Supply Chain Management Amazon: The largest E-Commerce hub

Debjani Kundu
Debjani Kundu  - Content writer trainee in CIA
10 Min Read

Supply Chain Management of Amazon refers to the entire flow and transformation of a good, from the procurement of raw materials to the production of standard goods to the final shipment of the goods to the customers. The process includes sourcing the raw materials, moving them to manufacturer’s production,collecting the product from suppliers, warehouse inventory, pricing, packaging, designing, delivery to the consumers, consumer feedback, and return-refund process.

Success story of Amazon:

Consequently, error-free workflow and astute resource optimization with the least amount of waste elimination are necessary for effortless operations. Amazon is the leading e-commerce business now. The success story of Amazon relies on end-to-end automated supply chain management that enables the organized, well-optimized, and flexible delivery of products from manufacturers to consumers.

Table of Contents: The article will highlight the importance of Supply chain management in e-commerce businesses. Let’s get a clear notion on supply chain management of Amazon.

  • History of the foundation Supply Chain Management
  • Crucial facts of supply chain
  • 5 factors of Supply Chain
  • Pros and Cons of Supply Chain Management

The stated key points will demonstrate the framework of a innovative business management skill that can widen a swift, efficient, and effective purchase policy to millions of customers.

History of Supply Chain Management of Amazon:  

The plethora of factors of Amazon are automated Supply Chain Management that has multiplied the growth of Amazon.The online bookstore website started it’s journey back in 1995 and has become a leading e-commerce industry gradually. The current business logistics of Amazon are quite similar to the previous logistics. Innovative technologies have scaled up its Supply chain management that streamlines the efficiency and economization of the company’s productivity.

The e-commerce business has witnessed skyrocketing growth in recent years. Shortage of leisure time, declining interest in offline shopping, and the presence of lucrative discounts on domestic amenities are triggering the trend of online shopping. The positive result is the explicit growth of such a e-commerce hub.

Definition of Supply Chain Management:

Supply Chain Management is the process of coordinating and managing all the activities from sourcing and procuring, producing, colleccting, shipping, distributing, delivering, and customer care service. The SCM of a company strives to  improve the efficiency and economization of supply chain with central control on critical production, shipment and process of products.

Each company’s supply chain management is different. The difference is always based on the different business nature of a company.

5 Factors Of Supply Chain Management: 

Different business nature cannot differentiate the basic key points of supply chain management. The basic components are following:

Planning: The planning process of supply chain anticipates the demand and distribution of a new product based on the genuine reviews of customers. It demonstrates quality, quantity and types of the product. It also deciphers the manufacturing places of products to the suppliers of products.

Sourcing: The sourcing process refers to the  acquiring of necessary raw materials for the desired production.

Manufacturing: The manufacturing process is the transformation of raw materials into final desired finished products.

Distributing: The process includes the accurate destination of a finished product with the intervention of retailers.

Delivery & Return: In the process, the orders desired products arrive at the doors of the customer. Amazon always pays attention to their customers priorities. It always pays attention to the consumers complaint, product-related return and others to continue the efficient sales process. Customer’s satisfaction is the priority of Amazon.

FBA(Fulfillment By Amazon): In the option, Amazon optimizes its business logistics, packing, shipping, stock inventory and customer service. Amazon’s 55% business sales relies on the third party suppliers. The third party suppliers send a bulk of their products to the warehouses of amazon. The picking, packing and shipping is on the market management team.

The third party sellers must have the following criteria:

  • Donot have any business logistics.
  • Sell small and light weight items.
  • Desire of global coverage with minimal efforts.

The third party sellers pay for referral fees, good storage and fulfillment. The fees are quite costly at the holidays.

FBM(Fulfillment By Merchant): In the option, merchants can apply the third party business logistics on the sales items. It optimizes the branding, designing, packaging,brand loyality, brand awareness and customer experience.

Only the third party sellers having the following qualities can adopt the policy:

  • Having experience in business logistics and enormous resources.
  • Selling heavy and large products.
  • Undeniable control on the customer service.

Some third party suppliers registers in SEP policy of Amazon.

Benefits of Supply Chain Management: Benefits of Supply Chain Management plays a pivotal role in emerging the strong and efficient ecommerce colegemerate named Amazon.

Better Colaboration: Streamlining efficiency and economisation the Supply Chain Management is emerging a better collaboration and coordination with stakeholders, suppliers and customers.

Quality Assurance: Quality control is a pivotal element of a successful supply chain. Quality assurance is necessary to ensure customer’s consistent and comparative recommendations on a product. With the quality control process any defective product can be identified before the delivery.

Assumption On Demanding products: Keeping a keen optimization on the delivered products Amazon can anticipate the ongoing demand of the product. The company can upgrade products aviailbility and respond to change the product list to maintain a competitive edge in current market.

High Efficiency:The well optimized and organized supply chain management system is a primary reason for a smooth delivered and reasonable priced product at customer’s doorstep.

Cost Reduction: Supply Chain Management lays off the inefficiency and minimalise wastage that enables cost reductions in manufacturing process.

Shipment: Successful supply chain relies on the swift transportation system, attractive packing and the swift arrival of the product at customer’s destination to meet the customer’s requirements.

Expansion of Amazon Warehouses: Amazon has 112 million prime customers worldwide. The fulfillment centers are near origin services. 175 million fulfillment centers are located in several countries for the accommodation of customers needs. Amazon has 21 warehouses in Texas and 14 in California. Amazon always provide extra benefits to the prime customers.

Delivery Fleet: The most innovative business logistics is one-two day delivery to keep up the customer’s demand. In ground several local trucks, vans and bikes are in the sevice of Amazon delivery. Amazon always operates with several transportation like Drones, Airplanes, ships and others. Each truck contains 2000 containers and airplanes contain 20-30 containers to accommodate customer’s wish.

A truck that can carry moreover 2000 containers always operates in the fulfillment centers to sort products. The packaging depends on the surface, destination of the product, delivery timing of the products. 20 -30 airport is operating  airplanes in United states for the swift shipment of the product.

Functions of Supply Chain Management: Any successful supply chain management system requires the adequate flow of information, procurement of materials, forecasting demands of the product, financial aid and timely delivery of the product to consumers. The success story of supply chain management is reliable to the consumers satisfactory reviews.

The functions of supply chain management are following:

  • Purchasing: Purchasing is the pivotal part of supply chain management. Accessing the needs, collaborating and exploring suitable suppliers, bargaining products cost,placing orders and ensuring on-time delivery all are involved in purchasing function of SCM.
  • Operations: Operation of SCM includes the following segments like procuring materials and supplies, transferring it into an efficient product, inventory management, swift delivery of the product to customers.
  • Logistics: Logistics is the vital part of SCM.The process ensures the on time and efficient delivery of goods to the customers.
  • Information flow: The accurate and adequate flow of information is necessary to continue a relentless SCM. The miscommunication  can tamper the SCM process.

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By Debjani Kundu Content writer trainee in CIA
Birthday:24/05/1997 Working as a content writer trainee in CIA Trying to write down the thoughts regarding various factors including business,social and economy purpose.