Please answer the 2 questions below the case study

Closing Case 1 POM Amazon Deals with the Weather and Its Supply were unable to meet the demand. In addition to the demand overload, inclement weather also strained the delivery system. Under normal The Problem conditions, parcel-delivery companies can adjust delivery to account for weather. During the 2013 holiday season, however, these com- More than 20 years after completing its first sale, Amazon has become panies were already operating at capacity. As a result they could not an online retailing powerhouse that is competing with bricks-and- make the necessary adjustments to account for inclement weather. mortar global retailers such as Walmart and Target. In addition, it is After the 2013 holiday season, Amazon tried to smooth things competing in the digital marketplace (e.g., ebooks, music, movies, and over with its customers by offering gift cards or credit. More imporTV shows) with Apple's iTunes store and Google's Google Play._ tantly, the retailer determined that it needed to implement certain Amazon's goal is to provide customers with the best selection, structural changes to expand its control over its entire supply chain price, and availability. Sometimes the best price is not the lowest, and distribution system. but the one that provides the best shipping option. Amazon's Web site and apps offer a simple, consistent, and reliable user experience. The IT Solution Product information, prices, customer reviews, related products, rec- Amazon needed to develop a method to increase its control over the ommended products, shipping information, and more appear in the delivery of its products. One common strategy to increase efficiencies same location on the page. Amazon's analytics systems use a custom- and control is to reduce the number of steps in a system. Significantly, er's order and search history to create customized experiences for that Amazon adopted the opposite approach, adding more sorting centers customer, and Amazon's order fulfillment process delivers products to its distribution channel. Sorting centers sort pre-packaged orders swiftly and accurately. Supply chain management is critical to Amazon's success. In entire route to the local post office for Sunday delivery (in select mar- 1995, Amazon began with two fulfillment centers. The company has kets). In certain markets where Amazon owns a delivery system, the now expanded to more than 165 distribution and fulfillment centers company can now maintain control all the way to the customer's door. located around the world. Amazon supports this operation with a Adding a step in the distribution system required Amazon to proprietary, in-house information system that is completely inte- update its proprietary information system. Previously, once the sysgrated. When the company receives an order, the order-management, tem had "slammed" a delivery sticker onto a package, Amazon was inventory-management, and warehouse-management systems locate basically out of the delivery loop. The retailer might maintain tracking products around the world and determine the optimal fulfillment (if offered by the delivery company), but it was not in control of the plan. Fulfillment is the business term that refers to the steps involved delivery. After adding the new step, the fulfillment center would mainin receiving, processing, and delivering orders to the end customer. tain the package, and the system would direct the pre-packaged order For Amazon, a global company with many products in many distribu- to the appropriate sorting center. When packages arrived at the center, tion centers, and many orders that require cooperation across centers the information system would sort them by zip code. They were then (meaning the entire order cannot be fulfilled through one distribution delivered to the local post office or to another carrier for the "last mile" center), fulfillment requires a very high level of coordination. of delivery. In select cities, Amazon maintains its own delivery service. MIS To achieve this coordination, Amazon has to know where In other cities, the company has contracted with the U.S. Postal Service every product is located in every distribution center world- (USPS) to deliver on Sundays. wide. For example, when suppliers send products to be "Fulfilled by Sunday delivery spreads the delivery service over another day inventory-management system. A "stower" then places the goods in This shift, coupled with the use of sorting centers, enabled Amazon any available bin. Items are not organized in any logical manner. How- to expand its operations, increase control, and offload some delivery ever, the product and bin location are recorded by the proprietary work to another day of the week. information system. When an order is received, a "picker" will walk through the warehouse, guided along an optimal route by a scanner The Results (powered by the proprietary information system) to the proper bins The additional step and the enhanced coordination enabled by Amain order to select the items. The pickers then bring the items to an zon's proprietary information system increased the company's control "organizer," who begins preparing them for delivery. Prepared boxes over its supply chain and reduced its dependence on parcel-delivery are sent down the "slam line," where the packages are weighed and companies. Having learned from the 2013 holiday delivery debacle, "slammed" with a shipping label. Finally, labeled packages are sorted Amazon expanded its operations and achieved a strategic advantage to appropriate loading docks based on the shipping company that will by gaining more control over its supply chain. handle the delivery. Amazon's sorting centers, updated supply chain management Despite the effectiveness of Amazon's proprietary information system, and agreement with the USPS helped the company achieve a system, several key factors, such as the weather, partner delivery com- record year in 2015. The retailer shipped to more than 185 countries, panies, and the competition, remain beyond the company's control. added more than 54 million Prime Members. In addition, Amazon For example, during the 2013 holiday season, several companies, in- reported no major problems with the new delivery system. Finally, the cluding Amazon, Kohl's, and 1-800-flowers.com, promised last-minute company reported sales revenue of $107 billion. delivery without taking into account the capacity of the parcel-delivery Amazon's updated system has generated some unintended concompanies, FedEx (www.fedex.com) and UPS (www.ups.com), which sequences. For example, the increased demand on Sunday delivery 368 CHAPTER 13 Supply Chain Management through the USPS has increased the agency's workload and caused Sorting Centers Aim to Help with Controlling Deliveries," The Seattle some postal workers to complain about 60-hour weeks and working 21 Times, July 28, 2014; B. Stone, "Amazon's Grand Plan to Avoid Holiday consecutive days. Although this problem is beyond Amazon's control, Delivery Snafus Again, Bloomberg.com, September 26, 2014; T. Duryee, it does impact the firm's operations because it could lead to delivery "Postal Workers Overwhelmed by Flood of Amazon Sunday Deliveries," delays. Additionally, other retailers have contracted with the USPS to For All the Insane Shopping Everyone Did This Hotiday Season," Business offer Sunday delivery, putting more strain on Amazon's ability to rely Insider, December 26, 2014; "Amazon Global Fulfiliment Center Network," on the agency as a delivery option. http://www.mwpvl.com/html/amazon_com.html, accessed October 21, 2015; www.amazon.com, www.ups.com, www.fedex.com, www.usps.com, Sources: Compiled from S. Soper, "Amazon Snags Sorting From FedEx accessed October 21, 2015. to Avert Package Pileups," Bloomberg.com, December 9, 2014; M. Schlangenstein, L. Patton, and A. Barinka, "UPS Shipping Delays Show Questions Perils of Stores Overpromising. Bloomberg.com, December 27, 2013; B. Bacheldor, "From Scratch: Amazon Keeps Supply Chain Close To Home," Information Week, March 5, 2004; J. Del Ray, "This is What It Looks Like 1. Describe the problems that Amazon faced during the 2013 holiday Inside an Amazon Warehouse, "All Things Digital, December 23, 2013; B. season. Thau, "A Post-Mortem On the Holiday "13 Retail Shipping Debacle and 2. Discuss how Amazon solved those problems via its supply chain Remedies for '14," Forbes, January 28, 2014; J. Greene, "Amazon's New management system