Understand Amazon's Supply Chain
If you are thinking of a supply chain management career, then you must learn how experts from different industries plan and execute their supply chains. One example of supply chain management that you can refer to is the American multinational e-commerce giant Amazon which has become a household name by winning the trust of millions of its customers.
Amazon made its debut in 1994 as a book-selling website. Today, it features one of the largest and most efficient supply chain models ever seen around the globe. How did Amazon achieve this? What are the fundamentals it focused on for the management of its supply chain? Let’s find out!
Before we get into the details of Amazon’s supply chain, an aspiring supply chain professional like you needs to get the conceptual basics correct so that you can understand these real-life examples well and in their entirety.
For this, you may wish to enrol in our IIT Supply chain management certification course which equips you with the fundamental concepts of the field that are necessary for making data-driven strategic business decisions!
All About Amazon’s Supply Chain
Amazon's Supply Chain refers to the entire process under which a product on offer by Amazon undergoes in its life journey. This is the process that starts right from the moment a product reaches Amazon’s warehouse, enters its inventory records, and goes on till the time it gets delivered to the customer.
To offer a robust platform to its suppliers, Amazon provides them with two types of fulfillment options -
- Fulfillment By Amazon (FBA) - Under this option, Amazon is responsible for storing, packaging, as well as shipping the product to the customer.
- Fulfillment By Merchant (FBM) - Under this fulfillment option, the responsibility of storing the products in the warehouse, packing, and shipping them to the customers rests with the Merchant.
How Does Amazon Supply Chain Work?
Over the last 2 decades, Amazon has made several changes to the working of its supply chain, in a bid to crack an efficient system with which it can offer the fastest delivery options like same-delivery to its customers.
As soon as Amazon receives an order, products get arranged into pallets either manually or with forklifts into the warehouses, where they get packed and screened for quality checks. After receiving a go-ahead from clearances, Amazon’s logistics team enters the supply chain and completes the delivery of the orders.
To achieve this efficiently, the e-commerce conglomerate puts its primary focus on two elements of the chain - Storage and Delivery. Let’s uncover how Amazon takes care of these two areas.
Amazon has more than 20 Crore customers globally who have subscribed to its Prime membership, which means, it needs to deliver a huge number of its orders in just 1 day or a maximum time of 2 days.
To fulfill this promise of fast delivery, Amazon maintains a huge network of fulfillment centers for storing its products. Amazon currently has 185 fulfillment centers spread across different cities of the world with a carpet area of up to 10,00,000 square feet!
This huge storage capacity helps Amazon maintain a cutting edge over its competitors and maintain a smooth fulfillment of its orders.
Another important aspect that Amazon has taken into consideration for its warehousing is its location. Most of its fulfillment centers are located near metropolitan cities from where it received huge and regular demand.
Moreover, to speed up warehouse operations, Amazon has deployed over 10 Lakh employees in its fulfillment centers globally. It also uses robots, drones, and other high-end technologies to run its warehouse ecosystem with greater efficiency.
The second most crucial segment of Amazon's Supply Chain is its logistics and delivery teams. Amazon ships products mainly via two channels - road and air. Amazon maintains a huge fleet of trucks, bikes, and vans for transporting products via roads. It has also partnered with various delivery services including FedEx and UPS.
Amazon also has a cargo airline of its own called Amazon Air which is used for transporting products. Amazon Air makes more than 160 flights every day with more than 85 planes, which include 11 Boeing Jets.
This is how Amazon can meet and many times exceed its customer’s expectations in terms of fulfillment and timely delivery of their orders!
A Supply Chain Management System is an area that can either make or break a business. If you are interested in making an impact on a business by becoming a part of its supply chain decision-making, you must get a supply chain analytics certification today!