Logistics Performance at Amazon

This article discusses the key logistic activities at Amazon and how they impact the company's performance. It covers topics such as Amazon's logistics infrastructure, customer demands, and recommendations to improve logistic performance. The article provides insights into the financial, customer, process, and learning perspectives of Amazon's logistics performance.

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Key logistic activities at Amazon
Amazon logistics comprises shipping and delivery services that are meant to complement
existing providers that offer logistic services. Amazon logistics offers both 7 day and same day
services through utilizing a number of third party logistics services (Cichosz et al. 2017). These
are separate logistic providers that are contracted to pick up deliveries at Amazon and distribute
them to respective customers. Amazon logistics can be defined through the operational facilities
across the world. Amazon has 258 facilities in the United States and close to 500 facilities
distributed outside the U.S. Amazon logistics in the United States constitutes various services
offered by Amazon such as Whole Foods delivery goods, fulfilment by Amazon, sorting area,
and delivery stations. Amazon has its dock centers where imported goods are broken down to be
transported to relevant collection centers (Yu et al. 2017). The company’s trucking fleet was
established in 2005 and has grown over the years. Amazon began with a fleet of a thousand
trailers to move goods between docking centers and fulfilment centers.
Amazon air has a significant number of airplanes that are used for transporting products
through the air (Liu et al. 2014). The size of Amazon logistic by air is compared to the 15th
largest passenger fleet in the United States market. Furthermore, the company is putting up a 210
acre Amazon airport that is expected to support 200 daily flights. Amazon logistic activities have
increased over the years and can be explained through its rise in shipping fee from 11.5 billion
dollars to 21.7 billion dollars within two years since 2015. As a result, logistic related to
fulfilment accounted for 14.2 percent of the sales between 2015 and 2017.
Moreover, the company is making attempts to enhance its logistic innovation through
crowdsourcing deliveries from external contractors, remote door access to Amazon couriers,
Amazon lockers and drone delivery patents (Kim et al. 2016). The franchise business delivery

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model inspires Amazon delivery which implies that Amazon is capable of establishing its own
courier network as a means to reduce costs. The company is investing in innovating tracking
capabilities so that customers can be able to track their products (McFarlane, Giannikas and Lu,
2016).
Amazon logistic hiring plans suggests that 5 per cent of the company jobs are in logistics.
Similarly, a research done by Freghtos research suggests that jobs related to enterprise logistics
are in the information technology sector. Half of logistic jobs at Amazon are in the United States
while half are outside the U.S. Amazon Global logistic footprint indicates that the company has
logistics positions in various countries. In addition, more than half of the senior position require
experience. This data shows that the company is moving towards cross-border trade and
international logistics and improving courier delivery (Carbone, Rouquet and Roussat, 2017).
There are few jobs in Amazon that require more than 10 years of experience such as
principal machine learning scientists, long distance freight, supply chain program manager and
senior intermodal manager. Amazon has logistic position for Lab126 which is responsible for
services such as Kindle and Echo. More so, there are other positions that offer flexibility in
logistics such as software and operations roles. These services point to a growing demand for
deliveries across new geographies, larger package size and rush shipment. There are few job
descriptions that focus on ocean freight related to Amazon.
How key logistics activities affect Amazon performance
A Balanced Scorecard Approach is a strategic management measure that offers clear
indication of what company’s need to manage to improve performance of other areas as well.
The balanced scorecard approach offers organizations with an opportunity to clarify the vision

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and strategy of the company. Consequently, it offers feedback on both internal and external
business process to enhance strategic performance.
The four Measures of Balance Scorecard
Financial perspective
In order to improve the financial position of the company to shareholders. Amazon has
considered increasing its package delivery and logistics services by introducing a new system
that enables entrepreneurs to set up their business to deliver Amazon packages. This strategy
creates value for delivery franchise as owners will be in a position to make significant profits.
Owners of delivery business are provided access to delivery technologies, hands-on training and
discount on vehicle insurance. Through creating and capturing value, the shareholders are in a
position to see value for money since the business always improves its logistic processes to
enhance efficiency of the company’s supply chain process. Amazon is also bringing additional

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in-house delivery partners that would hire delivery-based carriers who will work with existing
carriers.
Customer demands in the market necessitates the need to build capacity to handle its
operations. Besides, the company works towards empowering new small businesses to take
advantage of increased opportunities in the e-commerce package delivery (Chao et al. 2017).
Establishing new capacity will assist the companies to have a strong control of business
operations. This strategy is a low cost model that ensures Amazon knows what is going on
without necessarily having to manage the drivers. Amazon has continued to enhance its logistic
activities through opening of regional sorting centers that makes it easy for customers to access
their products. Other logistic aspects that Amazon has considered include drone delivery and
launching apps for freight. Therefore, shareholders see value in the investments that the company
is making in logistics to value the performance of the company.
Customer perspective
Amazon faces intense competition as a result of evolving business environment.
Competition is from different industries such as e-commerce, omnichannel retail, digital content
and infrastructure computer services (Yu et al. 2016). Some of Amazon competition have greater
resources and experience in the business. As a result, their vendors may secure better terms from
vendors, adopt aggressive pricing, invest more resources to technology, and enhance
infrastructure, fulfilment and marketing. Competition is likely to intensify in the future since the
competition involves a combination of alliances with established companies in different market
segment. In addition, new and advanced technologies are likely to increase competition for
Amazon. The internet offers consumers with competitive entry and comparison shopping thereby
increasing competition consequently impacting on performance of the business (Kasarda 2017).

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The company has a fulfilment network that handles a variety of support customer
fulfilment. There are several sortable fulfilment centers where picking, packaging and shipping
customer orders is done. The networks efficiency is increased with innovations of Amazon
Robotics (Li and Liu 2016). There are also non-sortable fulfilment centers that employ a
significant number of people to pick, pack and ship large sized customer items. Also, the
company has sortation centers where customer orders moved with trucks to guarantee faster
delivery (Lee and van Wyk 2015). Nonetheless, the company has receiving centers that support
customer fulfilment through taking large orders that often sell quickly and allocating within
fulfilment network (Daugherty, Bolumole and Grawe 2019). Specialty is also a characteristics
feature of amazon fulfilment network that handles specific categories of items. With delivery
stations, Amazon guarantees fast and reliable everyday shipping.
Process perspective
Amazon logistics infrastructure is largely managed by third-parties which directly impact
the performance of Amazon logistic services. As a result of third-party sellers, Amazon faces
threat of quality assurance when compared to similar services offered by Amazon fulfilment
program. The negative impact of third parties could arise from mishandled deliveries which
affects the seller’s feedback score. Negative score influences how customers decide to buy and
overall influence ability to win the buy box for similar sellers offering the same products. The
sellers often have no control over Amazon logistic process. They have no capabilities of
choosing providers. It implies that the entire logistic process is operated without seller input.
However, there are also benefits that are associated with Amazon logistics (Yao et al. 2017).
For instance, sellers have access to cutting edge technology like lockers, fresh, Flex and
Prime Air. There are other advantages offered during high shipping volumes and other systems

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are not functioning properly. The sellers are often encouraged to maintain strong relationships to
circumvent potential feedback before it occurs. This means that the seller is expected to message
the customers after they have placed there order and assure the customer that the order is the
process of fulfilment. Sellers are also encouraged to send tracking links and keep communication
open to determine how effective to assist the customer. Once the delivery is completed, sellers
are encouraged to send a message immediately a package has been delivered to request for
feedback on product. Sending this message early could mean that the package is delayed and
increases the chances of a negative feedback.
Learning and growth perspective
Amazon has invested billions of dollars into research and development compared to other
companies in the United States. An analysis by Recode determined that Amazon spent $23
billion in 2017 on R&D. The company’s earning and growth is facilitated by starting with
customer and working back. For instance, the fast process for development at Amazon involves
writing the structure on a document. The next process involves brainstorming about issues that
stakeholders of a particular innovation may have. Once every issue is considered, a prototype is
developed and optimized to fulfil the primary intent for the product. The company boasts of a
strong culture of writing that assists the company to put their ideas in writing which increases the
chances of being implemented to a real product. More so, Amazon invests in writing memos
which re-invents officer meetings. Employees are expected to go through the memo before a
meeting in order to ensure that they understand clearly what is required to avoid wasting time in
meetings that could be used valuably in developing solutions. Amazon has developed a culture
of solving problems by looking at problems strategically and then developing products that are
aimed at solving the problems and increasing efficiency. Therefore, the company has a unique

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approach to its strategy in innovating new solutions for its logistic issues (Chris and Yossi 1995).
In addition, the company has financial muscle to invest in startups that have potential to increase
performance.
Recommendations to improve logistic performance
The need to improve logistic performance is pegged on enhancing efficiency of the
supply chain process (Wong and Tang 2018). Logistics management is an important aspect of
business operations that influences internal process and customer relations. Among common
issues that influence logistic operation include poor customer relationship, cancelation of order
and misinformation. Therefore, Amazon can increase its efficiency through the following
approaches. To begin with, the company should invest in information management system, the
system will play a significant role in assisting the company with a range of services such as
warehouse management, supply chain management, order tracking and accurate delivery of
customers’ orders. Alternatively, one can invest in a reliable and affordable stock management
systems that offers more visibility and enhances processing of customers’ orders.
Similarly, amazon is expected to keep sizeable inventory. This helps to manage large
stock quantities. A sizable inventory often leads to supply shortage and delayed orders. In order
to address these problems. Amazon needs to hire logistical support to ensure that inventory is
always manageable and efficient as possible. This has to be done after analysis of information
management system which will facilitate informed decision making. Training plays a critical role
in improving the performance of a company. For this reason, it is significant that the company
invest its resources on training staff members to adhere to specific work culture that maintains
the company’s reputation. Training can be done internally using the Human resource department.
Besides, vendor software can be used to offer training sessions for the team. Additionally,

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Amazon can invite system architect and data management analysts to offer training in various
areas such as floor and warehouse (Wu and Lin 2018). Training of staff will enable smooth flow
of information throughout the supply chain.
Another recommendation for Amazon logistic support is to redefine the standard
operating procedures that will ensure team members are moving in the same direction at the right
time. This recommendation requires significant step such as free flow of information across
value chain. Regular analytic report, double checking the orders, designing a connected system
with different roles and printing key policy issues and place them across the facility. The last
recommendation for Amazon is to learn from competition. Majority of startups often fail within
a period of a year as a result of ceasing to learn. No matter the industry, competition is always a
great source of knowledge. By monitoring competition, amazon can update best practices of
logistic, manage information flow, offer training support and integrate modern operations.
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