Effectiveness of Supply Chain Process of Amazon

This essay discusses the effectiveness of the supply chain process of Amazon and the extent to which it is creating value for them. Key issues such as sourcing from China and lack of flexibility are identified, and recommended steps are discussed.

Running head: SUPPLY CHAIN PROCESS
Supply chain process
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Introduction
In the current business scenario, effectiveness of the supply chain process determines the
extent to which the business entities will be able to stay competitive in the business. This is due
to the reason that competitive and flexible supply chain management will help the business
entities in coping up with the rapid change in the market and offer the maximum value
proposition to the customers (Yu et al. 2016). Conveniences of the customers are also being
determined by the effective process of supply chain management due to the reason that time
consumption between the distance of production and consumption can be reduced with the help
of supply chain process. Amazon is the largest e-commerce retailer in the world with their global
presence and huge array of products and services being offered. Thus, they are also having the
requirement for proper supply chain process to reduce the time in sourcing the goods and getting
it delivered to the customers (Ellram and Cooper 2014).
This essay will discuss about the effectiveness of the supply chain process of Amazon
and the extent to which it is creating value for them. In addition, the key issues will also be
identified and based on these issues, recommended steps are discussed.
Supply chain
Supply chain process of Amazon is being managed by both in-house and outsourced
partners including the logistic partners. Amazon also maintains its own warehouses across the
world and these warehouses are located in metropolitan cities with well connectivity. This is
helping them to reduce the geographical distances between the different regions and less time
incurred in transportation process (Carter, Kosmol and Kaufmann 2017). In addition, the major
global logistic partners are also being involved in the supply chain process of Amazon and in

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some areas such as in India; the supply chain process is being outsourced to these external
partners. This is ensuring the last mile connectivity for Amazon and further reach in the market.
Moreover, with the help of the outsourced process, the cost and liabilities in the supply chain
process complexities for Amazon are also getting regulated. The supply chain process of
Amazon involves a few steps of which the first step is the inbound process of inventory followed
stocking them in the warehouses based on the demand trend. In the next step, customers order
the products and it is followed by the outbound logistics. The end of the supply chain process of
Amazon is by customer services for dealing with the customer queries. In the sourcing process,
products are being sourced majorly on the basis of market adaptability. This is due to the reason
that preferences for the products in different regions are different and based on that, goods are
sourced.
Supply chain management
In the recent time, Amazon also ventured in the online streaming services, which are
more prone to changes in the preference pattern of the customers. Thus, in this case,
determination of the customer analytics is getting important in suggesting the options for the
customers. Moreover, customer analytics are being used by Amazon in sourcing of the goods.
This is due to the fact that based on the customer analytics and big data, the preference pattern of
the customers can be identified and accordingly the goods are being stocked (Sanders 2014).
Thus, it is helping Amazon to have the round the clock availability of the products to be bought
by the customers from a certain regions. This is also helping them in reducing the waiting period
of the customers due to the availability of the products. Thus, it can be concluded that big data
and customer analytics are helping Amazon in enhancing the efficiency of the entire supply
chain process (Leveling, Edelbrock and Otto 2014).

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Issues
One of the major issues for Amazon is the sourcing of mobile phones majorly from
China. It is identified that majority of the mobile phone brands available in Amazon are from
China and they are imported by Amazon in delivering to the customers from different countries.
However, the recent trade dispute between the United States and China is affecting their supply
chain process due to the fact that tax imposition on the imports from China is increasing the cost
for Amazon in their sourcing process (Ittmann 2015). However, in terms of sourcing of majority
of the electronic gadgets, Chinese companies constitute the major part. Hence, it will create
supply hindrances for Amazon in the long term. Another issue being identified is the lack of
flexibility in the supply chain process of Amazon. This is due to the fact that goods already
stored in the warehouses of Amazon are being bought from the OEMs and thus they should be
sold irrespective of their demand in the market. In this case, changes in the preference pattern in
the market will pose challenge for Amazon in clearing their stock.
Recommendations
It is recommended that sourcing against order concept should be promoted by Amazon.
This will help them to reduce the stocked items in their warehouses and the risks related to the
unsold stocks will be reduced. Moreover, with the help of the sourcing against order concept,
flexibility of Amazon will get increased in meeting the changing trend in the market (Chopra and
Sodhi 2014). In addition, it is also being recommended that diversity should be maintained in
terms of OEMs in order to reduce the dependency from the Chinese vendors. This will help
Amazon to also bypass the trade dispute between the United States and China.
Conclusion

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Thus, it can be concluded that the supply chain process of Amazon is complex and
extensive considering their global operations. However, the supply chain process is effective
enough in enabling Amazon to deliver the products at minimal time to the customers. However,
on the other hand, a few limitations are also being discussed in this essay in regards to their
supply chain process. These issues will have long term impact on the business viability of
Amazon and will also affect their global operation. On the basis of the identified issues, a few
recommended steps are being identified and discussed in this essay.

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Reference
Carter, C.R., Kosmol, T. and Kaufmann, L., 2017. Toward a supply chain practice view. Journal
of Supply Chain Management, 53(1), pp.114-122.
Chopra, S. and Sodhi, M., 2014. Reducing the risk of supply chain disruptions. MIT Sloan
management review, 55(3), pp.72-80.
Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all about the journey, not
the destination. Journal of Supply Chain Management, 50(1), pp.8-20.
Ittmann, H.W., 2015. The impact of big data and business analytics on supply chain
management. Journal of Transport and Supply Chain Management, 9(1), pp.1-9.
Leveling, J., Edelbrock, M. and Otto, B., 2014, December. Big data analytics for supply chain
management. In 2014 IEEE International Conference on Industrial Engineering and
Engineering Management (pp. 918-922). IEEE.
Sanders, N.R., 2014. Big data driven supply chain management: A framework for implementing
analytics and turning information into intelligence. Pearson Education.
Yu, Y., Wang, X., Zhong, R.Y. and Huang, G.Q., 2016. E-commerce logistics in supply chain
management: Practice perspective. Procedia Cirp, 52, pp.179-185.

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Appendix
Fig: 1 (Supply chain process of Amazon)

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Fig: 2 (Amazon is the third most effective supply chain in the world)