Operational Management Strategy of Amazon

Table of Content
Operational Management Strategy of Amazon:..........................................................................................1
Integrated Business Operations:.............................................................................................................2
Customer Centric Focus:..........................................................................................................................2
Distribution Efficiency:.............................................................................................................................2
Human Resources:...................................................................................................................................2
Location Planning and Analysis:...................................................................................................................3
Total Quality Management:.........................................................................................................................3
Continuous Improvement:.......................................................................................................................3
Inventory Management:..............................................................................................................................4
Reference....................................................................................................................................................5
Operational Management Strategy of Amazon:
Excellence attained by the Amazon’s operations management (OM), which specifically
have a positive impact providing an edge over the rivals is a very important factor Amazon’s e-
commerce management strategy. To maximize efficiency, the organization adopted many
strategic tactics of OM. Amazon, is now globally biggest e-commerce firm, demonstrating the
significance of technology supported efficiency providing best results in the market. With the
passage of time each day the Amazon is showing development and capturing new markets, it is
becoming complex to handle and maintain the strategic decisions of operational management and
they are becoming more and more complex. One of the reasons that aids Amazon's capability to
provide enough capital for procedures during worldwide progress and an expansion of the
product mix is continuous improvement. Amazon is a leader in internet shopping and the e-
commerce industry through efficient operations management.

Amazon maintains that all strategic decision areas of its e-commerce market are met
through its operations management (OM) strategies. Amazon aims to adapt its operational
management strategy in response to developments in these strategic decision areas as it expands
operations beyond its online shopping market. This Amazon Operations Management
focuses on defining E-commerce as a cutting-edge industry framework that has allowed
businesses to increase their global accessibility in a different dimension. It is fundamentally the
smartest and most cost-effective way for virtuous stores to reach out to a larger client base with
successful and timely market response. The introduction of E-commerce technologies resulted in
a mixed commercial outcome. It has paved the way for many organizations’ potential business
expansion, although for some small-scale organizations, it has been a competitive stroke to play.
Integrated Business Operations:
Amazon’s all operations are integrated. One thing triggers the next one. When one
customer orders one thing, order is straight forwardly placed to the database and then sent next to
the nearest warehouse for immediate supply. Immediate supply also increase the confidence
level of the customers resulting increasing the customer loyalty.
Customer Centric Focus:
Many aspects, including customer loyalty campaigns such as Amazon lead to good
customer experience. Amazon has since made considerable investments in technologies to
minimize product mistakes and boost 'self-service' for its clients. Amazon has more than 10,000
engineers at its payroll trying to keep up with technological innovations to have a friendly user
interface. In order to manage the required logistics for prompt fulfilment of order (Lang et. al
2012), Amazon has also invested into the proprietary storage and ordering tools (Liyakasa,
2012).Amazon always makes policies that move around its clients. That also proved to be a
game changer factor for the Amazon’s business and it make Amazon a business leader on the
market.
Distribution Efficiency:
In terms of delivery, Amazon's original aim was to remove the middleman in the supply
chain. This was achieved by direct negotiations with publishers, the construction of vast
warehouses, and the utilization of newly recruited Wal-Mart executives' skills. Amazon leased
the first big 93,000 square foot facility in South Seattle in November 1996. Amazon opened a
second facility in New Castle, Delaware, precisely one year later. Opening its own warehouses

not only reduced the time of delivery but it also helped to lead more customer satisfaction
(Distinguin, 2011).
Human Resources:
According to the annual report of Amazon 2011, Amazon have shown a tremendous
attempt to employee expert and versatile workforces. Amazon has also adapted its corporate
tactic by linking pay to value creation for its manpower. Because employees are shareholders of
the firm, so this plan inspires them to work hard and they feel like a part of the firm. Though
Amazon assumes its workers to give their best during their duty, it also understands the
significance of keeping a good relationship with them. Amazon has implemented measures
aimed at improving employee loyalty. In July of 2012, the Amazon Career Choice Program was
launched. Via this tuition assistance scheme, Amazon will cover “95 percent of the cost of
courses such as aircraft mechanics, computer-aided design, and medical laboratory
technologies.” This platform was created by Amazon to help support schooling in high-demand
and high-paying markets, even though the talents aren't directly comparable to a job at Amazon.
Amazon tried to develop its own human resource by funding different institutes and to intelligent
individuals. That’s not only provided Amazon with a quality staff but also they proved more
faithful than the other already present staff. It helped Amazon to achieve the strategic excellence
in the market and become the base of a stronger human capital for Amazon also.

Location Planning and Analysis:
In this strategic decision field of operations management, the accessibility of services and
markets is taken into consideration. The focus is on the strategic positioning of warehouses or
distribution centers in the case of Amazon. For example, Amazon operates facilities that are
optimally located near the highest possible number of online store consumers. Amazon always
plans its warehouse monitoring its sales. From where more of the clients gets on the radar that’s
the first priority for a warehouse for Amazon. That makes it more convenient to facilitate those
clients in future and their confidence level is also boosted in this way.
Total Quality Management:
Total Quality Management (TQM) is an integrated and systematic approach to
governance practices aimed at improving service quality in response to continuous feedback.
TQM may be generalized to any kind of organization. It entails an organization's ongoing
attempts to enhance its ability to provide high-quality goods and services to consumers.
Continues improvement is used at Amazon for TQM.
TQM is a customer-focused mechanism that helps to optimize corporate processes on a
continuous basis. It intended to guarantee that all related workers are working for the same
shared objective of maximizing product or service efficiency as well as the manufacturing
practices. As we already mentioned that Amazon adopts strategies that are solely customer-
centric. TQM also works on same strategy so it was easy and convenient to adopt the TQM of
continues improvement to cope with the quality management issues in its all business processes.
Continuous Improvement:
Continuous improvement is needed to maintain the company at the forefront of a fiercely
competitive world filled by intimidating rivals. In order to remain competitive, any company
needs to uphold high quality standards by adding value to its services and goods. This can be
achieved with current goals to increase the overall efficiency of the enterprise by making the
operations more competitive and productive (Rundle 2015). Over the years, Amazon has
demonstrated unbelievable success and where growth can be improved. Amazon has been
steadily improving over time by identifying new ways to achieve a strategic advantage and
satisfy shareholder success goals. The consistency trilogy created by Dr Joseph M Juran has had
an effect on Amazon's continuous improvement. In reference to Figure to ensure quality

planning, quality management, and quality enhancement, Amazon used the quality trilogy
scheme. Juran created this system because he believes that customer satisfaction is directly
proportional to quality; thus, in order to improve customer satisfaction, businesses must be aware
of quality and continually improve standards by setting goals and planning how to achieve them,
providing necessary training, and creating progress reports (Juran 1998). Assuring shipped
product consistency, providing reliable and consistent refund service, and continuously updating
their e-commerce platform to provide consumers a better shopping experience are only a few
examples of what the company did when they enchanted the quality. One of Amazon's 14
leadership values allows staff to learn and be interested, which means that employees should
constantly strive to develop themselves, discover new possibilities, and explore them (Amazon
2010). These suggestions promote the proper mentality, ensuring that all of the company's
workers strive to enhance and establish themselves on a continual basis. If all of the staff have
this mentality, the business as a whole will continue to grow. This feature will help balance
growth while maintaining high-quality goods and services, which is especially important when
growth produces a variety of important issues.
Inventory Management:
By introducing vast and bold technical advances in the industry, Amazon had been a
visionary architect of supply chain management. Amazon has made a $100 billion profit in the
past 20 years due to outstanding supply chain management (Supply Management. 2018). This
company has made consistent attempts to offer goods to customers in the shortest time available,
putting tremendous pressure on rivals. Employees worked diligently for months to reach

deadlines during the company's early days when they were under resourced. Following the
introduction of the program this company has offered a two-day shipping option (Ritala et al.
2014). This was a game changer in terms of amplifying the Amazon success story in the most
descriptive manner possible. Because of its revamped IT offerings, intact warehouse networking,
multifaceted product management, and reliable logistics facilities, Amazon has a significant user
base .Another feather in Amazon's cap is its clever tactic of contracting product procurement to
third-party service suppliers while insourcing logistics.
Applying all these techniques of inventory management Amazon cut down the cost of
inventory management that helped Amazon not only financially but also facilitated to improve
the delivery system too and proved to be a major impact factor for the business of amazon.
Reference
Albanesius, C. 2012. Amazon Offers Tuition Assistance for Courses in 'Well-Paying' Fields. PC Magazine,
Jul2012: 1.
Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of
Amazon. com. Industrial marketing management, 43(2), pp.236-249.
Distinguin, S., 2011. Amazon. Com: The hidden empire.
Liyakasa, K., 2012. More Consumers Turn to Amazon for Product Research. CRM Magazine, 16(10),
pp.14-15.
Lang, S., Tinder, L., Zimmerman, J. and Harrison, J.S., 2012. Amazon. Com: Offering Everything from A
to Z.
MWPVL, 2012. Amazon.com Distribution Network. http://www.mwpvl.com/html/amazon_com.html,
Accessed November 2, 2012.
Amazon. 2011. Amazon.com: 2011 annual report. Seattle, WA: Amazon.com, Inc.

Godfrey, A.B. and Kenett, R.S., 2007. Joseph M. Juran, a perspective on past contributions and future
impact. Quality and Reliability Engineering International, 23(6), pp.653-663.