Supply Chain Network Design of Amazon: A Comprehensive Case Study

This case study report delves into the supply chain network design of Amazon, a leading player in the retail industry. It examines Amazon's organizational history, supply chain procedures, and various service developments, including delivery options and storage models. The report analyzes the company's supply chain network design, focusing on its strategic importance, the types of strategies employed (lean and agile), and their alignment with Amazon's organizational objectives. The analysis includes a comparison with industry best practices and existing literature, evaluating advantages, disadvantages, and potential risks. The study concludes with recommendations for redesigning the supply chain, if necessary, and justifies these suggestions based on the findings. The report emphasizes the significance of supply chain design in driving company performance and competitiveness, highlighting Amazon's success in this area and its ability to integrate numerous services, often surpassing competitors in its supply chain capabilities.

Running head: GLOBAL LOGISTICS AND VALUE CHAIN DESIGN
Implementing Lean Project Management In A Government Organization
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Abstract:
The objective of this case study report is to explore the position of the company
Amazon in the retail based industry, which has been acquired by the organization chiefly
through their attainment of supply chain in high-level and development in their logistic
sector. It describes the supply chain procedures of Amazon and also numerous products along
with their service developments with such delivery options. It also defines the Storage based
model of the Amazon and the network plan that is followed by the Amazon’s Logistic sector.
Entities are looking for a flexible strategy to project delivery and want to become more Agile.
However, the casualness of the agile strategy is difficult and deemed too risky for
organisations providing projects and programs and where traditional software development
procedures still serve a purpose. It will become apparent that the continuous development of
a supply chain structure seems to have more extensive and significant deep-rooted effects on
company performance than large profit figures. The correlation between Amazon and Wal
mart along with other businesses of same working structure demonstrates the supply chain of
Amazon is much more varied, suggesting that countless services provided by rivals are
combined inside Amazon and its supply chain. The findings of this literature review may
direct future research towards investigating Amazon's even more commercial benefits and
how well the potential threats and strengths in a supply chain framework can be overcome.

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Table of Contents
Introduction: 3
Literature: 4
Supply chain design and its strategic importance: 4
Types of supply chain design strategies: 5
Case study: 7
Organization history: 7
Amazon’s Supply Chain: 8
Analysis of the Amazon’s Supply chain network design: 11
Conclusion: 12
References: 14

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Introduction:
The objective of the case study report is about discussing and evaluating about the
Supply Chain Management along with the case study on the Supply Chain network design of
the company Amazon. The Supply chain management describes about the type of the
management where the products and their flow and the services includes motion and storage
of manufactured goods, function-in-process inventories and completed products from place
of origin to point of delivery.
This case study report states about all network design that are based on this kind of
the management. The initial purpose of this design which is known as the supply chain
network design is about checking the policies used and programs conducted in the
organization so as to achieve the targets and also deliver the strategically based aims and
objectives that are initiated for the long term based contract (Ahi and Searcy 2013). The
Amazon is also impacted by their network design project that is developed by the
organizational bodies.
The report also discusses about parameters that make the supply chain network design
essential for the Amazon Company. It is essential to acknowledge the matter that the network
of a company dictates its supply chain effectiveness and service quality. Designing an ideal
supply chain network implies the network should be able to meet the business's lengthy-term
strategic objectives.
The supply chain network design strategies and the organizational strategies can be
described and classified in several parts or the ways of the strategies. Some of the essential
strategies and designs are the Lean Supply Chain Design, collaborative design, Agile Supply
chain design, sustainable Supply Chain design, centralized and decentralized design and the
flexible chain design. The Amazon company which is a well renowned company and stands

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as one of the best retailing infrastructure has used their own supply chain network design that
has enabled the organization to fetch more profit from the retailing business all over the
world and is now the most popular with the maximum profit retailers al, over the world.
Literature:
Supply chain design and its strategic importance:
The Supply Chain design can be evaluated as a process which is required by all
company and organization structures dealing with any kind of business policy to create and
develop new structures for the organization and also helps to manage the Supply Chain
(Brandenburg et al 2014). Supply Chain Management is being committed by all organization
so as to evaluate and identify the correct measure of the balance is being maintained between
the key structures or the frameworks of the business organizations that are the transportation,
inventor and manufacturing costs (Chopra and Sodhi 2014). Supply Chain Design has been
used to fit supply and demand under instability by efficiently placement and handling stock.
In relation, resource efficiently is used in a dynamic setting.
The supply chain design is always implemented by a company when the main
objective of the company becomes to gain maximum profit out of the business structures,
especially the retail business organizations (Farahani 2014). Gaining benefit from the supply
chain design is about following the organized steps that have been designed by the
organization head. The solutions for the Supply Chain Network design that is provided and
allocated from head of organization or different companies that look after the solutions and
the process of consulting for the supply chain designing and planning that will be issued all
over the organization comprising the levels from strategic and then on to the operational and
functional level. The Supply Chain Design helps to answer various questions that are
essential to solve for the virtue of gaining more out of the input done on the business as well

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as the structure which also implies that the organization works will become more defined and
more organized. They also help and answer the questions in a very strategic level (Blome,
Schoenherr and Rexhausen 2013). This also includes the outbound delivery of the
organization, production and inventory and modeling of the inbound flows. The capability of
the design created particularly for the Supply Chain is very unique and also very effective as
it provides the authority and also the ability to the business infrastructure to organize the
requirements for strategic decisions of the business.
There are generally three steps of the Supply Chain Designing. The first step can be
described as the Strategic Network Design that helps to articulate the decisions concerning
the amount of places (Fawcett and Waller 2014). This also helps in making decisions on the
size of the warehouses or the plants and also the strategies that are based on geographical
sourcing. The next step classifies the stocking points that are based on the inventory section
of the stocking points considering limitations including production and consumption
uncertainties, lead times, costs and other complicated limitations (Holweg and Helo 2014).
The design planning also helps in resource allocation which enables the organization to
identify the time and the place and the amount or the number of the quantity that is needed to
be produced and also to be purchased (Hugos 2018). This also allows to settle the matter of
where and when to stock the level of inventory.
Maximizing the efficiency of the supply chain is complicated due to differing goals
and uncertainties and dynamics (Lim, Mak and Shen 2016). It helps the organization to
obtain substantial improvements and measurable outcomes both from user experience and
cost savings viewpoint. Strategic network design choices on both the amount of places,
warehouse or infrastructure size and geographical sourcing policies.

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Types of supply chain design strategies:
 Lean Supply Chain Design- A Lean Supply Chain Design is a collection of the
data of the companies explicitly connected by upstream and downstream flows
of goods, facilities, data and finances which really enhances their work
together to decline the costs and expenditure effectively and efficiently
drawing the matter that is required to satisfy external customer's requirements.
A lean supply chain structure needs supply chains to reduce operating
costs at all stages (Mangan, Lalwani and Lalwani 2016). Lean needs the
Supply Chain to use minimum quantity of assets to finish the work effectively.
Inventories, stores, trucks, individuals and working capital They are the
primary assets in the supply chain. A lean supply chain is designed to have
restricted system inventories, minimal storage space required to store many
such inventory concentrations and optimized shipments to reduce the cost of
moving inventory A lean supply chain would also generate a lengthy-term
supply chain, stable supply agreements with the smallest negotiated costs, but
typically without any significant capacity to alter the ordered amounts,
shipping destinations and the necessary need dates after the order has been
placed. Lean design will most probably not involve secondary providers
because a second level of providers is costly to keep.
 Agile supply chain design- The company speed has accelerated considerably.
But being agile, that is being fast to detect and respond to modifications, is
essential for businesses to be effective in this fresh atmosphere. The main
perspective seems to be that agility is not only about being really quickly in
implementation – responding quicker than competitiveness as fresh market
possibilities arises or disturbances occur in the Supply Chain. At the tactical

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level, where the payback period is one year and more, agile companies are
developing their supply chain with the required adaptability. The mentioned
design choices that Agile Businesses make at the strategic level are not only
linked to the supply chain's physical design. They also cover how to manage
product proliferation and customisation in the most effective manner.
Businesses have to deal with the fact that truth will still be distinct from the
scheme at the operational level. Possessing a well-designed, agile value chain
is a useful basic requirement, but it is no promise that a business will now
have the correct item in the correct amount at the correct place when the real
demand arrives.
Case study:
Organization history:
Amazon, Inc. is an American-based global electronic business corporation.
Headquarters in Seattle, Washington. Jeff Bezos established Amazon.com, Inc. as Cadabra on
July 5, om gthe year of 1994 and introduced it as an online domain site known as
amazon.com in the year of 1995. It began as an online bookstore. Amazon (Amazon) is
among the first online retail websites started in 1995 (Mentzer et al. 2014). It has also been
continuously listed as being among the best retailers outlets omline since its creation where it
is considered as global model which proved itself effective for internet retailing.
In March of the year 1998, Amazon was ranked in the top 20 websites in
approximately all significant market research. The Forrester Power Rankings identified
Amazon as that of the top online shopping site in 2000, according to an analyst. It became
Earth's largest bookstore with 2,5 million publications. The Amazon was known as the

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Earth’s biggest online Bookstore. Statics of Amazon recorded net revenue of $857 million at
its most current quarter, the third quarter in a row under which it showed profitable quarter.
The vision of the company stands with the key strategies of the success. They aimed
to know and evaluate the market strategies and the industries. The main importance being the
customer of the company they focused on the addition of value on the customers.
Maintaining the logistics by virtue of the perfect implication of the Supply Chain network
design. The logistics management by the Amazon is one of the main reasons for the
organization receiving the stand point in the global industry statistics. Use of, alliances,
acquisitions and strategic partnership is also a vision they believed in.
Amazon’s Supply Chain:
Amazon.com had introduced effective deals to input supply chains with regard to
fluctuating requirements. This empowered them to perform strong-demand title in storage,
while purchasing low-demand products from retailer in reaction to client orders. Decrease in
multiple expenses such as Cost of stock, Cost of facility, Cost of shipping and Cost of data.
Diagram 1- Supply Chain Diagram

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Source- (Monczka et al. 2015, p.119)
Amazon is encouraging its main rivals to buy stock more than in supply chain
mechanisation, reduce general production and shipment time, boosts amount of factories and
also participate within the product industrial production. For most internet e-commerce rivals,
Amazon is already out of reach.
Amazon has altered the retail face by using courageous supply chain techniques and
deploying creative techniques. In this report, it has been investigated some of the respects
Amazon has shaped its supply chain, having left rivals rushing to close the gap (Ross 2016).
Ten years after Amazon has been established in 2004, its annual household income was just
under $7 billion. Furthermore, based on the most recent Statistic, revenue nearly reached
$136 billion in 2016 (Seuring 2013). In reality, Amazon is the largest business to generate
sales income of $100 billion, requiring only 20 years. Amazon has grown roughly 20 percent
per year since its founding.
Some of the main facts underneath Amazon's huge transition from either a easy
internet bookseller to some of the most powerful and compelling entity In the retail sector, its
innovative and highly effective supply chain and its policies (Tarafdar and Qrunfleh 2017).
Constant attempts by Amazon to supply materials to clients as rapidly as possible are creating
immense pressure from other gigantic competitors in case of the retail based industry around
the whole world and therefore changing the management how the Supply Chain operates.
The individual pieces of Supply Chain can be differentiated in four categories. The
four categories are the Warehousing, Technology and the manufacturing unit.
For Warehousing, A large portion of Amazon's achievement resides in its professional
warehousing approach that guarantees that items are readily available with almost almost
anywhere in the globe. All warehouses of the company are ideally located close main

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metropolitan areas and demographic hubs, as well as storage is circulated between them to
ensure availability can meet demand. (Vinodh et al. 2013). Warehouses were also
domestically designed. The organisation approach enables members of the team picking plus
packing machines to draw deliveravble products just about immediately to push towards
shipment, each of which has five distinctive storage fields (Wang et al. 2015). Plugable
Technologies, established in September 2009, is just one instance of a brand that succeeded
in setting its objective of creating a better device business –mainly due to the application of
FBA vendor strategy & technology.
In case of the Amazon Supply Chain for the Delivery, It can be evaluated that the
several of the greatest selling points between both the approach of Amazon supply chain and
other online retailers is the multitude of the shipping alternatives provided. Amazon utilizes
the whole range of many other strategies from the more standard to highly strong-tech to
have its products out in fast times and across the globe (Wieland and Wallenburg 2013). The
distributor also uses current shipping routes through the use of Fedex and UPS. The broad-
ranging strategies of the company enables the business to place an order quicker, faster and
much more effectively across the globe and also in the isolated and remote village regions not
served by old alternative companies.
Amazon’s Supply Chain in the field of Technology created a wider scope for the
company to receive more stability in the economy of the organization. Amazon's supply
chain Business strategy is software adoption (Wieland 2013). The company utilizes various
technological advances and electrical methods to capture and assemble orders as well as to
stack and store them in the warehouse. These tools not only boost the company's efficiency
and transporting speed, but it also lower the cost of warehousing and support services,
evacuating the resources required in many other requirements in the logistics or supply chain.

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Although the curriculum is not functional, the drones are also introduced by the company for
the delivery of the goods by the drones which will ultimately allow shipments of thirty
minutes within some of the country's largest markets (Wisner et al. 2014).
The Supply Chain of Amazon Network design in Manufacturing evaluates that the
company still enables third-party vendors, but the business has discovered, some of the third-
party products can be manufactured much cheaper and more lucrative. The vendor has
preferred to manufacture its very own reduced-cost commodities in addition to many other
seller’s caucasian-labeling goods. Amazon provides branded routes in anything from family
cleaning products to animals to children. This quality of the company enables Amazon to
possess the entire time of its goods by development in the direction of advertising to store and
also to delivery.
Analysis of the Amazon’s Supply chain network design:
Amazon's supply chain management does indeed have a distinctive orientation to
being the preferred retailer for its customers due because of its strategy that is competitive in
natureThe introduction of high-level project management, sublime transportation and highly
effective availability of cheap information technology as well as its wide range of stores are
mostly geared towards further integration from its environmental management due to its part-
playing game strategy. The next element is its automation of its inventory control. Amazon
outsources the storage and production of product lines which are not commonly purchased or
requested for instant delivery along with products where the cost of transporting them
exceeds the marginal utility on their revenues. At the other side, Amazon purchases the
commonly purchased and arranged products with its own stores before it can respond to
client requirements instead of not negotiate shipping times and turnaround times. In many