Case Study: Global Logistics and Value Network Design of Amazon

This report delves into Amazon's global logistics and value network design, providing a comprehensive case study. It begins with an introduction to the topic and then identifies Amazon's organizational strategy, highlighting its cost leadership and concentric diversification. The report examines lean supply chain design principles and how Amazon applies them across procurement, manufacturing, warehousing, and transportation. A detailed supply chain network map of Amazon is presented, illustrating the flow of goods from suppliers to customers, including the roles of warehouses, distribution centers, and Prime services. The analysis assesses the alignment of Amazon's supply chain strategies with its organizational goals, explaining the rationale behind its design choices. The report also explores the advantages and disadvantages of Amazon's current supply chain, including the use of big data and outsourcing, and concludes with recommendations for further improvements. Overall, the report offers valuable insights into how Amazon has achieved its competitive advantage through strategic supply chain management.

Running head: GLOBAL LOGISTICS AND VALUE NETWORK DESIGN
GLOBAL LOGISTICS AND VALUE NETWORK DESIGN
Name of the Student
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1GLOBAL LOGISTICS AND VALUE NETWORK DESIGN
Table of Contents
Introduction..........................................................................................................................2
Identification of organizational strategy and supply chain network design strategies....2
Organizational Strategy...............................................................................................3
Lean Supply chain design............................................................................................4
Supply chain network of Amazon...................................................................................7
Analysis of supply chain strategies design with organizational strategy........................8
Advantage and disadvantage of current supply chain.....................................................9
Conclusion.........................................................................................................................13
Recommendation...............................................................................................................14
References..........................................................................................................................15

2GLOBAL LOGISTICS AND VALUE NETWORK DESIGN
Introduction
With the development in some of the technologies, it has become easy for Amazon to
collect huge volume of data. Both unique methods and powerful tools are very much important
for making an analysis of collected data and getting many useful sights (Christopher 2016). Big
Data technology tends to play a key role in improving the overall business capabilities of various
enterprises. The point should be noted that big data is an important factor which is needed for
transforming the overall process of supply chain management. Both shippers and third party
logistics believe that big data can have huge impact on Amazon (Hugos 2018). Supply chain
management firms can easily focus on big data for analysing and filtering of the internal data. In
addition, both external consumer and data of markets can have meaningful decision from data. It
is merely needed for optimizing the overall decision- making in the various level of supply chain.
In the coming page of the report, a review has been done concerning position of Amazon
in whole retail industry. Amazon has gained this particular position as a result of high-level
supply chain and overall logistic development. The report aims to describe the supply chain of
Amazon, along with various products. It focuses on service development like shipping, storage
model and lastly logistic network plan. Identification has been done with respect to
organizational strategy and supply chain network design strategy. A proper supply chain map of
Amazon along with brief explanation of strategies has been provided. Both advantages and
disadvantages of supply chain design have been provided.
Identification of organizational strategy and supply chain network design
strategies

3GLOBAL LOGISTICS AND VALUE NETWORK DESIGN
Organizational Strategy
Amazon is considered to be as one of the leading retailers on online platform and is
considered to be pioneer in the whole retail space. At present, Amazon has leveraged the whole
technology similar to a source of competitive advantage. It has merely reaped the overall benefits
of external driver that has removed many rivals (Monczka et al. 2015). The corporate strategy of
Amazon can be stated as concentric diversification. This particular strategy is completely based
on certain number of technologies for the overall success of the business. Amazon aims to follow
a cost leadership strategy which focuses on offering maximum value to the customers at
minimum cost (Fahimnia, Sarkis and Davarzani 2015). The mere focus is all about wrapping the
given business around the customers where Amazon can go on the portal for various kind of
shopping requirements.
Amazon strategy is completely driven by competitive advantage where it merely focuses
on the present technology. It is merely getting benefits for economic scale and focusing on
efficiencies between external and internal resources. These are merely considered to be
cornerstone of the whole business model (Wang et al. 2016). Amazon makes use of big data
analytics, which is a tool for consumer map behaviour. Big data has been completely embraced
by the idea that the organization is at a position for required market for providing services. The
overall cost leadership with minimum differentiation where business model has been taken by
“mee-too”. The present strategy of Amazon is completely built around the fact customers does
not need to physically go to store or even wait for purchase to arrive. Recently, Amazon has
come up with the plan of same day delivery option (Genovese et al. 2017). The organization is
making use of drone for near delivery. It merely emphasizes on non-retail products like cloud
based-services that focus on certain issues of differentiation along with cost leadership.

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Lean Supply chain design
Lean supply chain management is not for the organization that manufactures products,
but it merely for the business like Amazon who wants to stream their process. This particular
step is taken consideration by removing waste and any kind of non-value activities (Dubey et al.
2017). Amazon has various areas in the supply chain where waste can be easily noticed like
delivery, cost and time. For building supply chain organization needs to focus on certain domain
of supply chain.
Procurement: Procurement merely requires development of a long term strategy which is
needed by supply chain and overall need for purchasing. It is merely inclusive of supplier
contract, research of market, analysis of value and supplier quality. Various business around the
globe come up with complex purchasing operation because of fact that purchasing need are
complex. Large organization like Amazon have both corporate purchasing and local purchasing
(Touboulic and Walker 2015). It merely highlights that each of purchasing department focuses
on policy to some of the purchasing group. In some of the cases, it is observed that the corporate
headquarters is completely duplicated. Different kind of information that is stored at various
location can easily cause various records to be easily stored in system. Multiple purchasing
departments can easily result in huge amount of confusion and waste within the organization.
Amazon needs to focus on new technologies which will help in improving the procurement
method (Pettit, Croxton and Fiksel 2019). The given process is completely based on internet
based purchasing that will help in requisite of purchase items. Any kind of changes in the
payment option will ultimately help in streamline of process.
Lean Manufacturing: Lean Supply chain management has gained huge amount of
popularity in certain areas of manufacturing. This is the mere significant area where overall

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improvement can be easily achieved (Jabbour and de Sousa Jabbour 2016). The whole
manufacturing process can be enhanced for reducing waste and resources. It is merely all about
maintaining the overall operational performance. Quality is known to be an important factor in
lean manufacturing. Zero defects in the whole manufacturing method can easily reduce the
overall waste and improve the efficiency of the organization (Formentini and Taticchi 2016). By
the help of greater quality, customers cannot easily return the good that mere focus on the fact
that only few resources are needed for return and overall quality problems.
Warehousing: Organizationneeds to examine certain areas of removing the waste for
given resources and non-value steps. Inventory control management is the most suitable way of
reducing the overall cost. Overall accumulation of inventory mainly needs money and resource
for storing and maintaining it (Kshetri 2018). Any kind of unnecessary inventory can be reduced
where the organization can reduce the space of warehousing space and handling.
Transportation: There is large number of organization who want to implement the lean
process. It merely focuses on the transportation procedure for analysing areas that can be
streamlined. Amazon is putting huge amount of efforts so that they can improve the overall
customer satisfaction, which leads to poor shipping decision (Ayers and Odegaard 2017). There
is large number of orders which are shipped without any kind of additional orders.

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Fig 1: Lean Supply Chain Design
(Source: Rostamzadeh et al. 2015)

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Supply chain network of Amazon
This particular framework mainly comprises of suppliers, production, warehouse and
cross-docking, warehouse distribution and lastly client. The supplier takes up the required parcel
from the production unit and forwards the whole thing to warehouse. After that, the inbound
flow comes into picture where goods are shipped from a location to another by the help of ships
and Aeroplane (Chin, Tat and Sulaiman 2015). The required product is shipped to the warehouse
from where it is moved to the distribution centre. The last stage is all about distribution of
products to various clients.
In the year 2005, Amazon has come up with Prime Services, where the customer needs to
pay the annual membership fee. In this, the customer is guaranteed for two-day shipping of
thousands of products. The organization has come up with two-day delivery, which is known to
be game changer. It has merely established the Amazon in whole of the online retail industry.
Later on, Amazon introduced the option of one-hour delivery option by the help of prime now
service (Yu et al. 2016). The overall supply chain of Amazon tends to heavily depend on the idea
of outsourcing for its inventory management. In this, the products are not purchased at a frequent
rate, or the order is stored in regular warehouse of Amazon. The organization is heavily
depended on some of the third party logistics where the delivery time can be easily strength.
Amazon makes use of own vehicles for same day delivery option. Amazon makes use of
different kind of warehouse for different kind of products. The overall delivery option is
completely based on customer preference. There is large number of delivery option available like
one-day delivery and first class delivery (Kantor and Streitfeld 2015). The mere focus of
Amazon is all about making the product delivery as fast as possible. This particular step will
make Amazon a leader in the whole domain of supply chain industry.

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Amazon comes up with its warehouse, which is placed in strategical way that is moving
closer to some of the metropolitan areas. It is mainly pushing strategy for the given products that
are stored in the warehouse (Kristensen et al. 2017). Amazon makes use of pull strategy where it
can easily sell required products from some of the third party sellers.
Fig 2: Supply Chain Network Design of Amazon
(Source: Created by Author)
Analysis of supply chain strategies design with organizational strategy
Organization like Amazon that has adopted practice of lean supply chain which requires
examines of the routines and billing of required materials. It is all about making use of raw
materials and need for construction. It is all about manufacturing and repairing of given product
or given services (Rupp and Clinton 2017). It is all about analysis of requiring equipment that

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requires improvement to be achieved. Amazon needs to focus on the implementation of lean
processes so that they can easily look after the procedure of transportation so that any particular
area can be streamlined or not. In some of the cases, it is seen that organization find efforts so
that they can easily improve the overall customer satisfaction that ultimately leads to poor
shipping (Garner 2018). By minimizing the overall number of shipping option, the overall cost
associated with the shipping process can be easily reduced. In lean supply management, business
needs to take into account every process in supply chain. There are certain areas that are making
use of unnecessary resources that can be easily measured in raw materials and dollars. The
overall analysis can easily improve the competitive advantage that is customer service and
overall profitability.
Lean supply chain management can be stated as production management which is mainly
developed at Toyota. It has merely improved by various scholars on global platform. There are
mainly two features of lean manufacturing that is it separate from mass production. First
advantage of this method is that it increases the efficiency by reducing any kind of waste and
error (Althafairi et al. 2019). Secondly, it merely reduces the overall carrying cost of inventory
that is achieved by manufacturing in small batches. In comparison to mass production, lean
manufacturing can easily improve people that is operator on the shop floor. It can be stated as a
quality circle or preventive maintenance that focus on participating, which makes them work —
lean manufacturing focus on adding value from the demand (Finer et al. 2015). The whole
production system is completely based on forecasting depending on the schedule production.
Advantage and disadvantage of current supply chain
Lean manufacturing focus on optimizing the overall organization and supply base, which
is not functional. It mainly promotes close partnership that is relation with the first tier suppliers

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and other partners in the whole distribution channel (Galloway 2017). By making use of much
smaller supply base, lean producer can easily manage other resources to interact with the
supplier base. It is mainly made possible for organizational relation so that they can interact with
each of the first tiers. The advantages of lean supply chain are
 It is all about making use of people in the organization to be involved so that they can
easily eliminate the occurrence of waste in the supply chain.
 It is all about preparing the running in the whole manufacturing stage so that they can
remove all the waste that can take place shortly.
 It is all about understanding the flow of products from the given manufacturing plant so
that the customers by the help of supply chain continuous.
Lean manufacturing comes up with many drawbacks like
 Lean supply is very much expensive as a result of the fact that it requires expertise at
each of the levels.
 This particular design mainly depends on outsourcing, which is the biggest drawback.

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The difference between the various kind of supply chain management are
Lean Agile Resilient Green
Purpose Focus on
reduction and
flexibility for the
given production
by continuous
elimination of
waste (Christopher
2016).
Analysing the
need of the
customers by
interface with both
customer and
market.
Ability to returning
to the original state
to the new one.
Focus on
sustainable
development and
reducing the
ecological
impact.
Manufacturing
focus
Maintaining a high
average rate of
utilization
Ability to respond
quickly.
Much of the
emphasis is given
on flexibility that
improves the
supply chain
responsiveness
(Hugos 2018).
Focus on the
overall efficiency
and reduction of
waste for the
benefit of
environment.
Alliance Participating in the
traditional process
so that they can
come in alliance
with the parameter
Exploiting of
dynamic kind of
alliance
Joining with supply
chain alliance
network for
developing
practices.
Inter-
organizational
that requires
transferring.
Lean time Overall shortening The mere focus is Reduction of lead Reduction of