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Amazon’s Supply Chain and Transportation Innovations

Amazon is one of the leading companies in the e-commerce industry. The company focuses on three “customer sets” that include “consumer customers, seller customers, and developer customers” (as cited in Lee, 2012, p. 53). The company has headquarters and over 70 fulfillment centers in the USA (“Amazon Fulfillment Network,” 2017). It also has websites customized for the UK, Australia, Canada, India, China, Mexico, Germany, France, Poland, the Czech Republic, and some other countries. The company started as an online retailer of books and expanded to offer films, music, software, devices, apparel, and even food. Amazon delivers its goods to all parts of the world.

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Supply Chain

Its supply chain is characterized by a significant degree of diversification. The company relied heavily on delivery companies such as FedEx and UPS. It also made various alliances with various partners to ensure the efficient work of its supply chain. Amazon also has its fleet that ensures efficient ground, water, and even air transportation (BI Intelligence, 2017). The company has announced its commitment to developing a fleet that will ensure air transportation.

Strengths, Weaknesses, and Metrics

The major strength of supply chain management is its flexibility. The company has its ground, water, and air transportation services. However, it also enters various types of alliances and addresses delivery companies (BI Intelligence, 2017). Therefore, Amazon can ensure the effective operation of its supply chain and ensure safe and timely delivery. At the same time, the major weakness of Amazon’s supply chain is the lack of fulfillment centers outside the United States. The company has a one-hour delivery for premium customers in many cities across the USA and in London. However, the geography of prime delivery services could expand. The company could consider launching similar practices in such regions as China and India. The company uses the fill rate metrics as it considers the operations of its fulfillment center central to the company’s success (Lee, 2012).

Transportation Innovations

As far as the major transportation innovations implemented recently, it is possible to consider the development of its air transportation line. Amazon has already leased 16 cargo planes with 24 cargo planes to come. Additionally, the company will soon have an air cargo facility in the USA and one in China (BI Intelligence, 2017). These innovations can help the company develop the supply chain that will not require partnerships with delivery companies. Importantly, the company also hopes that its transportation and logistics system will grow into an independent business. Amazon’s top management believes the company can soon provide delivery services and become a rival of its present partners such as FedEx and UPS (BI Intelligence, 2017).

It is important to note that air transportation has long been regarded as costly and rather cost-ineffective. Nevertheless, this view is outdated as air transportation can help companies offer value-added products and services as the products will be delivered safely and timely (Coyle, Langley, Novack, & Gibson, 2012). Moreover, companies do not have to invest funds into the development of infrastructure and the fleet. For instance, cargo planes are often leased while terminals, and airways traffic control are provided by the government (Coyle et al., 2012).

As for the transportation innovations the company should consider, it is possible to mention the use of a traffic management system. The system could manage big data including locations of vehicles, vessels, and aircraft, the number of products, or even weather conditions in different parts of the world and the temperature of the products. The unified system could help Amazon create an effective supply chain, which will be the company’s major competitive advantage. This system should be incorporated into the company’s supply chain risk management and quality control. Amazon will be able to ensure the quality of products delivered, their safety, and timely delivery.

Next Step to Improve Amazon’s Supply Chain

The next step to undertake to improve the existing supply chain is associated with expansion and growth. Apart from developing a cargo facility in Beijing, the company should consider the development of such facilities in India (for instance, New Delhi), and Germany (for instance, Munich). These facilities will help the company enhance its operations in the mentioned regions. This step will also be instrumental in ensuring the prime delivery service in some of the key locations. As has been mentioned above, air transportation is becoming critical to the e-commerce industry as companies can deliver goods within short periods, which can be critical to the customer. Coyle et al. (2012) claim that the modern customer is ready to pay extra for certain guarantees. Thus, short delivery terms and safety are often critical.

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Conclusion

Amazon is one of the leaders in the e-commerce market. The company is developing its air transportation, which can grow into an independent business (delivery services to other companies). As for the next steps to strengthen its supply chain, the company should consider the development of the facilities in the key regions that will help the company address the needs of its existing and potential customers.

References

Amazon fulfillment network. (2017). Web.

BI Intelligence. (2017). Amazon is opening its first air cargo hub. Business Insider

Coyle, J. J., Langley, J., Novack, R. A., & Gibson, B. (2012). Supply chain management: A logistics perspective. Stanford, CT: Cengage Learning.

Lee, W. B. (2012). Creating entrepreneurial supply chain: A guide for innovation and growth. Fort Lauderdale, FL: J. Ross Publishing.

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