Table of Contents INTRODUCTION...........................................................................................................................1 OVERVIEW OF THE AMAZON...................................................................................................1 TASK 1............................................................................................................................................1 1. Impact of each issue on profitability of Amazon.....................................................................1 2. Supply chain management and logistic of Amazon.................................................................3 3. Impact of various challenges on Amazon................................................................................3 TASK 3............................................................................................................................................4 1. Revised logistic........................................................................................................................4 2. Good relationship with supplier helps in reducing cost...........................................................5 CONCLUSION................................................................................................................................6 REFERENCES................................................................................................................................7
INTRODUCTION Supply chain management considered as an management of operational activities and functions (Chae, 2015). The report consist of challenges faced by supply chain management and its effect on profitability on company. Role of e-commerce and e-business in providing solutions to challenges. Development of low cost and high efficiency supply chain management. OVERVIEW OF THE AMAZON Amazon is a multinational technology company focusing on multi-pal services such as e- commerce, cloud computing and artificial intelligence. Washington U.S. It is a public company that is employing approx 613300 employees and earning a revenue of $232.887 billion US dollars. It is the 5thlargest retailer in UKChanging Supply Chain Management,2018). TASK 1 1. Impact of each issue on profitability of Amazon To understand the issues related to supply chain management and its impact on company first supply chain management needs to be understand. SCM is a process that helps in providing goods and services to its consumers by involving multi-pal activities. This process starts with transfer of goods by supplier to distributor then manufacturer then retailer and last activity is logistic to deliver demanded goods to consumers. 1
(Source: Supply Chain Management, 2016) Supply chain management dine in most streamlined and cost effective way possible. It is important because it increases competitiveness and customer satisfaction. The issues that are sighted by supply chain management professionals in Amazon and impact of each issue on profitability of company are as follows- Reduce cost while improving consumer service and expansion:Competition is at its peak in the present market scenario. Amazon is expanding its business slow and gradually across all over the world. Amazon achieves reducing cost, improving consumer service as large consumer base is served, and benefit of economics of scale is enjoyed by business organisation (Supply Chain Management, 2016.). Complexity of Omni channel:Omni channel is a modern supply chain that extends delivery across mobile apps, website, social media and stores. Making availability of products online and developing apps make it difficult to manage stock in supply chain management. Expect lower cost and greater efficiency:This issue in Amazon of making a supply chain that is cost effective and bring more efficiency in the organisation will have a positive impact on the profitability of the company. As low cost and higher efficiency will bring more profits by improving results with effective supply chain management of stocks supplied. For this 2 Illustration1: Supply Chain Management, 2016
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cost will also be incurred to implement strategies but results of this will be great to increase profits more then cost incurred (Christopher, 2016). Safety and Quality incidences:When horse meat scandal is done then it puts a effect on all the organisations that are dealing in providing goods to consumers. Effect of this on Amazon will be that consumers will be more conscious about quality of products and online orders will reduce. Their will be an increase in product and this will impact profitability of Amazon by reducing revenue to some extent. As cost of logistic will improve with free shipping and getting product back. Developing new production skills:Enhancement of skills by providing training to staff appointed for effective supply chain management will increase operating cost of Amazon. Investment in production of new skills will be termed as an asset for organisation in long run. As cost of supply and inventory management will reduce. In initial years impact of this issue will leads to reduction in profitability of Amazon (Forslund, 2012). 2. Supply chain management and logistic of Amazon Supply chain management of Amazon is based on the idea of quick and efficient reach to its consumers. This is achieved by sophisticated technology and an extensive network of warehouse. Together with this effective inventory management and excellent transportation makes Amazon a highly efficient company. Amazon's supply chain management is heavily depends on outsourcing its inventory management (Hines, 2012). 3. Impact of various challenges on Amazon Skill Development in Supply Chain Management: Supply chain management of organisation like Amazon is one of the primary concern that will help in success of business in long run. Managing good relationship with supplier will be cost effective as delivery system of ordered goods will be on time when supplier is well known and possess a goods relationship. Number of cancellation of orders done by suppliers will be less that will help in managing goodwill of the organisation. This will increase cost of managing inventory as huge amount of stock of variety of products needs to be maintained. Employing high qualified professionals in company make it more expensive task. When organisation needs some special skills to manage inventory and training needs to be provided to develop that skill then it will not be cost effective. On the other hand availability of professionals 3
for inventory management is not sufficient and employing them in organisation is quite difficult (Huemer, 2012). Impact of skill development on profits of company: When inventory management system is designed and managed by professionals who are skilledthenitwillenhanceproductivityofAmazon.Havingprofessionalsininventory management system of organisation will help in reducing cost of inventory management on continuous basis. This will help in enhancing profits of the company as most favourable method will be used that is cost effective to the organisation and helps in achieving its objective. Together with this new and more competitive strategies that helps in e-commerce and can adopt technology very easily. Other challenges: Technology and business environment is changing on continuous basis and that leads to bring some more new challenges for Amazon to perform various business activities. Some new challenges are- Meeting new demands of various consumer group on time. Introducing latest technology in the organisation that required skilled employees. Always be adaptive to changes and more efficient then competitors. TASK 2 Different five challenges: Cost: It is defined as the source of exchange of good and services from buyer to customer. In order to buy a desirable product clients use to pay a specific amount to buyer. This is one of the major challenge for companies to fix cost of their product in a manner that help recover these cost while selling product in market. They company like Amazon fear that in some cases product are so much costly that they are not able to recover their cost.So manager are more focused to handle this issue which require planning, executing, controlling in producing goods or using of raw material. In Amazon Supply chain management and logistic department are dealing in marketing sector in order to maintain cost of their product. It is observed that continuousreduction in cost needs proper plan that are prepared according to market situation and so that production cost can be covered and Amazon can earn decent profit.Hence, better consumer satisfaction will intensify customer base and company can overcome the major issue of cost through generating more revenue 4
Complex: An organisation can also face complex internal challenges. These include employee conflict, change (whether in corporate direction, corporate ownership, departmental shift, or closure and renewal) and a dysfunctional organisational culture.Therefore,Amazon is continuously facing the issue of mismanagement and lack of employee contribution because of variouscomplexissuesbetweenmanagerandworkforce.Thishaveamajorimpacton profitability of a company as each cost of business operation are increasing such as distribution cost, inventory cost etc. Efficiency: It is very important for companies to manage their resources in appropriate manner that support to increase overall efficiency and increase profit. But this is also consider to be an main challenges for company because in order to make system more authentic and draw better result companies focuses on major activities that reduces their profitability. Amazon is performing its business through e-commerce and to manage inventory in the organisation there is requirement of employing staff in management team who is highly competent in managing inventory. When there is misunderstanding between suppliers and organisation the Amazon needs to establish its own warehouse in which stock of each product will be maintained Health and Safety:It includes all those policies and programs which are important for ensuring health of employees at workplace. Eventually it isnecessary for improving the conditions at the workplace. Herein, the company Amazon if they do not consider about the care of employees then it may become as a challenge for the company. This is why because without proper health safety employees can not work with full of efficiency.There are major issues that can be raised within Amazon related to health or employees that could be major problem for company such as Occupational diseases– dust, silicosis, vibration injuries, Mental healthand substanceuse–legalizationofcannabis,opioiduse,usedneedlesintheenvironment; accommodation for injured and ill workers Career progression: It is all about promoting the employees in the terms of designation, salary and rights. Eventually it is needed by every employees in the companies. It may become as a challenge if organisations do not focus on the growth of career of employees. In Amazon company this can be a issue if they do not have any policy for progression of workforce. Commodity which areoften acquire are not part of stock that is stored in storehouse and sales are made through third party with Amazon.Therefore supply chain management of the company 5
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realize the value of fast transfer system and depends on ordinal companies for logistic which make it challenging to accomplish quick delivery system. TASK 3 1. Revised logistic Logistic is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of consumption. The goal of logistics is to meet consumers requirements in timely and cost effective method (Jothimani and Sarmah, 2014). Amazon is an organisation that aims to develop a low cost and high efficiency supply chain management. It is a organisation that has performed well in its Supply chain management system but there is scope of improvement in its supply chain management and logistic system can be revised. Amazon can follow and implement to make its SCM world class and be a source of sustainable competitive advantage. Amazon has its own logistic system that helps in making quick delivery of orders and gain high level of consumer satisfaction but there are many areas where delivery is done through courier companies by Amazon (Kumar and Singh, 2012). When product is not delivered to consumers on time and wrong product is delivered that hinders image of the company. Amazon can setup its own transportation by creating its own fleet of delivery vehicles in areas where courier system is used. Amazon can integrate its SCM better and more from a cooperation model with its supplierstoacoordinationmode.Thiswouldenabletheorganisationtoshare information between all partners and suppliers using the latest technology. A unified IT system that can involve all the suppliers and stakeholders in its supply chain management and not in Amazon itself. This will help in bringing all the elements of supply chain under one umbrella (Sampson and Spring, 2012). Amazon needs to unifying its supply chain management in less then one gigantic IT systemsothattheirisgratervisibilityoneachcomponentofthesupplychain management. More accountability and transparency in the process will be their with this system. Amazon outsource some of its functions of supply chain management and can integrate its entire supply chain management. 6
Making improvement in some of its activities that are performed in supply chain management Amazon can achieve its objective of reducing cost and enhancing productivity. There are three recommended best practices for Amazon by adaptation of which it can become an organisation with best supply chain management system. 2. Good relationship with supplier helps in reducing cost Building healthy relationship with suppliers in business is beneficial for Amazon, as they are the one who performs various activities for company. This is cost effective for Amazon because supply chain management strategy of organisation have important role of suppliers. As amazon is dealing international and huge range of products are offered to consumers for purchase. Availability of wide range of choices in products makes it difficult for company to store each and every product that is offered for sale (Sampson and Spring, 2012). Nearly 82 percent of sales made by Amazon is done through third party who are suppliers for the company. This will benefit organisation indirectly as more and more orders will be received and revenue will increase. Together with this cost of establishing warehouses and operating them will go up. Overall cost of Amazon will get a hike when there is no healthy relationship between company and suppliers (Soni and Kodali, 2013). Analysing the whole scenario helps to understand that it is advisable for Amazon to have a good relationship with its suppliers so that various cost can be avoided. A reduced cost in various operating activities of supply chain makes company more efficient and cost effective and brings competitive advantage. Robust arguments and evidences helps those decisions and choices, developing policies and standards to know which intervention works and which remain unproven. CONCLUSION From the above project report it has been concluded that supply chain management plays very important role in success of an organisation. Form the above results it is recognised supply chain management not only assist the business structure but also helps in managing the relations with suppliers and buyers. As improved cost of managing inventory by having negative relationship with suplier is proven for the business organisations.Their is a need of continuous improvement in supply chain management system to improve efficiency of the organisation. 7
Together with this best practice in logistics needs to be done to reduce cost and enhance efficiency of the organisation. 8
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REFERENCES Books and Journals Chae, B. K., 2015. Insights from hashtag# supplychain and Twitter Analytics: Considering Twitter and Twitter data for supply chain practice and research.International Journal of Production Economics. 165. pp.247-259. Christopher, M., 2016.Logistics & supply chain management. Pearson UK. Forslund, H., 2012. Performance management in supply chains: Logistics service providers' perspective.International Journal of Physical Distribution & Logistics Management. 42(3). pp.296-311. Hines, T., 2012. From analogue to digital supply chains: implications for fashion marketing. In Fashion Marketing: Contemporary Issues(pp. 46-67). Routledge. Huemer, L., 2012. Unchained from the chain: Supply management from a logistics service provider perspective.Journal of Business Researc.65(2). pp.258-264. Jothimani, D. and Sarmah, S. P., 2014. Supply chain performance measurement for third party logistics.Benchmarking: An International Journal. 21(6). pp.944-963. Kumar, P. and Singh, R. K., 2012. A fuzzy AHP and TOPSIS methodology to evaluate 3PL in a supply chain.Journal of Modelling in Management. 7(3). pp.287-303. Sampson, S. E. and Spring, M., 2012. Customer roles in service supply chains and opportunities for innovation.Journal of Supply Chain Management. 48(4). pp.30-50. Sampson, S. E. and Spring, M., 2012. Service supply chains: Introducing the special topic forum. Journal of Supply Chain Management. 48(4). pp.3-7. Soni, G. and Kodali, R., 2013. A critical review of supply chain management frameworks: proposed framework.Benchmarking: an international journal. 20(2). pp.263-298. Online SupplyChainManagement.2016.[Online].Availablethrough: <http://ainidrus081103.blogspot.com/2016/12/definition-retail-management.html> ChangingSupplyChainManagement.2018.[Online].Availablethrough: <https://www.thebalancesmb.com/how-amazon-is-changing-supply-chain-management- 4155324> 9