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Amazon Inc.’s Global Supply Chain & Other Operations

Amazon has an extensive network of manufacturers who are partnered with the company and supply it with a significant portion of order volume. Procurement’s input resources consist of purchased goods from other vendors and manufacturers. Its processes consist of managing contacts with numerous sellers, seeking new partners, purchasing goods, and establishing an ideal price for them (Mark, 2018). Since Amazon actively buys products for resale and its order volume is approximately 50% first- and second-party sellers, its procurement volume is massive. With numerous sellers delivering goods from across the globe, the variety dimension of this operation is high. Variation of the process is low, as Amazon created a system that allows its operations to remain stable (Mark, 2018). Visibility can be described as low as an average customer does not possess any details of this process.

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Four performance perspectives for the procurement operation:

Perspective Priority
Top-down The continuous improvement of the supply chain.
Bottom-up A simplified process of creating and managing supply orders.
Market requirement A constant stream of demanded goods.
Operations resources A stable amount of each good prepared for delivery.

The key performance priority for procurement is to stabilize the process of obtaining the products from first- and second-party sellers.

Amazon has several facilities that manage its goods. The input of this operation is unsorted goods received from sellers. Its operations consist of storing, packaging, sorting, and tracking available products. The output of this operation is a product that is ready for transportation to a customer’s door. The volume for this operation is massive, and its variety is significant due to the number of different types of products coming through these centers (Mark, 2018). Variation of this process is low, as Amazon’s fulfillment centers are guaranteed to have a constant supply of products due to a high number of suppliers. Visibility is somewhat low, although customers and sellers can interact with this part of Amazon’s supply chain via product tracking.

Four performance perspectives for the fulfillment operation:

Perspective Priority
Top-down Ideal warehouse management and order completion.
Bottom-up A decreased amount of manual labor without any loss of efficiency.
Market requirement Optimization of the preparation process of an ordered product faster than competitor firms.
Operations resources An increased capability to fulfill orders in a set period.

The key performance priority for fulfillment is to deliver the products to Amazon’s customers in the shortest time possible.

Throughout the past two decades, Amazon continued to strive to achieve the most optimized supply chain and succeeded in its goal. The initial stage for Amazon, according to Hayes and Wheelwright’s model, was to capitalize on the growing success of its online book store (Mark, 2018). Being one of the first companies in this market, Amazon was able to establish industry standards, effectively setting long-term goals that aimed to help it with conquering the market, such as the accommodation of third-party sellers (Mark, 2018). The third stage of operations for Amazon was its successful experiments with Prime subscriptions and the expansion of fulfillment centers. The final step for the company that was already a leader was to provide a stream of upgrades to its supply chain that allows it to stay above its competitors to this day.

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Mark, K. (2018). Supply Chain Management. Ivey Publishing.

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