Supply Chain of

Amazon
 Analysis of SCM Model
To start with, Amazon’s SCM has a strategic fit with its competitive strategy
of being the retailer of choice for its customers. The combination of multi-tier
inventory management, superlative transportation, and highly efficient use of
IT (Information Technology), and its wide network of warehouses are all
geared towards aligning its SCM with its competitive strategy.

The next aspect is related to its outsourcing of its inventory

management. Amazon outsources the storage and distribution of products
that are not frequently purchased nor ordered for immediate delivery as well
as products where the costs of storing them exceed the marginal returns on
their sales.
Inventory System
Any discussion on Amazon’s SCM is incomplete without an analysis of its multi-tier inventory
system. The first tier is the aggregation in the distribution centers, which ensures that Amazon
holds fewer inventories and responds to demand in a dynamic manner.

The next tier is comprised of the partner distribution centers and the wholesalers wherein
whenever an ordered product is not available in its own distribution centers; Amazon can rely on
its partners and wholesalers to supply the customer with the required product. Further, through
the use of sophisticated and real time IT, Amazon is able to leverage efficiencies in its distribution.

The third tier is comprised of the networks of third party sellers,

publishers, vendors, and manufacturers who ensure that Amazon acts as an intermediary that
fulfills orders from customers by linking them to this tier.
Process of Supply Chain
It starts with the customer placing an order.

The order prompts a red light to come on in the warehouse which shows the worker the
products that have been ordered, and the barcode is matched with the order.

The product is then placed in crates on a conveyor, which goes through the distribution
center before being sorted by bar codes.

Crates arrive at the central point, and bar codes of products are matched with orders and
sorted automatically into one of several thousand chutes before going into a box.

The bar code then identifies the customer order, boxes are packed taped and weighed, and they
are shipped by either US postal service or UPS for the last mile, arriving at the consumer within
1 to 7 days.
 Recommendations
First, Amazon relies to a great extent on courier companies such as FedEx and UPS. In
recent years, Amazons’ brand image has taken a hit because of the unreliability of the
last mile connectivity or the last part of the SCM that is visible to the end consumer.
Therefore, Amazon can setup its own transportation and actualize superior last mile
delivery by creating its own fleet of delivery vehicles and personnel.

The second recommendation has to do with the aspect of “bullwhip”. This means that
Amazon can integrate its SCM better and move from a cooperation model with its
suppliers to a coordination mode. This would entail a sharing of information between all
its partners and suppliers using the latest technology.
Thank You