Amazon's Supply Chain (Term Paper Sample)

Assignment in Project Management Executive Summary The report identifies an organisation’s supply chain (Amazon) and analyses its operations and supply chain management issues in two main sections. The first section delves into its supply chain using two of the main components of its supply chain; upstream and downstream supply chains. The relevance of operations management to Amazon is assessed using the 4Vs dimension framework and objectives of operations management. Some of the processes and layouts of the supply chain that allow Amazon to deliver goods and services are discussed. The section also identifies potential issues in the operations and supply chain, while providing recommendations for improvement. The second section identifies a project within the supply chain that could provide a remedy to some of the identified issues in section 1. Various operations and supply chain management concepts are utilised in the report to provide an in-depth analysis of the some of the issues facing Amazon’s operations and supply chain. TABLE OF CONTENTS Section 1: Operations and Supply Chain Management Introduction and Background…………………………………………………………………4 Amazon’s Supply Chain………………………………………………………………………4 Amazon’s Upstream Supply Chain……………………………………………………………5 Relevance of Operations Management for Amazon (4Vs) ……………………………………5 Operations Processes and Layouts of Amazon that enable it to deliver Goods and Services to its Customers…………………………………………………………………………………6 Amazon’s Downstream Supply Chain………………………………………………………..7 Potential Issues with the Operations and Supply Chain of Amazon………………………….7 Recommendations for improving Amazon’s Operations and Supply Chain………………….8 Section 2: Project Management Project Introduction…………………………………………………………………………..9 Project Objectives and impact on Amazon’s Operations and Supply Chain…………………9 Elements of the Project Processes and Plan………………………………………………….10 Challenges implementing the Project Plan…………………………………………………..10 How Project Outcomes would be Evaluated………………………………………………….10 References……………………………………………………………………………………12 Appendices………………………………………………………………………………...…14 Section 1: Operations and Supply Chain Management Introduction and Background – Amazon Amazon is an American multinational company that focuses on AI, e-commerce, digital streaming, and cloud computing (Jacoby, 2020). The company was founded in 1994 as an online market for books but has expanded into different product categories through multiple acquisitions of more than a dozen firms (Jacoby, 2020). Its online marketplace is one of the biggest in the world offering customers numerous products across various product categories. Some of the main categories include beauty, electronics, automotive, appliances, toys, pet supplies, home and kitchen products, watches, mobile phones, computers, collectibles, jewellery, fine art, footwear, clothing, and care products (Jacoby, 2020). The report concentrates on Amazon shipping as the main supply chain element of its online marketplace. Some of the main elements that are discussed include an illustration of its supply chain, relevance of operations management for its supply chain, Amazon’s upstream and downstream supply chain, potential issues in the operations and supply chain, and recommendations for improvement of its operations and supply chain. Amazon’s Supply Chain Amazon’s supply chain is widely known for its efficiency through incorporation of innovation, which has contributed to the organisation’s success as one of the largest online retailers (Guo & Shang, 2023). The supply chain includes a series of interconnected activities that ensure production, procurement, storage, and distribution of goods to customers. Some of the key elements in Amazon’s supply chain include procurement, fulfilment centres, inventory management, technology, automation, last-mile delivery, and customer service (Parchuk, 2022). Figure 1 is an illustration of fulfilment by Amazon. The first step includes procurement where suppliers send inventory to distribution or fulfilment centres. Amazon employs a multi-sourcing strategy where products are sourced from hundreds of suppliers globally. Once the products are received at fulfilment centres, they are appropriately labelled and stored before customer orders can trigger the next process in the fulfilment process. According to Ke, Ye, & Mo, (2022), Amazon utilises complex inventory management systems and algorithms to understand customer shopping patterns to optimise stock levels. Optimised stock levels reduce stock carrying costs, thus improving the efficiency of Amazon shipping fulfilment centres. Customer orders trigger picking, packing, and shipping where goods are sent to customers using a last-mile delivery process (Parchuk, 2022). Amazon is known for delivering goods to end consumers with same-day delivery or next-day delivery options to ensure a swift delivery process. Once goods have been dispatched, Amazon’s customer service support becomes available to customers who can track their shipment in real time to guarantee efficient delivery. Customer service also provides support in case a customer wants to return an item or when a damaged item is delivered. Amazon’s supply chain employs cut-edge technology including AI and machine learning to improve efficiency. AI comes in handy when forecasting demand optimising warehouse operations, and route optimisation (Ke, Ye, & Mo, 2022). Figure 1: Fulfilment by Amazon (Parchuk, 2022). Amazon’s Upstream Supply Chain Amazon’s upstream supply chain consists of activities that are associated with sourcing and procurement of products before they reach its fulfilment centres (Midgley, 2019). The upstream supply chain provides information about activities that must be undertaken before securing goods that are later sold on its platform. Some of the key components of its upstream supply chain include supplier relationships, demand forecasting, procurement, quality control, supplier diversity, and technology adoption. Amazon employs multi-sourcing where goods are sourced or procured from multiple suppliers across its product categories. Multi-sourcing is associated with many benefits compared to single sourcing, which is associated with numerous risks. Appendix 1 is a table offering detailed information about the pros and cons of multi-sourcing and single sourcing. Sourcing involves identification of multiple suppliers who can fulfil projected demand forecasts without failure. Relevance of Operations Management for Amazon (4Vs) Amazon’s success as the largest online retailer rests on high efficiency across its operations, which determines productivity levels achieved (Chu, 2022). High efficiency is achieved through appropriate incorporation of technology that supports core functions including production, procurement, storage, stock levels, route optimisation, and shipping. According to Chu (2022), good all-round performance at Amazon rests on key performance objectives including flexibility, cost, speed, quality, and dependability. Technology integration is crucial in achieving each of these objectives across the supply chain. Amazon’s operations management can also be assessed using the 4Vs dimension as illustrated on Figure 2. The 4Vs of operations management allow businesses to compare, categorise, structure, and understand the nature of their operations (Carmignani, 2019). The dimension includes volume, variety, variation, and visibility. Amazon’s operations have high volumes since millions of products are sold on its online store every day. This is shown on Figure 2. Its variety depends on the type of vendors who provide the products. There is often low variety although products are highly differentiated given the many vendors. Variation of demand is low at Amazon is low since it experiences high levels of demand throughout the year. However, it is important to note that the Christmas period can often experience higher than normal demand as many shoppers buy Christmas presents for their loved ones. Amazon has low visibility since most of its operations are performed remotely from customers (Qin & Liu, 2022). Customers are unaware of these operations and only interact with the organisation on the app or when deliveries are being made using the last-mile delivery system. Figure 2: Amazon’s 4Vs (Qin & Liu, 2022). Operations Processes and Layouts of Amazon that enable it to deliver Goods to its Customers. There are key operations processes and layouts at Amazon that enable efficiency delivery of goods to its customers. These processes and layouts play a pivotal role in making Amazon the most successful and largest online retailer in the world. The first key process is quality management. Quality management is a critical strategic decision area since when appropriately implemented, enhanced operational output in terms of quality can be achieved, thus meeting customer needs and expectations (Li, Holsapple, & Goldsby, 2019). The second key process that contributes to Amazon’s success is inventory management. Inventory management is a cornerstone to any supply chain since it ensures that optimal stock levels are maintained (Li, Holsapple, & Goldsby, 2019). Inventory management not only involves...