Comprehensive Report: Transport and Inventory Management at Amazon

This report provides a detailed analysis of Amazon's transport and inventory management strategies. It examines Amazon's intermodal and multimodal transportation choices, including the potential of drone delivery, discussing their advantages and disadvantages. The report also delves into Amazon's warehouse management system, covering warehouse types, technology usage, and inventory storage. It analyzes strategic and operational factors such as location, cost, space, stock movement, and technology. Furthermore, the report proposes improved order picking principles tailored to Amazon's specific needs, linking them to inventory types, space utilization, stock movement, technology, and the location of picking areas. The report highlights the importance of a systematic approach to enhance order picking efficiency and overall supply chain productivity.

Running head: TRANSPORT AND INVENTORY MANAGEMENT
Transport and Inventory Management
Name of the Student:
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Author’s Note:

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Executive Summary
In this report, in task 1 the intermodal/multimodal transportation choice for Amazon is identified.
The methods to increase the intermodal /multimodality in supply chain of Amazon are analyzed.
Amazon has considered delivery by drones which can make the intermodal/multimodal delivery
system of Amazon more efficient. The advantages and disadvantages of the intermodal and
multimodal transportation choice are discussed. Delivery by drones can be speedy and can help
Amazon gain a competitive advantage in the marketplace. However, this transportation choice
can be risky, can lead to accidents and requires strong monitoring .In task 2, the warehouse
management system of Amazon is analyzed in terms of types of warehouse, warehouse size, use
of technology, types of inventory to be stored. The strategic and operational factors of Amazon
which include location, cost, space, and culture, stock movement and technology are analyzed.
A better order picking principle to suit the company’s strategic and operational factors is
discussed. The order picking principle should be more systematic in Amazon to increase the
efficiency of order picking and make it more effective. The proposed order picking principles are
linked with 1) Inventory Types, 2) Utilization of Space, 3) Stock Movement 4) Technology 5)
The location of picking areas.

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Contents
Introduction......................................................................................................................................3
Topic 1.............................................................................................................................................3
Transport and Logistics Management of Amazon...........................................................................3
B. Intermodal /Multimodal Transportation choice of Amazon.......................................................3
C. Ways to Increase Intermodal / Multimodality in Supply Chain of Amazon..............................4
D. Advantages and Disadvantages of the intermodal/multimodal Transportation Choice.............5
Topic 2.............................................................................................................................................7
B. Warehouse Management of Amazon..........................................................................................7
Type of Warehouse and Size.......................................................................................................7
Use of Technology.......................................................................................................................7
Types of Inventory to be Stored...................................................................................................8
Strategic and Operational Factors................................................................................................8
Location, Cost, Space and Capacity.............................................................................................8
Service Level, Communication, Culture, Stock Movement and Technology.............................9
C. Picking......................................................................................................................................10
1. Inventory Types.....................................................................................................................10
2. Space Utilization....................................................................................................................10
3. Stock Movement....................................................................................................................10

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4) Technology............................................................................................................................10
5) Location of picking areas.......................................................................................................11
Conclusion.....................................................................................................................................12

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Introduction
The intermodal/ multimodal transportation choice of Amazon increases the productivity of the
Supply chain. Amazon is focusing on new technology like delivery by drones to solve current
issues in transportation system which is a lengthy procedure. The delivery by drone will ensure
speedy delivery to customers (da Silva et al., 2013).The warehouse management system of
Amazon makes use of modern technology and chaotic management for storage of inventory.
However, a systematic picking procedure can increase the picking productivity of Amazon.

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Topic 1
Transport and Logistics Management of Amazon
A. Figure :( Product movement and Supply chain Network of Amazon)
Source:( Richards, 2014).
B. Intermodal /Multimodal Transportation choice of Amazon
Amazon has adopted modern tools and technology in its transportation system and
logistics management and makes use of updated technology for an efficient supply chain
management. In Amazon the transportation system is skillfully managed by the Amazon
Fulfillment service. The trucking division is known as the Amazon Transportation service.

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Amazon does not own a 100 percentage of fleet which is private though the organization has its
trucks. The freight between locations of Amazon is moved by utilizing the tractors and trailers
of the Company. Amazon makes use of trucking companies for transportation from Amazon
locations to the parcel carriers. Truck drivers are matched with shippers by Amazon and to
support this process Amazon has used technology and innovation and makes use of an app
(Zehendner & Feillet, 2014). Vans are used by Amazon for delivery of parcel, this clearly
reflects that the organization has shifted into transportation. Amazon also owns air-cargo fleet
and this will take away business from parcel delivery partners of Amazon like Blue Dart, FedEx
and Aramex. The transportation services of Amazon are an extension of the Amazon Fulfillment
Service. Amazon has entered in the transportation business because with a private fleet and
owning some percentage of the transportation will reduce the cost of transportation of Amazon.
Tractor trailers are used by Amazon to move from larger Distribution Centers to the fulfillment
centers of the Company. The supply networks are reconfigured by Amazon and smaller
distribution centers are built by Amazon which is located near to the population centers or
customers (Almeida, Gularte & Yamashita, 2014).
C. Ways to Increase Intermodal / Multimodality in Supply Chain of Amazon
Amazon is investing in drones and unmanned aerial vehicles and in airborne fulfillment
centers (AFCs) or flying warehouses to improve the supply chain management system of the
process to increase the intermodal/multimodality in its supply chain. The boats, trains and planes
of Amazon will serve as a station and UAVs will receive maintenance, pick up cargos and
recharge from them. Amazon has obtained a patent from the U.S. Patent and Trademark office
because the organization intended to develop boats, trains and planes to dock the drone fleet of
the Company. The demand of customers will be analyzed and these vehicles will travel to the

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areas of demand for the purpose of delivery (Caris, Macharis & Janssens, 2013). The histories of
purchases in a region will enable Amazon to predict the demand of a location and thus the
organization will be able to analyze which location will order a higher number of products.
Different consumer items, inspection equipment and replacement parts will be stocked in the
intermodal vehicles so that repairmen of drones and their examination can be conducted (Bock,
2010).
D. Advantages and Disadvantages of the intermodal/multimodal Transportation Choice
Intermodal transportation makes use of two or more modes for freight transportation
process. Truck, railroad and steamship are different modes of transportation. Transportation by
air is expensive although used in this mode for transportation. For example in intermodal
transportation, an empty container is moved by a truck to the shipper (Givoni & Banister, 2010).
The containers are loaded with goods by the shipper. The steamship loaded with the containers at
port moves them in the port of destination. From the destination port the container is moved to
the warehouse of the receiver. Thus the main advantage of intermodal freight transportation is
that flexibility is obtained for the movement of freight. An efficient way is adopted for the
transportation of freight, since at least two modes of transportation are used in the process, a lot
of money can be saved with an efficient transportation plan (SteadieSeifi et al.,
2014).Transportation cost is likely to increase because freights are moved by several types of
mode of transportation. There is lack of communication and idle time of equipment which
increases the cost of transportation (Bell, 2015).Some equipments move from one location to
another which also increases the cost of the transportation process (Vilko & Hallikas, 2012).
Supply Chain management is efficiently managed when intermodal transportation system is used
(Reis, 2014). The organizations within the supply chain of an organization involved in

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intermodal freight transportation also assist and cooperate with each other and organizations can
better respond to the market changes(Moccia et al., 2011).Information is shared and needs are
communicated in intermodal transportation system. In intermodal transportation, multiple
carriers are contracted whereas in multimodal transportation a single carrier is contracted (Harris,
Wang & Wang, 2015).
The advantages of delivery by drone adopted by Amazon are as follows
i) Amazon will gain competitive advantage by delivery of products to customers with the
help of drone as this will increase the speed of delivery.
ii) Delivery by drones will also enhance brand image of Amazon as this process is
environmental friendly, transportation carriers on roads can increase pollution (Zhang,
Wiegmans & Tavasszy, 2013).
iii) A revolutionary Move- If Amazon can develop delivery by drones then it will be a
revolutionary process for Amazon and will help the Company to gain competitive advantage
(Martinez et al., 2010).
Disadvantages of Delivery by drones
1) Insurance policy will be required by Amazon to start for delivery by drones which will
increase the cost of the organization.
2) The delivery of products by drones is risky and can lead to injuries.
3) Federal Aviation Administration- Under the rule of FAA, Amazon will have to
maintain strict control for delivery of products by drones because the drones can’t fly over

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people and ground staffs are required to be employed to monitor the safety of drones (Ferrucci &
Bock, 2014).
4) The drone may trespass on privately properties and can accidentally fall on these
properties (Murray & Chu, 2015).

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2 Topic 2
A Figure: (Warehouse Floor Plans of Amazon)
Source: (Terry-Armstrong, 2013).
B. Warehouse Management of Amazon
Type of Warehouse and Size
Amazon has different has different types of warehouse and fulfillment centers depending
of inventory type of products and space utilization. These centers include redistribution centers,
apparel and footwear, return centers, 3PL outsourced facilities. Amazon also has a network of

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distribution centers for grocery and warehouses for storage of cold items. These buildings are
used for services like Amazon Fresh or Pantry operations. The size of warehouses of Amazon is
around one million square feet.
Figure: (Warehouse Floor Plans of Amazon)
Source :( Terry-Armstrong, 2013)
Use of Technology
Extensive use of barcode scanners in the warehouses of Amazon is evident during the
whole process of processing of order, picking of items and shipping. Amazon makes use of the
digital technology for the warehouse management. Amazon tries to optimize shipping practices
and order picking principles adopted by Amazon are also innovative. For instance, these days in
China the company has partnered with merchants with merchants and they allow the
organization to directly pick up goods from the stores of the merchants and these goods are then
shipped to customers. Amazon has adopted completely digital warehouses and fulfillment
centers (Terry-Armstrong, 2013).
Types of Inventory to be Stored
The distribution buildings of Amazon are located close to the proximity of metropolitan
cities across the globe. The Prime Now Hubs of Amazon are stocked with velocity items which