Summarize this case by suggesting how Amazon could improve as a company. What data analysis based business decisions would you make moving forward?

Closing Case POM MKT MIS Amazon's Global Supply Chain The Problem More than 20 years after completing its first sale, Amazon has become an online retailing powerhouse that is competing with bricks-and- mortar global retailers such as Walmart and Target. It is also compet- ting in the digital marketplace (e.g., e-books, music, movies, and TV shows) with Apple's iTunes store and Google's Google Play Amazon's goal is to provide customers with the best selection, price, and availability. Sometimes the best price is not the lowest, but the one that provides the best shipping option. Amazon's website and apps offer a simple, consistent, and reliable user experience. Prod- uct information, prices, customer reviews, related products, recom- mended products, shipping information, and more appear in the same location on the page. Amazon's analytics systems use a customer's or- der and search history to create customized experiences for that cus- tomer, and Amazon's order fulfilment process delivers products swiftly and accurately. Supply chain management is critical to Amazon's success. In 1995, Amazon began with two fulfilment centers. The company has now expanded to some 350 distribution and fulfillment centers located around the world. Amazon supports this operation with a proprietary, in-house information system that is completely integrated. When the company receives an order, the order-management, inventory- management, and warehouse-management systems locate products around the world and determine the optimal fulfillment plan. Fulfill- ument is the business term that refers to the steps involved in receiving, processing, and delivering orders to the end customer. For Amazon, a global company with many products in many distribution centers, and many orders that require cooperation across centers (meaning the entire order cannot be fulfilled through one distribution center), fulfill- ment requires a very high level of coordination. To achieve this coordination, Amazon has to know where every product is located in every distribution center worldwide. For example, when suppliers send products to be "Fulfilled by Amazon" (FBA), their products are immediately scanned into Amazon's inventory manage- ment system. A "stower" then places the goods in any available bin. items are not organized in any logical manner. However, the product and bin location are recorded by the proprietary information system. When an order is received, a robot will go to the proper bin and select the items, guided along an optimal route by a scanner (powered by the proprietary information system). The robots bring the items to a human, who places them in boxes. Prepared boxes are sent down the "slam line," where the packages are weighed and slammed" with a shipping label. Finally, labeled packages are sent to appropriate load- ing docks based on the shipping company that will handle the delivery. Despite the effectiveness of Amazon's proprietary information stem, several key factors, such as the weather, partner delivery com- panies, and the competition, remain beyond the company's control. For example, during the 2013 holiday season, several companies, in- cluding Amazon, Kohl's, and 1-800-flowers.com, promised last-minute delivery without taking into account the capacity of the parcel-delivery companies, FedEx (www.fedex.com) and UPS (www.ups.com), which were unable to meet the demand. In addition to the demand overload, inclement weather also strained the delivery system. Under normal conditions, parcel delivery companies can adjust delivery to account for weather. During the 2013 holiday season, however, these compa- nies were already operating at full capacity. As a result, they could not make the necessary adjustments to account for inclement weather. After the 2013 holiday season, Amazon tried to smooth things over with its customers by offering gift cards or credit. More impor- tantly, the retailer determined that it needed to implement certain structural changes to expand its control over its entire supply chain and distribution system. The IT Solution Amazon needed to develop a method to increase its control over the delivery of its products. One common strategy to increase efficiencies and control is to reduce the number of steps in a system. Significantly, Amazon adopted the opposite approach, adding more sorting centers to its distribution channel. Sorting centers sort pre-packaged orders by zip code. This process enables Amazon to control delivery along the entire route to the local post office for Sunday delivery (in select mar- kets). In certain markets where Amazon owns a delivery system, the company can now maintain control all the way to the customer's door. Adding a step in the distribution system required Amazon to up- date its proprietary information system. Previously, once the system had "slammed" a delivery sticker onto a package, Amazon was basi- cally out of the delivery loop. The retailer might maintain tracking (if offered by the delivery company), but it was not in control of the deliv- ery. After adding the new step, the fulfillment center would maintain the package, and the system would direct the pre-packaged order to the appropriate sorting center. When packages arrived at the center, the information system would sort them by zip code. They were then delivered to the local post office or to another carrier for the last milo" of delivery. In select cities, Amazon maintains its own delivery service In other cities, the company has contracted with the U.S. Postal Service (USPS) to deliver on Sundays. The Results The additional step and the enhanced coordination enabled by Ama- zon's proprietary information system increased the company's control over its supply chain and reduced its dependence on parcel-delivery companies. Having learned from the 2013 holiday delivery debacle, Amazon expanded its operations and achieved a strategic advantage by gaining more control over its supply chain. Amazon's sorting centers, updated supply chain management system, and agreement with the USPS helped the company achieve a record year in 2015. The retailer shipped to more than 185 countries, and added more than 54 million Prime Members. Amazon also re- ported no major problems with the new delivery system. Finally, the company reported sales revenue of $107 billion. Amazon is expanding its Fulfillment by Amazon service, which provides storage, packing, and shipping for independent merchants selling products on the company' website. To do so, Amazon plans to launch a global shipping and logistics operation called Global Supply Chain by Amazon (GSCA). This operation will compete with carriers such as UPS (www.ups.com) and FedEx (www.fedex.com), as well as with Alibaba (www.alibaba.com), the Chinese e-commerce gia GSCA plans to connect two huge markets to each other, Chinese producers and American consumers. About 40 percent of Amazon's 2016 revenue came from small businesses that buy products from China, manage the complexity of the shipping and import process, and then sell those products to U.S. customers using Fulfillment by Amazon. Amazon saves money if it can cut out those middlemen and streamline logistics enough so that more Chinese sellers use Amazon as their retail platform. GSCA plans to attract merchants in countries such as China and then consolidate their products at regional shipping hubs. The large volume of goods means that Amazon would be able to buy cargo space at lower wholesale rates and then offer a lower price to participating Chinese merchants by passing on some of the savings. By automating the shipping paperwork, Amazon can further reduce costs and make the process more convenient for the merchants. To handle GSCA shipping, Amazon received a license to act as a wholesaler for ocean container shipping from the Chinese Ministry of Commerce from the U.S. Federal Maritime Commission. Having licenses from the United States and from China means that Amazon can buy space on shipping containers at wholesale rates and resell it at retail rates. To handle air cargo, Amazon signed a deal to lease more cargo jets, in effect doubling the size of its fleet. Amazon partnered with cargo airline Atlas Air (www.atlasair.com) to lease 20 Boeing planes. The deal includes the use of the planes, crew, and maintenance for seven years. The strategy puts Amazon in direct competition with Alibaba. Both companies are competing in the rapidly growing cross-border e-commerce market. By 2020, this market is expected to be a $1 trillion industry serving 900 million shoppers. For example, Cainiao, a logistics company formed by Alibaba and three others, announced plans in 2016 for a $16 billion supply chain investment. The funds provide enhanced data quality and route planning information, as well as construction of 1,800 distribution centers and 97,000 delivery stations in more than 600 cities across 31 Chinese provinces. Amazon and Alibaba have made significant investments in their supply chain capabilities and they will soon handle more shipments than most specialist delivery postal and courier companies. For exam- ple, Amazon shipped 1 billion parcels of its own goods in 2016. The company is forecast to handle a greater volume than FedEx by 2019