Supply chain management isn't just a fact of life at Amazon. Corporate executives realize that supply chain management is in fact crucial to the success of Amazon now and in the future (Wheatley, 2000). Within five years of opening its doors to the public Amazon succeeded in enticing more than 20 million customers, located in more than 150 countries around the world (Wheatley, 2000).
Interestingly despite its economic gains Amazon has also realized multiple losses. These losses have resulted in stock price declines during the early quarters of 2000 (Wheatley, 2000). Why the change? Costs in an e-commerce business are often fixed. Amazon, because it is a Web-based business generally must deal with many high fixed costs. Fortunately the best way to overcome this obstacle is by selling as much as possible, or by increasing volume (Wheatley, 2000). Amazon has done this successfully, expanding its product base to include almost every product under the sun. While the company first started out by focusing on books, today Amazon offers more than 18 million different products to consumers (Wheatley, 2000).
To help minimize fixed costs Amazon has opened multiple distribution centers across the nation and world. The distribution centers currently rely primarily on automated processes to fulfill orders. Amazon has also expanded internationally by investing in integrated logistics solutions and software programs that will help improve supplier lead times and address varying transportation from distribution centers in multiple locations (Wheatley, 2000).
Supply chain management is a vital component of any organization's processes. It's not enough for a company to simply make a product and provide it to a customer. A company has to do so in the most efficient manner possible, meeting all customer needs, wants and expectations. When done correctly, supply chain management will propel even the smallest company to the head of the competition. Supply chain management is nothing more than the process whereby a company plans, sources, creates and delivers goods or products to their target audience. For a company to succeed this process must be streamlined to not only guarantee optimal customer service, but also to ensure that costs are contained so the company can realize significant profits. The one company that has continually achieved supply chain management excellence over time is Amazon.
Amazon's president and CEO believes that "end-to-end and click-to-ship" customer offerings at Amazon are among the more prevalent features that will continue to propel the company to the top (Wheatley, 1). Amazon continually works to upgrade and streamline its processes. Of highest important to the company is customer service, which according to annual surveys the company performs, thus far works efficiently.
Perhaps the one weak link Amazon has had in the past with respect to supply chain management is inventory management. It is difficult after all for a company offering so many products to ensure that all products are in stock at the same time. Fortunately Amazon is working around this problem, continuing to offer customers 'one click shipping' alternatives but sometimes shipping customer orders in segments as products become available. Amazon is currently working with software programs to help set optimal inventory levels and help the company improve its product mix to maximize customer service, particularly during peak times (Wheatley, 2005).
One last piece of the puzzle that has enabled Amazon's success include its ability to track customer transactions. Amazon keep tabs on not only what customers buy, but how they buy it, when they buy it and what combinations of products customers tend to buy together (Whealtey, 2005). This has enabled the company to further improve customer service by offering additional products to customers through recommendations, but also ensuring that certain combinations of products are in stock when customer place online orders.
Amazon.com is among other things committed to excellence in supply chain management. It is likely that in the upcoming years the company will continue to develop new processes and procedures that further integrate their supply chain processes. Advanced planning, inventory, scheduling, warehousing, improved supplier relationships, use of improved internet technology and a constant commitment to customer service have all helped propel Amazon to the top of the competition. Supply chain management is at best both an art and a science.
Clearly Amazon is working to prefect both the art and science of producing and providing optimal products and services to customers. Amazon succeeds because it plans, sources, creates and delivers the products customers' want and need in a timely and efficient fashion, and will continue to do so for years to come.