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Strategic Supply Chain Management Assignment
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1. Introduction
Supply chain management refers to the process of coordinating, handling, and strategizing the flow of data, knowledge, resources, and substances in order to ensure the best service or product to all various stakeholder groups results in the transformation of raw materials to a marketable product and delivery to the ultimate customer(Wieland,2021). Supply chain management enables the management of anything from product flow to unforeseeable natural catastrophes. With a strong SCM in place, businesses can accurately identify issues and interruptions. SCM is critical in ensuring that goods get at their destination effectively and professionally.
The life cycle of a product is often divided into four stages: the introduction phase, the growth phase, the maturity period, and the decline phase. Each step is distinct and often necessitates the use of distinct value chains (Dami Sani, 2020). Supply managers need to develop supply strategies that are tailored to the distinct requirements of each phase. The following study analyses Amazon's supply chain in the twenty-first century and evaluates whether Amazon's supply chain strategy and practices satisfy consumer needs. Additionally, the study makes recommendations for further eradicating the challenges that Amazon often has in managing its supply chain.
2. Analysis of Amazon’s supply chain
2.1 Components of the Amazon’s distribution strategy
Individual components of Amazon's supply chain strategy include the following:
Warehousing
Amazon has a very effective storage strategy, assuring the availability of products from virtually any device. All warehouses of the company are strategically placed in the vicinity of large population areas and population areas and inventories are dispersed to ensure supplies can meet demand (Cole, Stevenson & Aitken, 2019). Mini-stores may also be found in certain areas to ensure that purchases are sent and delivered promptly irrespective of the item purchased.
Delivery
The broad range of delivery options accessible for other online merchants was one of the most notable differences in Amazon's supply chain approach (Hugos, 2018). Amazon uses several methods to transportation of its products at incredible speeds and across the world, ranging from more traditional to ultra-high-tech. Drones are discovered in backyards and rooftops, marked Amazon cars and delivery cars and deliveries are done out by bike in certain areas.
Technology
Innovation is being encouraged by Amazon's approach of supply chain management. The company use a variety of automated and robotic technology to select and pack orders and store stocks (Cortner et al., 2019). The company also took drones to create “Amazon Prime Air”.
Manufacturing
Although Amazon decides to support third party merchants, the company does seem to have understood that most third-party items can be produced far cheaper and better. The store started manufacturing its own cheap products and white labels which others sold.
2.2 Challenges Amazon faces in the 21st century
These are just a few of the obstacles Amazon faces in delivering products to customers.
“Assuring Sufficient Supply to Meet Demands”
Improper demand forecasting often ends in customer unhappiness. Amazon routinely handles demand and supply issues by increasing inventories to accommodate the anticipated high number of purchases on Prime Day or the holiday season.
“Preparing Resources to Accommodate Additional Order Deliveries”
Amazon's concern is last-mile delivery, notably during busy seasons like “Black Friday” and “Christmas”. Indeed, Amazon experienced a significant logistical failure over the Christmas season of 2013 that culminated in many consumers not receiving their purchases(Arrudaet al., 2019). This led Amazon to face the possibility of assuming control of the last mile of delivery.
“Enhancing Technical Infrastructure to Support Increases in Orders”
Amazon is the owner of AWS, the world's largest cloud computing provider, and yet the business appears overcharged during Prime Day sales (Cortner et al., 2019). For the first several year of "Amazon Prime Days", web purchases were tough for customers to check out. For the retail machinery, technical questions remain a matter of contention.
3. Environmental Analysis
3.1 SWOT
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Strengths
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Weaknesses
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· Amazon Supply seems to be the market leader in a number of categories.
· Amazon Supply's Technology & Operations solutions & strategies have aided the business in developing a unique solution for un-catered marketplaces.
· Amazon Supply is dedicated to some of the most well-known brands in the local market.
· Amazon Supply has a proven track record of not just introducing new goods in the home market but also catering to international markets based on customer insights.
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· While demand for products has not decreased, there is a growing feeling of discontent among Amazon Supply consumers.
· Amazon Supply is inadequately diversified, considering that the majority of its development has occurred in its local market.
· Project management is just too focussed delivery rather than on all external stakeholders' interests.
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Opportunities
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Threats
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· Amazon Supply's e-commerce marketing strategy enables it to establish relationships with local suppliers and logistics providers in the worldwide market.
· The explosion of artificial intelligence and machine learning is reshaping the technological environment wherein Amazon Supply works.
· Amazon Supply can use innovations in artificial intelligence to improve its forecasting of customer demand, its capacity to adapt to specialised niches, and its recommendation engines.
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· The negotiating power of Amazon Supply consumers has grown considerably over the years, exerting downward pressure on pricing.
· Inequality is among the most serious threats to not just globalisation, but also capitalism.
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(Source: Rodrigue, 2020; Min, Zacharia & Smith, 2019)
3.2 PESTEL
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Factors
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Description
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Political
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Both the local and national governments operate deficit budgets that promote short-term growth and may contribute to medium-term inflation (Polacco& Backes,2018). Debt is a certified investment grade of the national government. The government adheres with all rules and regulations of the "World Trade Organization". In both policy development and implementation, consistency occurs.
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Economic
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The service sector's portion of the economy is steadily growing in comparison to the manufacturing, products, and agricultural sectors.
Numerous businesses have suffered heavy losses in the last few years due to currency risk in Brazil, Venezuela, and Argentina (Cohen, 2018). Amazon Supply should exercise caution while starting a business. Due to the recurrent currency crisis of the nation, several US companies have incurred losses in Mexico.
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Socio-cultural
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In response to recent events, particularly Brexit and the imprisonment of immigrants mostly on south border between the United States, there has certainly indeed been harsh light on public behaviour towards immigration. In this very safe atmosphere, Amazon Supply should have been capable of functioning. Greater social consciousness in society frequently leads to greater consumer activity and condemnation by NGOs and pressure groups.
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Technological
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Amazon Supply must conduct an analysis of areas where technology may enhance supply chain partners' abilities. This may aid Amazon Supply in enhancing confidence and adapting the supply chain's flexibility (Laber, Thamma, & Kirby, 2020). Countries throughout the world are attempting to prepare for the deployment of 5G infrastructure. Amazon Supply must determine the extent to which the local supermarket is prepared to provide 5G connection.
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Environmental
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Local and National environmental policies can differ. These may assist Amazon Supply via a range of decisions, including the location, product development of facilities and pricing structure.Environment standards police organisations play a vital role in ensuring that standards are adhered to(Cohen, 2018). However, in developing nations, these authorities often stall the procedure in order to collect bribes. Amazon Supply should really be aware of such activities in a particular nation.
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Legal
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Amazon Supply will establish the “data security laws” of the nation and the measures having to comply with it (Laber, Thamma, & Kirby, 2020). For instance, most "Member States of the European Union" are now requiring EU citizen data exclusively to be kept in EU members.
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4. Strategic Procurement Tools
The strategic procurement instruments mitigate the chances of defects and contribute to long-term collaboration with suppliers. The issue may also be identified throughout the procedure. The whole company must incorporate strategic procurement instruments in its management to prevent risks across the entire supply chain.
When a business wants to supply its goods to its consumers, it must first select the suppliers from whom the product will be obtained. The word "sourcing" relates to the procedure through which an organisation compiles a list of suppliers (Brante&Strømsø, 2018). A “Request for Proposal” (REP) is issued every few years. This request for proposal or reason is needed to eliminate the expenses associated with moving goods inside the company and between suppliers.
After the business has determined the appropriate supplier, the next step is to negotiate a contract with a supplier that includes all of the terms and conditions agreed upon by both parties, the company and the supplier (Brante&Strømsø, 2018). The contract is signed after the organisation and the supplier have discussed the terms and conditions. As a result, the organisation will make every effort to negotiate the contract with the supplier at the lowest feasible cost.
After the contract between both the organisation and the supplier is completed, the organisation begins procuring goods from the supplier in accordance with the terms of a contract (Lysons& Farrington, 2020). Indeed, Amazon Business is a strategic supplier, enables organizations to purchase goods on a big scale without the need for lengthy RFP procedures or agreements with individual vendors. Amazon Business brings to together certifies suppliers across hundreds of categories and provide a diverse selection of business-related goods.
Seller management include overseeing the financial health, compliance, review, auditing, and taxes of the sellers. Amazon Seller Central is an online marketplace where companies may sell directly to Amazoncustomers (Laber, Thamma, & Kirby, 2020). Furthermore, the Amazon seller consultant assists with product photography, listing creation, keyword-targeted writing, and paid marketing.
5. Assessment of whether the supply chain strategy and operations of Amazon meet customers’ requirements in terms of:
Products/Services
Amazon is not responsible for the storage and distribution of goods not often acquired or requested for quick delivery and also of items that have marginal sales returns that are exceeding the expenses of storage (Rodrigue, 2020). On the other hand, Amazon warehouses constantly bought and ordered goods in order to respond effectively to consumer demands while maintaining consistent delivery and lead times.
Quality of Service
Amazon has a follow-up similar to cults. For one important reason, buyers appreciate it: quick and efficient control of the supply chain. Because of a combination of sophisticated information technology, a massive network of "warehouses," multi-tier inventories control and high transport capacity, Amazon's distribution network is the largest efficient in the world(Cortneret al., 2019). Thus, Amazon’s supply chain ensures better quality of services for the consumers.
Lean Principles
When seen in this way, despite being the world's largest retailer and one of the most expensive publicly listed businesses, Amazon remains fundamentally a lean startup. Jeff Bezos seems to be the architect of a digital empire, which he built and governs using the same concepts and ideas as the rest of the world - Lean Six Sigma (Lysons& Farrington, 2020). The primary objective of embracing lean was to continually improve the way the business operated by reducing waste and adding value to the customer.
Competitive Advantage
Digitalization of Amazon's supply chain have boosted their supremacy and given it three major benefits over their competition in e-commerce: Consumers have an unequalled variety of products. Shipping expenses are reduced, which results in savings for their consumers (Brante&Strømsø, 2018).
6. Recommendations on improvement of Amazon’s Supply chain
Amazon Supply Should maintain a careful watch on rapidly changing government laws, notably those relating to environmental and labour safety, as a result of growing criticism from protest groups and non-governmental organisations (Touet al., 2019).
Amazon Supply can leverage advances in artificial intelligence to improve its forecasting of customer demand, its ability to cater to specialised niches, and its recommender systems.
The development of social media may aid Amazon Supply in lowering the cost of market entry and reaching consumers with a substantially reduced marketing expenditure (Rodrigue, 2020). Furthermore, it may result in crowdsourcing different services and data-driven marketing targeting consumers based on their data and buy history.
7. Conclusion
To conclude, it can be stated that Businesses can properly detect problems and disruptions when they have a robust SCM in place. Amazon Supply seems to have a track record of launching new products not just in the domestic market, but also in foreign markets based on consumer data. Amazon Supply must undertake an examination of areas wherein technology may improve the capabilities of supply chain partners. These might help Amazon Supply boost trust and adjust the supply chain's flexibility.
References
Arruda, E. J. M., Muylder, C. F. D., Cançado, A. C., Dholakia, R. R., & Paladino, A. (2019). Technology perspectives and innovative scenarios applied in the Amazon region. Revista de AdministraçãoContemporânea, 23, 607-618.
Brante, E. W., &Strømsø, H. I. (2018). Sourcing in text comprehension: A review of interventions targeting sourcing skills. Educational Psychology Review, 30(3), 773-799.
Cohen, R. (2018). How Amazon’s delivery logistics redefined retail supply chains. Journal of Supply Chain Management, Logistics and Procurement, 1(1), 75-86.
Cole, R., Stevenson, M., & Aitken, J. (2019). Blockchain technology: implications for operations and supply chain management. Supply Chain Management: An International Journal.
Cortner, O., Garrett, R. D., Valentim, J. F., Ferreira, J., Niles, M. T., Reis, J., & Gil, J. (2019). Perceptions of integrated crop-livestock systems for sustainable intensification in the Brazilian Amazon. Land use policy, 82, 841-853.
Dami Sani (2020), Strategic Supply Chain Management: Creating Competitive Advantage and Value Through Effective Leadership, 1st edition, Kogan Page
Hugos M. H. (2018). Essentials of Supply Chain Management, Fourth Edition, Wiley
Koberg, E., &Longoni, A. (2019). A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, 1084-1098.
Laber, J., Thamma, R., & Kirby, E. D. (2020). The impact of warehouse automation in amazon’s success’. International Journal of Innovative Science, Engineering & Technology Information, 7(8).
Lysons K & Farrington B (2020): Procurement and Supply Chain Management, 10th Edition, Pearson Education Limited
Min, S., Zacharia, Z. G., & Smith, C. D. (2019). Defining supply chain management: in the past, present, and future. Journal of Business Logistics, 40(1), 44-55.
Polacco, A., & Backes, K. (2018). The amazon go concept: Implications, applications, and sustainability. Journal of Business and Management, 24(1), 79-92.
Rodrigue, J. P. (2020). The distribution network of Amazon and the footprint of freight digitalization. Journal of transport geography, 88, 102825.
Tou, Y., Watanabe, C., Moriya, K., Naveed, N., Vurpillat, V., &Neittaanmäki, P. (2019). The transformation of R&D into neo open innovation-a new concept in R&D endeavor triggered by amazon. Technology in Society, 58, 101141.
Wieland, A. (2021). Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management, 57(1), 58-73.
