Operation Management Framework: Value & Supply Chain Analysis - Amazon

This report provides an overview of Amazon's operation and supply chain management, highlighting the company's efficient strategies for production, warehousing, and delivery. It discusses Amazon's operation management framework, including outsourcing inventory, delivery options, and warehouse automation. The analysis covers key elements such as leadership, employee accountability, risk management, and knowledge sharing, emphasizing their impact on Amazon's success. Furthermore, the report examines Amazon's value chain and supply chain, illustrating how these components contribute to the company's competitive advantage and overall profitability. Desklib offers a platform to explore similar solved assignments and study resources.

Running head: Operation management
Operation management

Operation management
Table of Contents
Introduction.................................................................................................................................................3
Operation management framework for Amazon........................................................................................3
Amazon from operational management perspective..................................................................................4
Elements of operation management framework........................................................................................5
Value chain and supply chain analysis.........................................................................................................7
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
2

Operation management
Introduction
The main objective of the task is to provide a brief overview about the operation and
supply chain management of Amazon Company. It is an online shopping company which
provides several products to customers globally. Furthermore, the organization maintains
effective and dynamic operation management. Apart from this, the paper explains that how
supply chain and operation management helps to maximize the profitability in the firm. Further
details of the task have been discussed below.
Amazon Company is an American electronic commerce company. The company was
incorporated in 5th July 1994 by Jelf Bezos with its headquartered is located in Seattle,
Washington U.S. The organization has separate retail websites for the France, Germany, Italy,
Spain, the United Kingdom,Japan, China, India, Australia, Mexico and the United states. It is the
biggest internet corporation measured by revenue. There are approx 566,000 employees
employed in the organization (Britannica, 2018).
Operation management framework for Amazon
Operation management is an area of management which designs and controls the process
of production and redesigning business operation in the manufacturing of products and services.
Operation management focuses on the techniques and tools which ensures the effective and
unique production process (Heizer, 2016). It helps to gain competitive advantages and also
improves the financial image of the company. Amazon supply chain is the most efficient and
effective among all the major companies across the world. In today’s competitive world,
Amazon is changing the operation and supply chain management to overcome the competitors in
the world (Christopher, 2016). The operations management of Amazon Company has been stated
below.
Outsourcing inventory management and insourcing logistics: The Company’s supply chain
and operation management depends on outsourcing of its inventory management. Especially the
products which are not frequently bought or ordered are not stored in the company’s warehouse.
3

Operation management
Delivery options to customers: The Company provides delivery options to potential customers
in the global market. The firm has several warehouses for different types of products and
services. The delivery options include prime customer delivery, one day delivery, free super
saver delivery and first class delivery. Along with this, the organization provides fast delivery of
the products and services (Brown, Blackmon, Cousins and Maylor, 2013).
Pull/push strategy for supply chain success: The company uses own pull and push strategies to
stay in the competitive market and to attract more customers in the international market. Apart
from this, Amazon uses push strategy to store its products in the warehouses and pull strategy to
sell the products in the marketplace (Huang, Li, Tsai, Chung and Shih, 2014).
Amazon’s warehouse classes and Zones: The Company has 70 centers in the United States
where more than 90,000 employees are employed. In order to increase revenue and returns, the
company is trying to open new warehouses in the local urban markets. The number of
warehouses are essential factors in order to maintain success and growth of the firm. The
warehouses of the organization are divided into five storage areas.
Warehouse automation: The Company requires automated and robotic warehouse which is
called Kiva systems. The robots of Amazon robotics can pick and pack without any human
assistance. In today’s era, the organization is increasing its army of robots in its warehouse
(Rushton, Croucher & Baker, 2014).
Army supply chain cost: Due to the huge economies of scale, the company has been able to
keep minimum cost of the products in the international market. It helps to increase number of
customers in the huge market.
Amazon from operational management perspective
1. Design of goods and services
Design of goods and services takes place keeping in mind the taste of the customers. The
packaging is done in such a manner that it must attract the customer. The Company has separate
section for maintaining all the frameworks and therefore the design of goods and services is
checked by the employees involved in making it.
2. Quality Management
4

Operation management
Quality is that factor of business which is taken care at first priority. The quality management
checks whether the product is relevant to its value or not. The quality of the product is a major
concern of the company. Therefore, to manage the quality company goes through various cycles
of examining the product and services (Evans & Lindsay, 2013).
3. Process and capacity design
The capacity design basically means the dimensions of the product that is being shown on the
website. The section of the organization which takes care about this has to calculate the exact
size and area of the commodity. It will help to provide accurate information to the buyers.
4. Location strategy
Amazon sets its location strategies as per the demand of the product in different areas. The
strategy set by the company keeping in mind the necessity of the product form a particular area.
5. Layout design and strategy
Layout design gives the customer a chance to check the measurements of the product before
making a purchase. The description about design makes the buyers aware about the design
methodology of the product. Therefore, it is used by Amazon company.
6. Job design and human resource
It is also a path by which human resource management of the company gives ample of
opportunities to the new employees to enter into the field of marketing.
7. Supply chain management
Supply chain management is a system of interacting with customers by the producers. Supply
chain manages the overall formation of selling of product in a step by step approach.
8. Inventory management
The company under this management keeps a record about the availability of the stock. They
manage the inventory and keep a track on the lack of stock that is needed in the company.
9. Maintenance
This is the most important operational management framework. Amazon has large warehouses
which need to be maintained in a proper way. This is done by the company very appropriately.
Elements of operation management framework
The elements of operation management framework have been detailed below (Griffin, R.W.,
2013).
1. Leadership
5

Operation management
In Amazon, company hires leaders to maintain harmony in the business. The leaders are
responsible for taking decisions collectively and operating in a team. Leadership style of the
company helps in solving the issues of the employees effectively and efficiently. The leadership
technique unites the member of the organization. A proper leadership enables the members of the
organization to perform in an effective manner. This creates a warm environment in the
workplace and a comfortable place to work in the firm. A proper leadership style is only possible
if there is larger participation in the company by the employees.
2. Employee Accountability
Amazon takes care about its responsibilities in a well manner. It is accountable to each and every
employee working in the organization. It is answerable to employee’s problem and finds a
solution to the problem from every aspect. This gives the employee’s a bit of satisfaction. Once
the problem of the employees is solved, they work comfortably and without any stress. This
gives good results to the business. Amazon is accountable to its employees in such a way that
employees have no complaints working with them. This reduces the chances of conflicts in the
workplace (Hugos, 2018).
3. Risk Identification
The company has set up a team which helps them to get notified before any risk is about to take
place. The identification of risk in advance reduces the chances of having any loss to the
company. This allows the company to be prepared with the solutions of the issues. Risk
identification is a technique to resolve the major issues and challenges that are occurred in the
firm. It is one of the greatest strategies used by Amazon which helps them in avoid further
issues.
4. Risk Control
Before the company gets to know about the problem, the problem is controlled beforehand. In a
big company like Amazon risk taking is easily acceptable. Therefore, the members of the
company set themselves to face any kind of risk in the marketplace. The controlling of risk
makes the company vulnerable in performing its functions and operations. This is a very
6

Operation management
effective method of managing the working of the company. Controlling the risk beforehand helps
in reducing the chances of conflicts and issues.
5. Knowledge Sharing
The company uses various platforms where each and every employee is asked to share what they
know. This helps other employees to develop their knowledge in different fields and different
sectors. The process of knowledge sharing gives these employees a chance to express what they
know about the process. Knowledge sharing also allows the workers to open their minds in
different fields and develop interest in working in those areas. It gives them a chance to
overcome the fear of getting to learn something new. Knowledge sharing is important aspect in
Amazon company.
6. Management of Change
Management of change is important which is seen in Amazon frequently. The management of
change helps the company to stand out against the competitors in the world. Management of
change takes place when the environment changes its trends and way of living. The company
takes care about its changing formation. Training and development coaching is provided to
employees in order to increase effectiveness of the workers.
Value chain and supply chain analysis
Value chain
Value chain is a model of high level. It is developed by Michael Porter. The process of value
chain involves receiving raw materials, adding value to raw materials and then making a finished
good and finally selling the product that is been made to its customers. Every step is calculated at
every production level (Ahi and Searcy, 2013). The process takes place step by step keeping in
mind the aspect at every level. The Companies follow value chain by conducting each process
step by step. Following supply chain in an order also gives a competitive advantage to the
company. The value chain is a medium to make people aware about how the company functions
and operations (Rothaermel, 2015).
Supply Chain
7

Operation management
It is a system involved in moving and selling of a product to the customer. The competition
between producers takes place through supply chain. Value chains are underlined by supply
chain, as without supply chain no producer can interact with their customers (Sanders, 2014).
They cannot fulfill the demands of the producers without the supply chain. The supply chain is
an important part to conduct any business. It takes care about the availability of the stock. Supply
chain helps the company in knowing about the ratio and proportion of the stock and further the
amount of stock needed. Therefore supply chain is essential factor that is to be measured in any
company (Monczka, Handfield, Giunipero and Patterson, 2015).
Value chain allows Amazon company to check whether the raw materials being supplied
by the manufacturer have a value or not. The quality of the product is very important that needs
to be in mind while adding the value of the raw materials which is done by Amazon in a
effective manner as it has to stand on the expectations of the company. This value chain makes
the employee to maintain a track record on the following products (Ross, 2013).
Supply chain of Amazon takes places between the dealer and the customer. It takes care about
the product delivered by the company goes through a certain process or not. The operation
management in Amazon takes place with the help of supply chain where company has to follow
the basic steps for processing the product to its customers.
Conclusion
On the above mentioned analysis, it is concluded that operation management of the
Amazon plays an important role to attract and retain more customers globally. Operation
management helps to control and design the production process within the organization. Along
with this, it helps to gain highest efficiency and effectiveness in the firm. No company can
survive its business operations and activities without effective operation and supply chain
management. Moreover, the paper also explains the elements of the OM and role of supply chain
management in Amazon.
8

Operation management
References
Ahi, P. and Searcy, C. (2013). A comparative literature analysis of definitions for green and
sustainable supply chain management. Journal of cleaner production, 52, (pp.329-341).
Britannica. (2018). About Amazoncom. [Online]. Available at
https://www.britannica.com/topic/Amazoncom . [ Accessed as on 29th March 2018].
Brown, S., Blackmon, K., Cousins, P. and Maylor, H. (2013). Operations management: policy,
practice and performance improvement. Routledge.
Burke, W. W. (2017). Organization change: Theory and practice (5th ed., pp. 9-13). Sage
Publications.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Evans, J. R., & Lindsay, W. M. (2013). Managing for quality and performance excellence.
Cengage Learning.
Griffin, R.W. (2013). Fundamentals of management (7th ed., pp. 433-464). Cengage Learning.
Heizer, J. (2016). Operations Management, 11/e (11th ed.,pp. 1-27). Pearson Education India.
Huang, C.L., Li, R.K., Tsai, C.H., Chung, Y.C. and Shih, C.H. (2014). A Comparative Study of
Pull and Push Production Methods for Supply Chain Resilience. International Journal of
Operations and Logistics Management, 3(1), (pp.1-15).
Hugos, M. H. (2018). Essentials of supply chain management (4th ed., pp. 1-77). John Wiley &
Sons.
9

Operation management
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L. (2015). Purchasing and
supply chain management (6th ed., pp. 409-459). Cengage Learning.
Ross, D. F. (2013). Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media.
Rothaermel, F.T. (2015). Strategic management. McGraw-Hill Education.
Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain (5th ed., pp. 16-32). Kogan Page
Publishers.
Sanders, N. R. (2014). Big data driven supply chain management: A framework for
implementing analytics and turning information into intelligence. Pearson Education.
10