Benefits of Outsourcing Part of Amazon’s Supply Chain
Globalization has created an array of opportunities for organizations to leverage to create value for themselves. Amazon is an example of an organization that created value for itself by outsourcing part of its supply chain. Amazon has an extensive global supply chain that it has outsourced to third-party providers to handle various aspects of its business operations (Bryson et al., 2020).
Specifically, Amazon has outsourced its logistics operations, including order fulfillment, delivery, and returns processing, to third-party providers. This has allowed Amazon to reduce its costs by leveraging the expertise and resources of its third-party providers, which are better equipped to handle these aspects of Amazon’s business than Amazon itself. Amazon’s outsourcing reduced costs and increased efficiency. It also expanded its product selection, making its website the go-to marketplace for online shoppers (Min et al., 2019). Additionally, the benefit flowed to customers, who now had access to an enormous range of goods at competitive prices.
Drawbacks of Outsourcing Logistics
However, outsourcing in supply chain management is not without its problems. While outsourcing does offer benefits, it also presents some challenges. One of the most significant challenges to Amazon is ensuring that its vendors adhere to their quality standards (Min et al., 2019). The level of quality can significantly impact customer satisfaction ratings, and dealing with high volumes of different vendors can make this difficult.
Value Created by Outsourcing for Amazon and Its Customers
The value created by Amazon’s outsourcing was both for the organization and the customer. On the organizational side, Amazon reduced costs and improved efficiency (Bryson et al., 2020). On the customer side, Amazon was able to meet customer demand more timely and cost-effectively, allowing it to offer a better customer experience (Bryson et al., 2020). This created value for both the organization and the customer, as Amazon increased its profits while providing a better experience for its customer base.
References
Bryson, J.R., Sundbo, J., Fuglsang, L., & Daniels, P. (2020). Supply chains and logistics services. In: Service Management. Palgrave Macmillan, Cham. Web.
Min, S., Zacharia, Z. G., & Smith, C. D. (2019). Defining supply chain management: In the past, present, and future. Journal of Business Logistics, 40(1), 44-55. Web.