Analysis of Project Risk and Procurement Management at Amazon

This report delves into the project risk and procurement management practices of Amazon, a leading multinational e-commerce company. It examines the various types of risks Amazon faces, including competition, operational failures, and stakeholder management, and details the strategies employed for planning, managing, monitoring, and controlling these risks. The report explores Amazon's strategic procurement processes, emphasizing the role of strategic sourcing functions such as purchasing, quality control, and transportation in achieving a competitive advantage. Furthermore, it discusses sustainable procurement practices, supply chain risks, and the application of procurement cycle principles within Amazon's operational environment. Through a critical analysis, the report highlights how Amazon integrates these elements to maintain efficiency and mitigate potential disruptions, contributing to its success in the global market.

Running head: PROJECT RISK AND PROCUREMENT MANAGEMENT
Project Risk and Procurement Management
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Executive Summary
The paper will be presenting the different types of risks associated with Amazon along
with the ways to plan and mitigate those risks. The different methods to control and
monitor the risks will be also provided in this paper. The strategic procure processes and
the sustainable procurement processes will be also presented in the paper, the risks
coming from the supply chain of this organization will be discussed in details in this
paper. The parameters of the strategic sourcing functions such as the quality control and
the transportation will be determined from this paper as well. The procurement cycle
principles which is followed in the working environment of Amazon will be also
discussed in a detailed manner in this report.

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Table of Contents
1 Introduction.......................................................................................................................4
2.1 Defining Risk.................................................................................................................4
2.2 Planning and managing risks.........................................................................................5
2.3 Monitoring and controlling risks...................................................................................5
2.4 Strategic procurement and SCM....................................................................................6
2.5 Sustainable procurement process...................................................................................7
2.6 Supply chain risks..........................................................................................................7
3.1 Strategic sourcing function of Amazon’s competitive advantage.................................8
3.1.1 Purchasing function................................................................................................8
3.1.2 Quality Control.......................................................................................................8
3.1.3 Transportation.........................................................................................................9
3.1.4 Other Strategic sourcing of Amazon....................................................................10
4 Literature Review...........................................................................................................12
5 Critical Analysis.............................................................................................................12
6 Application of the Procurement Cycle principles in Amazon........................................13
7 Conclusion......................................................................................................................16
8 Reference........................................................................................................................18

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1 Introduction
The foremost determination of the paper is to focus on the project risks and the
procurement management process of Amazon which is the one of the largest
multinational business organization headquartered in Seattle, Washington DC.
The largest e-commerce market place is offered by Amazon, along with this
business, Amazon provides services in the cloud computing technologies such as the
Amazon Web Service as well as in the artificial intelligence sector (Amazon 2019). The
business practices of Amazon have numerous complexities coming from both their
internal stakeholders such as their regional decision makers as well as from the external
stakeholders such as the dedicated social media marketing team which promotes the
business of this organization in the online social media platforms such as Twitter and
Facebook. This business organization had innovative changes in terms of the services
they provide to their customers such as the Amazon prime video where high quality
movies, TV series, regional and Hollywood movies and daily soaps are telecasted.
2.1 Defining Risk
The competition faced by this business organization from the other similar
organization is one of the biggest threat of Amazon. The operational failures and
management failure is the other significant risks associated with the business
organizations as they need to manage all of their branches across most of the countries all
around the world (Turban et al. 2015). The selection of the appropriate business
strategies according to the local market conditions and fixing the prices of the products
and services according to the regional business conditions are the other risks associated

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with this business. The management of the stakeholders is the other significant issue
faced by this organization. The foreign exchange risks, income tax liabilities
2.2 Planning and managing risks
The central management team of this organization knows that their business is
bound to have risks due to their business practices and their global working environment.
There are situations where the market condition of the regional offices such as in Europe
and Asia keeps on changing (Patro, Padhy and Panigrahi 2016). However, the
management team of this organization maintains a corporate culture in their working
environment so that each of the stakeholders works with their full potential. The turnover
rate maintained by this organization is very much important to deal with all the above-
discussed risks as well.
The practice of the governance plan is also very much helpful for the organization
to manage the different types of risks faced by this business organization. The
management of the risks coming from the employees of this organization are managed
using the performance evaluation procedure which is conducted in each of the regional
offices of this organization.
2.3 Monitoring and controlling risks
All the risks which are discussed in the above unit of the paper are monitored
using the data centres which are present in most of the countries which get their services.
There compliance programs for the AWS services which have considerable risks such as
ransomware (Merhi and Ahluwalia 2017). Artificial Intelligence-based systems are used
in numerous healthcare organization for the protection of data from security threats. The

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customer complaints unit of the Amazon portal are there to understand the issues faced
by the consumers of this organization as well (Xu and Huang 2017). The security policy
created and implemented is also very much important to deal with the risks faced by
Amazon.
2.4 Strategic procurement and SCM
Exclusive strategic sourcing cycle are maintained in the working environment of
Amazon considering the activities of each of the stakeholders. Inputs of every department
all around the globe are considered in the strategic procurement such as the role of the
third party vendors and the sales and marketing team. Business strategies are created
using the innovative business models according to the needs and requirements of the
customers of this organization (Turban et al. 2018). The business models which are
followed in this organization helps in improving the profitability of the business as well.
Figure 1: Strategic procurement process of Amazon
(Source: Created by the author)
PlanningaftermarketanalysisDevelopstratgeiesafterevaluatingsuppliersMakecontractualagreeentsExecutestartegyandmanagethedeliveryprocessShareknowledgeandgetfeedbackfromtheclients.

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There are numerous organizations which belongs to Amazon such as IMDb,
LEXCYCLE, ALEXA, ZAPPOS, A9 and Woot. Strategic partners of Amazon such as
the Future group (Nicoletti 2018). Multilevel e-commerce models are followed to
maintain the supply chain of this business organization.
2.5 Sustainable procurement process
The value of this organization was estimated around $60billion in the year 2012,
it is now the biggest retailing organization in the world. The customer service of this
organization along with the transportation logistics and the distribution of the centres are
very much useful to maintain sustainable procurement process (Turban et al. 2018).
Green technologies and management practices are encouraged in the working
environments of this organization. Green practices include the use of fuel-efficient
vehicles, energy saving devices and solar energy systems.
2.6 Supply chain risks
The risks coming from the supply chain of this organization can be solved using
effective leadership skills. Network planning and other decision making capability of the
project managers and the operational heads of each regional offices of this organization.
All the business practices must be optimised in such a way so that the supply chain risks
can be effectively mitigated (Wang et al. 2018). The fulfilment centres of Amazon are
also responsible for the monitoring and managing the risks coming from the supply chain
of this organization.

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3.1 Strategic sourcing function of Amazon’s competitive advantage
The strategic sourcing function which are followed in the working environment of
Amazon involves relentless investments from the shareholders of the firm, it provides a
competitive advantage to Amazon with the other leading e-commerce organizations such
as eBay. The outsourcing policy adopted by Amazon is very much important as it
provides services to almost every country in the world (Turban et al. 2015). The channels
which are developed by this organization over the years in terms of the provider of the
raw materials, distribution channels, bargain power of the stakeholders, quality control of
the products and services, transportation and the cost associated with the transportation
and all the supply chain decisions are the prime strategic sourcing functions which
provide this organization a competitive advantage.
3.1.1 Purchasing function
The purchasing management of this business organization ensures good quality
products are provided to all the customers so that the business sales of the organization
can be improved. The supplies and inventories which are needed to manage and operate
are examined on a monthly basis in this organization so that it deal with the changing
needs and requirements of the customers (Li and Muckstadt 2016). The cost involved in
the purchasing items and all the overhead costs of this business organization are revised
according to the local market conditions which provides this organization a huge
advantage over the other similar business organizations. The
3.1.2 Quality Control
The products and services offered from Amazon involves different steps such as
the followings:

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 Labelling of the products: The specification of the products are mentioned in the
parcel having a light background colour so that there are no real visibility issues
to see the products details.
 Packing: The breakage and leakage of the parcels are minimized by numerous
examination process which are followed before the parcels are dispatched from
the regional offices (Walker 2018). Bubble wraps are provided inside the boxes,
so that it can protect the product from adverse conditions. Carbon drop tests are
performed for the mobile devices which are sold in the parcel.
3.1.3 Transportation
Amazon ship their packages using the UPS, alternative services such as
FedEx/DHL are also used for the transportation of the products all over the world. The
working and the non-working days are given high priority by the retails and the
distributors of this organization and these factors have a direct impact on the
transportation of the products for this organization. The entire transportation service
facility of Amazon can be tracked by the consumers of this organization from their
Amazon accounts. The Amazon logistics tracking system considers private fleets,
aircrafts and other kinds of transportation devices to reach their consumers (Turban et al.
2017). Delivery of the products within the time which are shown in the user accounts of
the portal is the prime transportation objectives of Amazon. The delivery drivers of
Amazons are recruitment in such a way so that they can manage all the probable risks
which may come in the way while delivering the products such as the environmental
threats such as rains and storms.

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3.1.4 Other Strategic sourcing of Amazon
Apart from the above discussed strategic sourcing options, the other essential
strategic sourcing option are as followings:
• Evaluate suppliers and develop strategy: The growing reputation of this global
organization is due to the active involvement of the different types of stakeholders
such as the internal stakeholders such as the operational managers of each country
and the external stakeholders such as the distributors of the products (Laudon and
Traver 2016). Performance evaluation report are published for all the stakeholders
of this organization so that the performance of the stakeholders are monitored.
• Contractual agreement between the stakeholders: This business organization
makes contractual agreements with all the internal and the external stakeholders
so that they can work dedicatedly with this organization only, as there are
multiple e-commerce organization all over the world which provides good quality
products in the same market.
• Commodity management: The role of the community management analysts is
very much important to manage both the back office and the front office of
Amazon. The back office involves the management of the processing of the
products according to the requirements of the consumers. The logistics systems
and the planning the next step of action regarding the development or the
marketing strategies for the products falls under the back office department of
Amazon (Papke-Shields and Boyer-Wright, 2017). The front office deals with the
decision support system and future simulations regarding the products. All the
paper works of this organization and the physical dealing with the products such

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as buying, selling and trading of the products all fall under this category of the
front office.
• Share knowledge: Numerous Information Systems are used in the working
environment of Amazon such as the Knowledge Management System. These IS
are used both in the e-commerce unit of the organization as well as in the AWS
Key Management Services.
• Forecast the plan the next strategy: The plan of actions regarding any kinds of
products depends completely upon the changing needs and requirements of the
consumers of this organization (De Araújo, Alencar and de Miranda Mota, 2017).
Discount offers and loyalty bonuses are given to the consumers of this
organization so that the potential customer can be also get attracted to the service
provided to this organization.
The following diagram is very much useful to understand the different strategic
sourcing functions of Amazon.
Figure 3: Strategic sourcing functions of Amazon
(Source: Created by the author)
Evaluate
suppliers and
develop
strategy
Contractual
agreement
between the
stakeholders
Commodity
management
Share
knowledge
Forcast the
plan the next
strategy

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4 Literature Review
According to Fuller et al. (2017), the role of the project managers are very much
important for managing the risks of the back office and the front office of Amazon. The
researcher of this paper focuses on the different types of knowledge areas like time and
cost management, procurement management and scope management, and, however as
stated by Chapman (2016), the procurement risks of this project are the prime
contributing factors in most of the e-commerce business organizations. The importance
of project management models are also highlighted in the paper. The researcher also
stated that integration management is also very much important for the growth and
progress of the global e-commerce organizations (Schwalbe 2015). The prime strength of
this paper is that it highlights all the ways by which the global e-commerce organization
can grow in the competitive market and the main weakness of this paper is that it does
not highlight the importance of maintaining an organizational culture.
5 Critical Analysis
The different categories of management such as HR management, procurement
management and risk management can be very much important for the business
organizations to growth in the competitive market. However, along with the different
types of management skills, the role of the project managers and the leaders of the
organization are also equally important as it helps the organization to deal with adverse
business conditions such as dealing with angry clients who lodged complaints about the
delay in delivery of the product (Padalkar and Gopinath 2016). Thus, it can be said that
both the collective effort of the leaders of the organizations along with the different