as artificial intelligence (AI), internet of things
(IoT), mobile and social internet, blockchain and big data, firms in almost all industries are
conducting multiple initiatives to explore and exploit the benefits of these technologies
(Fitzgerald et al., 2014; Ross et al., 2017). This necessarily entails transformations of key
business operations and affects products and processes, as well as organizational structures
and management concepts to conduct these complex company-wide transformations (Matt et
al., 2015). Meanwhile, the society is facing fast and radical changes due to the maturation of
digital technologies and their power to penetrate markets rapidly, while customers’ demands
are increasing, and organizations face tougher competition due to globalization (Bharadwaj et
al., 2013; Li et al., 2018).

With the emergence of new digital technologies, the ongoing digital transformation is argued
to heavily impact core societal pillars such as logistics and transportation. This has generated
unique challenges and introduced an increasing need for organizations to take steps towards
innovating their business models. Thus, a popular theoretical lens for keeping up with
disruptive changes through business model innovation (BMI) is via the dynamic capability
framework – consisting of sensing, seizing as well as transforming microfoundations.
 İntroduction

Levering technology is currently a key success factor in most industries and e-commerce
entices companies of all sorts to go global. Simultaneously, as customers become more
demanding, logistics solutions are increasingly more customised to different customer
segments. This means that organisations must be both efficient and flexible in their logistics
operations in order to fulfill different customers’ individual needs. In this sense, third-party
logistics providers (3PL’s), tradicional brokers and carriers are in continuous improvement
and innovation both in terms of processes and information technology. Aiming to address
these issues and having in sight the predicted transformation of the freight industry, many
startups and established players made serious investments in Electronic Logistics
Marketplaces (ELM’s) that support the matching between shippers and carriers. The use of
ELM’s has promised to lower transaction costs, provide greater visibility of freight
movement and reduce inefficiencies in the current transportation and logistics processes.
Despite the fact that this kind of marketplaces already exist for over twenty years, they have
still not impacted the industry as promoted. And altough the efficiencies of implementing
these virtual hubs are promising, their success strongly depends on the support of the
interactive actors and agents of the transportation ecosystem. Amazon’s infamous workplace
culture allows it to “shoot for the moon” and win. Although this hardline approach isn’t
appropriate for every workplace, there are some takeaways:
 Achieving technological greatness isn’t just about the technology. It’s also about the
people. Bring people into any software or digital technology that promises to transform a
business process.

 Automate business processes, from production through to support functions like

performance management and finance.

For example, in admin the process around adding a new supplier involves a lot of emailing,
phone calls and gathering of information from the supplier and stakeholders within the
organisation. A clearly defined digital process to walk you through those steps and automate
some of that data collection would eliminate this waste along the chain. This is essentially
digital transformation and it’s possible in the simplest of settings. Paperless software
systems like these will eliminate waste and repetitive processes, meaning the business can
redirect this capital to core functions or new ventures. 
 Innovation needs to be in built into organisational culture. A global telecommunications
company has seen results from this approach: “Innovation is built into people’s career
objectives, so they are ultimately incentivised on innovation growth.

This is applicable at every level; for example, “Toyota encourages play by giving factory
workers the opportunity to come up with and test new tools and ideas on the assembly line.

Analysis of key success factors of logistics enterprises digital transformation based on

Amazon

“Behind every successful brand is an agile business model driven by digital technology ” –
Mike Bainbridge, chief digital technologist at Rackspace.

Key success factors of Amazon company digital transformation

 Focus on customer experience

 Integrated data and processes
 Leverage Artificial Intellegence
 Focus on effiency and scale
 Consumer grade technology

Amazon has always experimented with new services to dominate new markets and displace
other industry giants. Although it survived the dot-com crash in 2000, Amazon’s business
model needed diversifying. In 2000, it launched Amazon Marketplace, the world’s first third-
party reseller platform. But it didn’t stop there; in 2005, Amazon Prime was born. The
membership offered free two-day shipping within the USA for an annual flat fee, and was so
successful it spread to France, Italy, Germany, Japan, the United Kingdom, and Canada over
the next eight years.

More recently, Amazon has established itself as a main player in web software and database
management for businesses, with Amazon Web Services and DynamoDB, which has IoT
capabilities.
But it wasn’t always smooth sailing. In the late 90s and early 2000s, this fast movement was
chaotic - system outages caused facility shutdowns, inventory pile-up, and there was no
preparation for new product categories.

İnside Amazon Warehouse, human-robot symbiosis

At the center of the warehouse is a storage space containing square shelves packed with
countless products from Amazon’s inventory. In previous generations of its fulfillment
center, Amazon’s workers would have roamed these shelves searching for the products
needed to fulfill each new order. Now the shelves themselves glide quickly across the floor
carried atop robots about the size and shape of footstools. In a carefully choreographed dance,
these robots either rearrange the shelves in neatly packed rows, or bring them over to human
workers, who stack them with new products or retrieve goods for packaging. Amazon’s
robotic shelves allow more products to be packed into a tighter space.

Amazon warehouse
robots by company
KIVA

Amazon’s robotic
shelves allow more products to be packed into a tighter space. They also make stacking and
picking more efficient by automatically bringing empty shelves over to packers or the right
products over to pickers. The process is more efficient than having humans walk around, so it
also a good example of how automation can be combined with human labor to increase
productivity. Amazon’s robots come from a company called Kiva Systems that it acquired in
2012. They are controlled by a central computer and navigate using markers on the ground.
Amazon has begun exploring ways that it might someday automate some of the shelf-picking
work at its factories. However, robots are still incapable of tasks that require fine
manipulation or improvisation, so it is useful to devise ways for robots to collaborate with

Table 1. Alternative success factors of enterprise digital transformation

humans more effectively. While Amazon’s warehouse is designed around its robots, some
companies hope to develop robots capable of working in regular warehouses. Fetch Robotics,
based in San Jose, California, is developing a robot designed to retrieve products from
shelves in a warehouse that was not designed for robots.
 Table 2. Robotic transformation of Amazon warehouses

But beyond robotic shelves, humans work in close collaboration with automation across
Amazon’s warehouse. Products flow through the warehouse at a dizzying pace, tracked from
arrival to dispatch by a computer system. At the start of the process, a sophisticated computer
vision system recognizes products after they are unpacked. On the other side of the
warehouse, workers pack products into boxes for shipping with help from Amazon’s central
computer systems. Items retrieved from storage shelves are automatically identified and
sorted into batches destined for a single customer. The computer knows the dimensions of
each product and will automatically allocate the right box, and even the right amount of
packing tape. Further along, before products are sent to different trucks for dispatching, boxes
are weighed to make sure no mistakes have been make in packing.
DT in Amazon Transport

Amazon Drones

A very good communication boost from Amazon because delivery by drone remains
impossible in urban areas for several obvious safety reasons. Based on the Amazon principle,
it claims to be able to deliver in less than 30 minutes within a 16km radius of the delivery
center. Nevertheless, Amazon is putting in place strong lobbying to achieve its goals.

Amazon Flying Warehouse

It is a somewhat surrealist patent for the moment filed by Amazon of an airship that would
act as a floating warehouse from which drones would come to deliver you directly within a
certain radius around the airship. This clearly shows the Amazon Group’s extremely long-
term vision to always try to deliver its customers ever faster at the lowest cost.
Conclusion

Embracing new technologies is one of the best strategies to improve your supply chain. As
we can see, DT has numerous uses in the supply chain and the logistics sector. Companies all
over the world are implementing this powerful technology into their everyday operations. DT
helps speed up and simplify various essential processes. Automating routine tasks that
otherwise take a lot of time improves efficiency and accuracy and reduces the probability of
human error. As a result, the implementation of DT in the logistics industry can reduce
expenses and increase customer satisfaction.

References
https://abcsupplychain.com/amazon-supply-chain-logistics/
https://www.ilscompany.com/the-role-of-artificial-intelligence-in-logistics/
https://www.youtube.com/watch?v=w3AIAMXrH7w
Amazon.com_case_study___2018_update___Smart_Insights
https://www.aboutamazon.com/news/innovation-at-amazon/the-story-behind-amazons-next-
generation-robot
Bruno José de Sampaio Picão - Digital business transformation in transport and logistics
companies: a global freight forwarder case study
Abduljabbar, R., Dia, H., Liyanage, S., & Bagloee, S. (2019). Applications of Artificial
Intelligence in Transport: An Overview
Berman, S. (2012). Digital transformation: Opportunities to create new business models.