Amazon Revolutionizes Supply Chain Management

(Amazon Case Study; page 489; 8^th edition of Schroeder)

Instructions to Students:

1. Read the case carefully, assimilating all facts and data.
2. Please write a report covering the following bullet points. (Do not do the Discussion Questions at the end of the case).

• How has Amazon revolutionized supply chain management?
• What are Amazons strengths and weaknesses?
• What are Walmarts strengths and weaknesses?

• Which company, Amazon or Walmart, do you believe is in the best position for future growth? Why? Please support your answer.

C Chegg eReader Id21 metrostate - Bing Sign On With Your StarlD x + _ a O https://www.chegg.com/reader/9781260937039/513/ os : Search keywords a ... iFi Case Study Amazon Revolutionizes Supply Chain Management Q&A Beginning from a small start-up company in 1995, Ama- zon has revolutionized supply chain management. It dominates e-commerce by providing online ordering for all of its products, and it has revolutionized the retail industry with omni-channel marketing. How Amazon has accomplished these changes through innovative sup- ply chain practices is discussed here, along with how traditional retailers are responding. Amazon has funda- mentally changed the basis of competition in the retail industry. This case challenges you to think about how Amazon should move forward in the future and how tra- ditional retailers, such as Walmart, should respond from both a strategic and supply chain point-of-view. HOW AMAZON IS REVOLUTIONIZING SUPPLY CHAIN MANAGEMENT Amazon has changed supply chain management forever by providing convenience for the customer. When Ama- zon started, no one thought customers would pay the shipping costs for convenience. After inventing Amazon Prime, which offered free two-day shipping on most orders for a flat rate of $99 per year, revenue exploded from $7 billion in 2004 to $177 billion in 2017, a growth rate of 27% per year. Growth was facilitated by Ama- zon's revolutionary supply chain strategy. for not only accuracy of orders, but also availability of inventory. Once the order is placed, the customer can track the fulfillment and arrival dates. If the product is not satisfactory, it can be easily returned in the same package with a return label printed online, and a refund is made. Amazon provides superior online customer ser- vice via a very sophisticated information system. Amazon has 140 fulfillment centers in the U.S. that can ship a large quantity of goods. Many of these are 1,000,000 square feet in size, but some are smaller. Ful- fillment centers also handle the "Fulfillment by Amazon" program where third-party sellers post items to be sent to Amazon customers. The map in Exhibit 1 shows the fulfillment centers, which are located close to population centers to allow two-day shipments to Prime customers. With the recent addition of Whole Foods, Amazon acquired 470 stores located through-out the country.2 While these stores provide groceries, they can also store goods from Amazon.com for transfer to customers. The stores can provide delivery of groceries and Amazon merchandise within two hours for Prime customers or for curb-side pickup by the customers. Curb-side pickup does not require an Amazon Prime membership and the associated cost. The Whole Foods and fulfillment center network provides a very fast and reliable delivery system. 489 of 545 o Type here to search j a O 30F 8:53 PM 11/15/2021 C Chegg eReader X Id21 metrostate - Bing 1 Sign On With Your Starld X + _ a c 8 https://www.chegg.com/reader/9781260937039/513/ or 17 : Search keywords a ... rate of 27% per year. Growth was facilitated by Ama- zon's revolutionary supply chain strategy. Ciri Q&A amazon associated cost. The Whole Foods and fulfillment center network provides a very fast and reliable delivery system. Fulfillment centers are highly automated and effi- cient. Orders are filled in real-time, not in batches at the end of the day. These centers operate on a twenty-four hour cycle. As soon as an order is received, it is sent for picking and packaging and then sent to an available package delivery truck. These trucks constantly load packages for delivery and are frequently dispatched. Gone are the order cut-off times and queueing of pack- ages for end of the day pickup. Jonathan Weiss/Shutterstock amazon Amazon is a favorite choice by customers because of its quick and efficient supply chain. A combination of sev- eral key features have built its supply chain. First, Amazon acts as a distribution company. Amazon's suppliers hold inventory in their own warehouses and ship it to Amazon fulfillment centers in relatively small lots with frequent deliveries. Once in the fulfillment center, Amazon quickly sends out orders on a continuous basis. Amazon uses parcel services for two day deliveries and its own vehicles when same day or one-hour service is required. Amazon controls its own logistics network including 7,000 deliv- ery vans and the use of 40 aircraft for rapid delivery, plus it delivers many packages through USPS and UPS. Customer order entry through the Amazon website is an important part of the supply chain. The website checks AMAZON UPV/Newscom Fulfillment centers use the latest robotic technol- ogy to move and pick products for packaging. In 2012 Business Insider, Sept 27, 2017 2 The Associated Press, Nov 21, 2017. 489 489 of 545 Type here to search j O a 30F 8:53 PM 11/15/2021 C Chegg eReader Id21 metrostate - Bing Sign On With Your StarlD x + _ a O https://www.chegg.com/reader/9781260937039/513/ os : Search keywords a ... iFi Case Study Amazon Revolutionizes Supply Chain Management Q&A Beginning from a small start-up company in 1995, Ama- zon has revolutionized supply chain management. It dominates e-commerce by providing online ordering for all of its products, and it has revolutionized the retail industry with omni-channel marketing. How Amazon has accomplished these changes through innovative sup- ply chain practices is discussed here, along with how traditional retailers are responding. Amazon has funda- mentally changed the basis of competition in the retail industry. This case challenges you to think about how Amazon should move forward in the future and how tra- ditional retailers, such as Walmart, should respond from both a strategic and supply chain point-of-view. HOW AMAZON IS REVOLUTIONIZING SUPPLY CHAIN MANAGEMENT Amazon has changed supply chain management forever by providing convenience for the customer. When Ama- zon started, no one thought customers would pay the shipping costs for convenience. After inventing Amazon Prime, which offered free two-day shipping on most orders for a flat rate of $99 per year, revenue exploded from $7 billion in 2004 to $177 billion in 2017, a growth rate of 27% per year. Growth was facilitated by Ama- zon's revolutionary supply chain strategy. for not only accuracy of orders, but also availability of inventory. Once the order is placed, the customer can track the fulfillment and arrival dates. If the product is not satisfactory, it can be easily returned in the same package with a return label printed online, and a refund is made. Amazon provides superior online customer ser- vice via a very sophisticated information system. Amazon has 140 fulfillment centers in the U.S. that can ship a large quantity of goods. Many of these are 1,000,000 square feet in size, but some are smaller. Ful- fillment centers also handle the "Fulfillment by Amazon" program where third-party sellers post items to be sent to Amazon customers. The map in Exhibit 1 shows the fulfillment centers, which are located close to population centers to allow two-day shipments to Prime customers. With the recent addition of Whole Foods, Amazon acquired 470 stores located through-out the country.2 While these stores provide groceries, they can also store goods from Amazon.com for transfer to customers. The stores can provide delivery of groceries and Amazon merchandise within two hours for Prime customers or for curb-side pickup by the customers. Curb-side pickup does not require an Amazon Prime membership and the associated cost. The Whole Foods and fulfillment center network provides a very fast and reliable delivery system. 489 of 545 o Type here to search j a O 30F 8:53 PM 11/15/2021 C Chegg eReader X Id21 metrostate - Bing 1 Sign On With Your Starld X + _ a c 8 https://www.chegg.com/reader/9781260937039/513/ or 17 : Search keywords a ... rate of 27% per year. Growth was facilitated by Ama- zon's revolutionary supply chain strategy. Ciri Q&A amazon associated cost. The Whole Foods and fulfillment center network provides a very fast and reliable delivery system. Fulfillment centers are highly automated and effi- cient. Orders are filled in real-time, not in batches at the end of the day. These centers operate on a twenty-four hour cycle. As soon as an order is received, it is sent for picking and packaging and then sent to an available package delivery truck. These trucks constantly load packages for delivery and are frequently dispatched. Gone are the order cut-off times and queueing of pack- ages for end of the day pickup. Jonathan Weiss/Shutterstock amazon Amazon is a favorite choice by customers because of its quick and efficient supply chain. A combination of sev- eral key features have built its supply chain. First, Amazon acts as a distribution company. Amazon's suppliers hold inventory in their own warehouses and ship it to Amazon fulfillment centers in relatively small lots with frequent deliveries. Once in the fulfillment center, Amazon quickly sends out orders on a continuous basis. Amazon uses parcel services for two day deliveries and its own vehicles when same day or one-hour service is required. Amazon controls its own logistics network including 7,000 deliv- ery vans and the use of 40 aircraft for rapid delivery, plus it delivers many packages through USPS and UPS. Customer order entry through the Amazon website is an important part of the supply chain. The website checks AMAZON UPV/Newscom Fulfillment centers use the latest robotic technol- ogy to move and pick products for packaging. In 2012 Business Insider, Sept 27, 2017 2 The Associated Press, Nov 21, 2017. 489 489 of 545 Type here to search j O a 30F 8:53 PM 11/15/2021