Introduction to Supply Chain Management - Analysis of Amazon's Supply Chain

This paper analyzes the supply chain management of Amazon Company. It discusses the level of integration used by the supply chain of Amazon, how well the products and information flows are integrated and the relationships in the supply chain. It also discusses the significant problems and opportunities in which the supply chain is experiencing given evolving airport capabilities.

Running Head: INTRODUCTION TO SUPPLY CHAIN MANAGEMENT
Introduction to Supply Chain Management
Name of the Student:
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1INTRODUCTION TO SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction................................................................................................................................2
Answer to Question 1.................................................................................................................2
Answer to Question 1A:.........................................................................................................2
Answer to Question 1B:.........................................................................................................3
Answer to Question 1C:.........................................................................................................3
Answer to Question 2.................................................................................................................4
Conclusion..................................................................................................................................5
References:.................................................................................................................................7

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Introduction
The aim of this paper is to analyze the supply chain management of Amazon
Company. Amazon is Seattle, Australia based company which is one of the largest company,
involved in the business of e commerce, artificial intelligence and cloud computing (Nilsson,
2014). It has become one of the most dominant company in the retail industry. Under this
paper, discussion will be based on the level of integration used by the supply chain of
Amazon. In addition, the discussion will be on how well the products and information flows
are integrated and the relationships in the supply chain. Lastly, based on the analysis,
significant problem and opportunities in which the supply chain is experiencing will be
discussed, given involving airport capabilities.
Answer to Question 1
The level of integration followed by the Amazon is vertical integration system of the
supply chain (Atalay, Hortaçsu & Syverson, 2014). The company has a strategy of
developing the system by developing the products that cater their needs, optimizing the limit
and then offering it to the third party for helping them to make profitable their development
and operations. Due to the several hassles such as taking products from the companies and
sending to the customers, Amazon has then established its own warehouses, which has given
the scope for other companies to store their products safely and then delivering the products
to the ultimate customers with their own personnel and their own fleet of vans (Hernandez et
al., 2016). It is great step taken by amazon to boost the volume of their sales and credibility.
Answer to Question 1A:
Amazon makes sure that the products delivered to the ultimate customers is in time. It
heavily depends on the inventory outsourcing and logistics insourcing (Hinojosa et al., 2008).
Amazon does not depend on the logistic system of the third party rather it takes products

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from the third party and stores it into their own warehouse. Later, when customers book any
product, they accept the order and deliver it with their own personnel. It helps in reducing
unnecessary reliance on the third party logistics because of it’s lengthen delivery timing.
Amazon has developed its warehousing system in such a way that it cater the needs and
requirement of different customers of different product with different preferences for the
delivery options. A first, it produces product cheaply, secondly with the help of high
technology it store products in warehouses and lastly the product are delivered to customer
with the help of their staff and technology.
Answer to Question 1B:
The integration of the information in the supply chain of the Amazon has added
advantage to the company for achieving its ultimate goal (Korpela, Hallikas & Dahlberg,
2017). It involves coordination and close alignment among the parties and process involved
in the supply chain. For production, to warehousing and delivery to the customers, integration
of the information system of the company plays a vital role. Amazon has achieved the fruit of
success by using latest information technology. It has invested heavily in the reducing the
time taken for delivery by the introduction of drones, the products are delivered on the same
day. The coordination between the parties involved in the supply chain are in such a way that
real times needs are fulfilled.
Answer to Question 1C:
The relationships in the supply chain management consist of many relationship such
as strategic, transactional, tactical, internal and among the concerned members of the supply
chain (Christopher, 2016). The relationship in the supply chain of the Amazon consist of the
relationship between the suppliers and customers. The company has a set of third parties
suppliers whose product are sold to the ultimate customers. Hence, it requires a good
communication, high level of trust, transparency in the services from the third parties to the

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customers (Leuschner et al., 2014). Maintenance, creation and development of the positive
and strong relationship helps in the key feature of the success of the supply chain. An ideal
relationship in the supply chain consist of the fact that the information is exchanged between
the company, suppliers and the ultimate customers in such a way that the demand of every
party is fulfilled timely. With the help of technology and information system in the supply
chain management of the company, it reduces the time and cost, improves the quality and
ensures on time delivery of the products and services (Lotfi et al., 2013).
Answer to Question 2
The significant problems that the supply chain of Amazon is experiencing or can
experience, given the evolving of airport capabilities, are as follows:
Delays and congestion at the airport: Amazon is known for its on time delivery of the
products and services. Any delay and congestion of the flights at the airport will create
problem in on time delivery. As a result, company’s image may be at risk (Chopra & Sodhi,
2014).
Increasing fuel prices: Changes in the government policy may impact the prices of the fuel
of airline. Hence, it will increase the cost of supply of the company. As a result, there will be
the impact on the prices of the product.
Security Threats: Due to high security at the airport, every items which have be transported
by air cargo have to be checked and verified, which usually takes lot of time.
Small Airport: Apart from major airport, there are few airport whose warehouses are small,
these airport may not be able to store major items. This may create problem to the company.

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Maintenance: The maintenance system at the warehouses of the Amazon is one of the best
worldwide. However, in case of the airport, there may not be proper warehousing facilities,
which will create problems to the company.
Unnecessary paperwork: The unnecessary paperwork at the airport takes invest lot of time,
which ultimately hinder the performance of the supply chain system of the company.
The significant opportunities that the supply chain of Amazon is experiencing or can
experience, given the evolving of airport capabilities are as follows:
Increases efficiency: Cargo of airport increases efficiency of supply chain by providing
smooth flow of exports and imports of products from the place where the requirement occurs
to the place where need is to be addressed.
Increase in volume: Due to diversification and increased volume of the exports, airport
capabilities has been extended by providing charters to export oriented flights for assisting
smooth supply chain (Sáenz & Revilla, 2014).
Speed: By the evolving airport capabilities, the speed in delivery from the third party to the
ultimate customers is the great advantage.
Conclusion
Hence, it is concluded that Amazon has experienced key success in its innovative
supply chain management. Its innovations in the system of supply chain is mesmerizing
which is difficult for other competitors to keep up. Its investment in the number of
warehouses, the technology used in integration of information and delivery system has been
the major strategies taken by the company. Therefore, the discussion has been done on
vertical integration system used by the supply chain of the Amazon which helps in ensuring
the customers to provide different products at right time and at right place. Moreover, the

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integration of the products and information as well as the relationship in the supply chain has
been discussed which explained that how Amazon’s system of supply chain helps in
manufacturing, warehousing and distribution to the end user and how effectively its uses their
information system in maintaining their relationship with third party and end user of the
products. Lastly, the problems and opportunities of the supply chain experiencing, evolving
airport capabilities is discussed which explained that apart from the significant problems,
there is ample scope and opportunities for Amazon for speedy delivery and increasing
efficiency in its supply chain management.

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References:
Atalay, E., Hortaçsu, A., & Syverson, C. (2014). Vertical integration and input
flows. American Economic Review, 104(4), 1120-48.
Chopra, S., & Sodhi, M. (2014). Reducing the risk of supply chain disruptions. MIT Sloan
management review, 55(3), 72-80.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Hernandez, C., Bharatheesha, M., Ko, W., Gaiser, H., Tan, J., van Deurzen, K., ... & Morariu,
M. (2016, June). Team delft’s robot winner of the amazon picking challenge 2016.
In Robot World Cup (pp. 613-624). Springer, Cham.
Hinojosa, Y., Kalcsics, J., Nickel, S., Puerto, J., & Velten, S. (2008). Dynamic supply chain
design with inventory. Computers & Operations Research, 35(2), 373-391.
Korpela, K., Hallikas, J., & Dahlberg, T. (2017, January). Digital supply chain transformation
toward blockchain integration. In proceedings of the 50th Hawaii international
conference on system sciences.
Leuschner, R., Carter, C. R., Goldsby, T. J., & Rogers, Z. S. (2014). Third‐party logistics: a
meta‐analytic review and investigation of its impact on performance. Journal of
Supply Chain Management, 50(1), 21-43.
Lotfi, Z., Mukhtar, M., Sahran, S., & Zadeh, A. T. (2013). Information sharing in supply
chain management. Procedia Technology, 11, 298-304.
Nilsson, N. J. (2014). Principles of artificial intelligence. Morgan Kaufmann.
Sáenz, M. J., & Revilla, E. (2014). Creating more resilient supply chains. MIT Sloan
management review, 55(4), 22-24.