RMIT University: Amazon Service Delivery and Production Process Report

This report provides a comprehensive analysis of Amazon's service delivery and production processes, focusing on the challenges faced within its warehouse and delivery systems. The report begins with an executive summary, followed by an exploration of quality definitions relevant to Amazon's operations, emphasizing the importance of customer experience. It details existing processes, identifies key problems such as reliance on third-party delivery partners, late deliveries, and improper package handling, and their underlying causes. To address these issues, the report proposes several recommendations for process improvements, including a strategic process change strategy. The report also outlines expected quality outcomes and concludes with a summary of findings and suggestions for enhancing customer satisfaction and operational efficiency. Diagrams are used to illustrate process changes, and the report highlights the need for improved strategies to strengthen customer relationships and streamline operations.

Running head: SERVICE DELIVERY OR PRODUCTION PROCESS WITHIN AMAZON
Service delivery or production process within Amazon
Name of the Student
Name of the University
Author note

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Executive Summary
The report focuses over the present kind of problems that are being faced by Amazon within the
processes that are followed within the warehouse team offered by the company. This report
figures out the existing kind of processes that are offered by the company and the kind of
problems that are being faced by the internal warehouse team of the company. These problems
are considered as critical for the growth of the company. Any kind of problem that are being
faced would lead to negative impacts towards customers and the company. The current processes
involved within the company is mainly due to improper handling of packages, late delivery
service and choosing the preferred delivery partner by customers. The process change strategy
have also been proposed within the study based on improving certain process. The report also
puts focus on the use of diagrams for depicting the change processes within the company. In
order to deal with the wide ranging issues that are being faced by the company, the report also
underline a certain list of recommendations that should be followed in order to increase the
chances of improvement of the present strategies and improving the present relationship with
customers.

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Table of Contents
1. Context and Background.............................................................................................................3
2. Quality Definition appropriate to the Process.............................................................................4
3. Description of Existing Process...................................................................................................6
4. Identification of Existing Problems and Relevant Causes...........................................................7
5. Recommendation for Process Improvements............................................................................10
6. Description of Process Change Strategy....................................................................................12
7. Description of Expected Quality Outcomes..............................................................................15
8. Conclusion.................................................................................................................................17
References......................................................................................................................................19

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1. Context and Background
The infrastructure for Amazon logistics has always been in the process of improving their
services for the betterment of their customers. They also strive to deliver goods while also
increasing their brand reputation. The kind of service delivery processes that are followed at
Amazon has been quite innovative and this has further resulted in the growth of the reputation
and building a trust factor in the mind of customers (McFarlane, Giannikas and Lu 2016). The
result that would need to achieve with the help of service delivery program could vary from one
seller to another. This also mainly depends on the seller and the ways in which they would
understand the business concerns of Amazon Logistics Program and become more proactive
within their actions.
On the other hand, Amazon follows agile based strategies based on searching new ways
based on improving the systems in which the items that needs to be delivered are sorted and
arranged for quicker delivery. Amazon receives about 45 orders per second and thus they have to
enhance their service processes in order to match with increasing demand of customers
(Angeleanu 2015). The fulfilment centres at Amazon are located at all parts of the world. These
fulfilment centres comprise of employees who travel from one part of the centre to another in
order to locate the products, pack them and put them into the service delivery van. In the present
times, Amazon has tied up with different logistic service provider companies such as USPS, UPS
and FedEx in order to deal with the increasing number of orders that need to be delivered on
urgent basis.
Amazon also helps in offering same-day to 7-day delivery options. It also hosts different
kind of third party logistics partners that are present all over the country. These includes

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bicyclers, walkers and motorcyclists who help in offering the delivery options in a fast mode.
These separate logistic partners who have been contracted by Amazon pick up the goods from
the warehouses and sort them as per their immediate needs of distribution (Chen et al. 2016).
They are thus supported by Amazon supported technological platforms, which further guides
them during the entire delivery process. However, Amazon also provides additional facilities
such as flexible working schedules and picking up of shipments at the own will of their delivery
partners.
2. Quality Definition appropriate to the Process
Quality is a huge concern that needs to be maintained at every aspect of a business
process. Any form of business, which would not be able to conform to the standards of quality
within the procedures and processes would surely fall apart. Hence, it can be understood that
quality is a major concern in any kind of department such as sales, control over cost factors,
productivity factors, compliance and risk management procedures.
However, in the presently discussed case based on the service delivery process followed
at Amazon Logistics, the definition of quality that could be identified is – Quality as an
Experience (Klumpp and Heragu 2019). These customers who purchase or avail a wide range of
services from Amazon mainly depend on the aspect of quality and the long term relationship that
is maintained by the company.
The factor of quality is considered as a satisfying experience. Customers would not only
purchase or avail the offered services from Amazon just for the sake of making a purchase for
their needs. They would also expect a long term relationship and end-to-end experience with the
company. The experience in terms of aspects of quality could be measured with the help of

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bottom line metrics such as return visits, revenue generation and customer lifetime value (CLV).
Whenever a customer would be satisfied with the metrics of quality, they would definitely agree
to receive the same kind of service at a later time. This could be calculated by the management
team at Amazon who would keep a close look over the frequency of visits made by a customer
(Fan and Li 2014). An internal algorithm could be placed within the code section, which would
determine the visits made by a customer and the number of purchases made by an individual
customer.
The amount of revenue generated by the company should be calculated based on the
number of times a customer would make a purchase and the entire revenue generated in a single
year. This kind of calculation of revenue would help in understanding the ways in which revenue
have been generated and the calculation of profits for the company.
Amazon has their own Consumer Intelligence Research Partners, who have a primary
responsibility to estimate the amount of money spent by a customer during making purchases.
Hence, Amazon should develop new options in which customers could subscribe themselves for
competing with the price factor and thus increase their lifetime value. With the application of the
CLV, Amazon would be able to gain idea about the most profitable segment of customers and
thus can focus over future development.
In the case of the service delivery processes by Amazon, it can be discussed that the
company primarily employs highly skilled experts and delivery service specialists who have high
form of experience based on increasing the speed of delivery and improving their reach to
customers. Amazon had introduced a Prime service for their customers. Customers had to pay for
an annual membership fee in which they would receive their products within a two day time
frame. This facility proves to be a major game changer for the company.

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However, in the recent times, Amazon has also introduced a two-hour free delivery,
which could be defined as a major competition in the global market. In the present case, the
delivery partners of Amazon have been majorly been benefited from their plans in order to spend
nearly $800 million for investing into new methods of Prime default shipping standards within a
single day. The robots employed at the Amazon warehouse have the prime responsibility to pick
and pack without the need of human assistance and enabling the performing of faster operations
at the warehouse.
However, in future strategies, Amazon has planned to implement Amazon Prime Air,
which can be defined as an innovative method to deliver products at a range of 10 miles from the
fulfilment centres at Amazon. The time frame allocated for delivery have been discussed at 30
minutes or even less. They have even invested in the development of a drone-based system of
delivery. This kind of new strategy would majorly help the company to bring in a major change
in bringing innovation and bringing a competitive edge in the industry.
3. Description of Existing Process
Amazon has entered into the process of innovating their service delivery processes at
each of the customer touch points. This kind of innovation features that are employed by the
company is considered as a mean of continuous differentiation against competitive advantages.
Hence, they have employed a wide range of new services such as the introduction of Prime
membership facility that offers customers to order a certain product and get them delivered
within a single day of ordering them (Bonini, Urru and Echelmeyer 2016). They have also
pushed themselves to provide Sunday deliveries.

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In the present times, Amazon employs a wide range of methods for shipping and getting
their products to be delivered to the proper address that are put as input by customers. However,
before the products would be put on to the delivery truck, the company would perform several
pre-processes in order to speed up the process of sorting and packaging of goods.
Amazon has recently purchased Kiva Systems, which is a robotic distribution system
employed at the company for leveraging the aspect of picking up of products from the
warehouse, sorting them as per the requirements of the company and delivering them to the
customers. In the present system, it can be seen that the products stored at the warehouse of the
company would not be shelved in any order (Stoltz et al. 2017). These products are also not
reorganized and continually displaced in the forms preserved within a library. In the case of the
warehouse of Amazon, the products are stored in the order where they would fit properly. The
human pickers within the warehouse thus sort and fetch the products during the time of
packaging.
Once these products are packaged in a proper way, they would not always wait for a
courier service provider to pick these products and deliver it to customers. In some of the cities
covered under Amazon, the courier providers pick up the products directly from the warehouse
and deliver these parcels to customers on the same day of ordering. In some countries, Amazon
has also employed the facility of sorting millions of parcels based on their zip codes (Škrinjar,
Škorput and Furdić 2018). They would thus deliver these parcels to the local post offices in order
to be collected by customers or inexpensive kind of local distribution. However, in this process,
Amazon incurs a lot of cost factors to sort each product and then deliver them at a halfway path.

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4. Identification of Existing Problems and Relevant Causes
Based on the discussion from the above part of the report, the existing problems within
the current processes of delivery by courier partners employed by Amazon are discussed as
follows:
(Figure 1: Existing Processes at Amazon)
(Source: Created by author)
In this diagram, the full lines depict the flow of task processes followed within the
warehouse system. The dotted lines depict any kind of flow of messages. The envelope icons
depict any kind of notification that would be sent from Amazon to customer during the entire
process of purchase and delivery.
1. Entire Dependency on Third party delivery partners

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Amazon employs third party courier partners such as UPS, FedEx and others to provide
different kind of delivery services to their customers. One of the biggest problem that is faced by
Amazon is that cannot fully depend on these delivery partners to provide the best kind of
services. This is due to the reason that third party service providers would not be able to provide
their best quality of service as they would also have their personal schedules of delivering
parcels.
Hence, a mark of guarantee based on providing a dedicated service to Amazon customers
only would not be provided by these companies. Hence, the factor of quick delivery that is
mostly promised by Amazon cannot be guaranteed and any case of late delivery would be
seriously reported by customers (Daniluk and Holtkamp 2015). This would further lead to a
negative reputation over the company.
2. Package Handling Problems
The feedback for the seller is entirely dependent on the customers. This feedback would
be submitted by them after the products meet up to the expectation. According to the present
scenario followed within the organisation, it might happen that any delivery could be marked late
or mishandled (Matkovic, Tumbas and Pavlicevic 2014). There might be some packages, which
could get tampered during the process of packaging and transporting them to customers.
3. Unavailability of option for choosing the preferred delivery partners
In the process of transportation of a certain product from the seller to the customer, the
entire procedure is handled by the courier service team hired by Amazon. However, during the
process of a booking for a delivery service, the sellers would not be able to choose the logistics
team. It might happen that a seller might have a negative kind of experience with a particular

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delivery provider in any previous instance (Li and Liu 2016.). This would create an awareness
for the seller that they would not deliver the product with that particular delivery partner.
Amazon might allocate that particular delivery partner to deliver the services and this
might ruin the partnership of the seller with Amazon and the concerned customers. The entire
chain of logistic operations is being operated by Amazon occurs without taking any kind of input
from the seller.
5. Recommendation for Process Improvements
In order to ensure that each of the services that are offered to customers occurs in a
smooth form and thus the customers would be satisfied with the kind of service being offered,
Amazon would need to locate the pin points over which they could work over (Eppner et al.
2016). In order to avoid the problem of late delivery and quick packaging of goods, Amazon
could plan for the implementation of certain techniques that would in turn increase the efficiency
of the delivery procedure of offered services.
Certain kind of initial moves that could be undertaken by Amazon in order to increase the
speed of delivery service are:
1. Vehicular control over the delivery service - Gaining a direct form of control over
the delivery vehicles would help Amazon to move forward in the process of differentiating
themselves from their competitors (Weidinger 2018). Moreover, they could also bring in
innovation within their services based on employing new opportunities based on employing new
ways in which the delivery services could be improved.
2. Warehouse Management - In a second effort to improve their services, Amazon
could build a better experience for managing the operations performed at the sorting centre

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within the warehouse (Lasisi, McCullen and Turner 2015). As Amazon mainly employs and
outsources third party delivery providers, hence they should certainly choose a dedicated courier
team who would directly pick up the products from the warehouse, pack them and transport it to
the customer end at the earliest.
In order to improve the process of delivery of service, it could be recommended that
Amazon could bring in the process of “cherry-pick”. This process could be defined as delivering
of their products by making use of their in-house delivery partners. In case of delivery of grocery
items, this new system could immensely help in providing greater potential to the delivered
services (Żurek 2015). On the other hand, it would also create an increasing form of attractive
place for different sellers who make use of the marketplace offered by Amazon and ultimately
use the fulfilment service.
Maintaining a good communication with customers can be discussed as the key to
provide the best form of service to customers after the product would dispatch from the
warehouse. Whenever a customer orders a certain item, they would be highly interested to know
each of the tracking details and the whereabouts of their package (Deutsch and Golany 2018).
Whenever the product would be dispatched from the Amazon warehouse, the customers would
be provided with a tracking link that would help the customers in tracking the product. They
could thus check the “My Orders” page from the application. According to insights gained over
the problems faced by customers during the entire service delivery process, an update regarding
the number of deliveries before the final delivery to the designated customer should be provided
(Kawa 2017). Updates regarding the location of the delivery service provider and the number of
deliveries left before the final delivery could help the customer in gaining better kind of insights
about the service operations.