Supply Chain Management: Risk Mitigation Strategies for Amazon Inc.

This report evaluates Amazon Inc.'s supply chain management, building upon a previous assessment of its strengths and weaknesses. It highlights the importance of mitigating risks and vulnerabilities within the supply chain network. The report recommends implementing an Enterprise Resource Planning (ERP) system to automate purchasing, standardize processes, create transparency, gain data insights, manage real-time inventory, monitor vendor performance, and raise cost awareness. Additionally, the report suggests adopting Just-In-Time (JIT) inventory management and improving integration with information technology. It also addresses issues related to third-party courier services, customer interactions, and supplier coordination, recommending strategies to enhance reliability, customer satisfaction, and overall supply chain effectiveness. The report emphasizes the need for a customer-centric approach and continuous evaluation of policies to maintain a competitive advantage and improve organizational performance.

Running Head: Supply Chain Management
Amazon inc.
Supply chain Management

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The previous assessment discussed supply chain management of Amazon Inc. and from that
research, certain strengths and weaknesses of company’s supply chain has been evaluated. In the
first assessment, it was analysed that Amazon’s supply chain network is a combination of multi-
tier inventory management, superlative transportation, usage of information technology and big
warehouses to store fast moving goods. Along with this, organization has also adopted advanced
measures for maintaining acquired position in the market. With the help of this supply chain
network, Amazon has acquired the leading position in the online retailing industry. It has also
been evaluated that the existing supply chain management of organization includes various
frameworks but it does not cover the strategies and policies for mitigating the risk and
vulnerabilities of the system. Thus, whenever company faces challenging a challenging situation,
a new system or framework is adopted to face the challenges and issues appropriately in terms of
coping up with the challenges so that the organizational performance does not get affected
(Christopher, 2016).
In this assessment, various strategies will be discussed through which risks and vulnerabilities
involved in the supply chain network could be mitigated so that positive outcomes could be
attained. There are various issues and challenges which every organization faces while executing
organizational operations. Main motive of supply chain network is to reduce cost of production
and fulfil its customer’s demands effectively. Primary functionalities of supply chain network are
to fulfil target audience’s demands along with providing them appropriate choices so that their
requirements could be fulfilled. Effective supply chain management is an effective concept for
enhancing organizational performance along with gaining competitive advantage. Amazon’s
supply chain network includes functionality under which company outsource the distribution of
products those are not purchased by customers frequently. Apart from this, Amazon stores those
products in their own warehouses which are frequently purchased by consumers (Jacobs, Chase
& Lummus, 2014).
In this report, recommendations for improving existing supply chain network will be discussed in
order to gain positive outcomes along with making the organization more effective and efficient.
The main motive of giving recommendations for improving Amazon’s supply chain management
in order to enhance organizational revenues, profitability and performance in the competitive
business environment.

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Recommendations for improving supply chain network of Amazon
One of the best possible methods for improving organizational supply chain network is
utilisation of ERP (Enterprise Resource Planning) software. Following are certain essential
element of ERP through organizational efficiency could be enhanced:
 Automatic purchasing: Controlling and monitoring inventory is essential element of
supply chain network as it provides indication to the purchase department to maintain
sufficient level of stock in order to fulfil target audience’s demand along with fulfilling
sudden demands from consumers. Adaptation of ERP software will help the
organization to make its supply chain network effective. In ERP system, an effective
feature will be implemented which will concur the purchasing system (Stadtler, 2015).
With the help of this system, orders will be placed automatically to the vendors
whenever the stock levels will drop. This will reduce efforts of employees to regularly
keep an eye on stock level, thus, employees’ efforts could be shifted towards other
significant departments to enhance organizational performance.
 Standardize: With the help of standardised ERP system, organizational efficiency could
be enhanced along with saving time and money. Standardised processes are the key
success features for supply chain strategy and standardised form of processes removes
the threat of low quality products and increase accuracy, encourages teamwork and
reduces miscommunication (Monczka, Handfield, Giunipero & Patterson, 2015).
 Creates transparency: Major issues faced under supply chain strategy are waste, fraud
and small glitches could easily fix with an effective ERP system. Main issue that occur
in managing inventory is reconciling the physical count of inventory with software
numbers. Creating transparency in the supply chain management will help the
organization to meet its customer’s demand in an effective manner along with coping up
with the external business environmental conditions (Hugos, 2018).
 Gain data insight: Data and information plays vital role in setting up strategies for
supply chain management. In relation with this, real time reports helps to make supply
chain effective and appropriate. This system helps both users as well as management to
instantly access inventory, production data and purchasing for critical decision making
purposes (Lai & Cheng, 2016).

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 Real time inventory management: Amazon’s supply chain management is quite better
and advanced from traditional forms of supply chain management. Though, ERP will
make the supply chain more effective and effective result oriented. ERP software will
make the supply chain management efficient and flexible through which business’
growth and unique needs of the organization could easily be attained (Mangan, Lalwani
& Lalwani, 2016).
 Monitoring vendor performance: Vendor performance is dependent upon effective
supply chain system. Thus, it is necessary for monitoring vendor performance so that
ERP system could be rated. ERP system will allow the organization to review vendor
cycle and all errors with just one click.
 Raise cost awareness: There are various uncontrollable factors and variables in supply
chain management and managers of different managers of different departments are not
aware about their expenses. This develops gaps and to reduce this gap, ERP system
helps to centralise financial data through which expenses of all departments are recorded
at one place (Ayers & Odegaard, 2017).
Above discussed are certain measures through which supply chain management of an
organization could easily be improved. Amazon’s supply chain management already includes
advanced measures and techniques. Effectiveness of supply chain management of Amazon could
be evaluated with its success. Amazon is leader of global online industry and it one of the top
most companies in relevance with product offerings. Amazon has adopted customer centric
approach along with the advanced measures and this has helped the organization to satisfy
customer’s satisfaction. Along with satisfying target customer’s needs, organization has also
acquired competitive advantage in the industry. With its wide product offerings and effective
supply chain network, company has expanded its business in more than 188 countries in the
world and it has also set up their registered office in approximately 12 countries. In relation with
expansion of business, companies seek for effective change management along with obtaining
consent from all the key stakeholders in order to enhance organizational performance.
Adaptation of change management along with dynamic and flexible strategies is essential
elements for enhancing organizational performance as well as to cope up with the external
business environmental conditions along with the changing customer’s demands and

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requirements (Brandenburg, Govindan, Sarkis & Seuring, 2014). In relation with improving
organizational performance along with enhancing the effectiveness of its supply chain network,
following strategies are recommended to the Amazon:
 Just In time Inventory (JIT): Just-in-Time manufacturing is also known as just-in-time
production or Toyota Production System (TPS). The basic motive of this system is to
reduce flow times from the production system and response time amongst customers and
suppliers. With the help of this system, organization could easily lower down its cost of
production and meet up with the customer’s demand on time. For example, when
demand for consumer electronic goods will be increased, supply will be increased along
with decreasing the supply of other goods. Unnecessary costs are eliminated with the
help of this system because those products which are not frequently purchased should be
outsourced to the third party warehouses in order to reduce organizational operational
costs (Wisner, Tan & Leong, 2014).
 Integration with information technology variables: Amazon’s supply chain network
includes advanced variables linked with information technology. Drone delivery system
is one of those effective measures adopted by Amazon but, it is not in practice yet. This
system is going through beta-testing phase and it will be introduced in the physical
market very soon. With the help of this system, organization will be able to fulfil its
client’s demands so that the desired goals and objectives could be improved (Singla,
Sethi & Ahuja, 2018).
Evaluation and monitoring should be executed at regular intervals so that the adopted policies
and techniques of organization could be determined. It is necessary to evaluate the effectiveness
of organizational policies and standards so that the desired goals could be attained. Supply chain
management also plays vital role in the enhancing organizational performance along with the
attainment of competitive advantage (Mitra & Datta, 2014). Following are some of the attributes
which could be determined from the existing supply chain network of Amazon:
 Amazon mainly relies over third party courier services to deliver its products. Along
with the third party couriers, Amazon has its own courier service company i.e. Amazon
Transportation Services which operates under Amazon Inc. As Amazon is relied over

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third party courier companies such as FedEx, BlueDart, etc., various incidents have been
reviewed where customers have not received the package on time and received in
damaged condition. This was affecting reliability gained by Amazon from its target
audience. Amazon faced various negative feedbacks from the customers, thus, it is
necessary for the organization to expand its own courier service company rather being
outsourcing the delivery of packages to third party courier companies in order to enhance
reliability amongst the customers as well as to regain positive image amongst the target
audience. It has been recommended to the organization to improve its delivery system so
that customers could receive their orders on time as well as with the same quality and in
working condition as expected (Ho, Zheng, Yildiz & Talluri, 2015).
 Customer interactions need to be improved because courier partners are the person who
deals with customers on behalf of the organization. Thus, it is necessary for the
organization to develop certain standards and policies for its courier partners so that it
could be followed while interacting with the customers. Amazon follows customer
centric approach and on the basis of this approach, they majorly focus over customer
satisfaction. However, delivery partners are not performing as per the organizational
objectives and this is affecting organizational performance. In relation to this,
organization is required to adopt appropriate strategies and measures so that customer’s
interaction could be improved with the company. Amazon has its own transportation
department and in relation to this, in relation to this, organization needs to adopt
appropriate strategies so that their transportation department i.e. ATS could be made as
per organizational expectations (Turker & Altuntas, 2014).
 Amazon should also adopt cooperation model through which coordination could be
developed amongst the suppliers so as to make supply chain network more effective.
Latest technology i.e. ERP system could be used for this aspect. Coordination will help
the organization and its supplier to be on the same page. Customer’s demand could be
fulfilled with this format in an effective manner along with gaining positive outcomes.
Major challenge faced by Amazon in its existing supply chain network is lack of
communication between suppliers and the Amazon and due to this, organizational
operations gets affected. For targeting new customers, it is required for the organization
to adopt push and pull strategy. In push strategy, company promotes its products

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amongst the target audience with the objective of increasing demand for the product.
Main motive of push strategy is “taking product to the customer” and for this,
organization could use various promotional activities such as trade shows, using IMC
tools, point of sale displays, etc. Apart from this, pull strategy is the medium through
which customers are motivated to seek out the customers for the particular products.
Motive of pull strategy is “getting customers to the brand”. Advertising through various
mediums, word of mouth, sales promotions and discount, etc. are certain mediums
through which organization could enhance its customer base (Hazen, Boone, Ezell &
Jones-Farmer, 2014).
 Apart from the above recommendations, one of the most advanced recommendations for
Amazon Inc. is adaptation of IT system into organizational operations so that supply
chain as well as other operations of the organization could be improved. Accountability
and transparency would also be developed in the processes of organization through
which chances for success for organization increases. The main issues faced by Amazon
are accountability issues which arise due to outsourcing of various functionalities in
supply chain management. With the help of information technology system, organization
will be able to integrate its all operations including supply chain management’s
operations in a centralised manner through which every function would easily be
controlled and monitored. This will also help the organization to connect all procedures
with a single end-to-end IT system and this will help the organization to determine
bottlenecks in time so that appropriate actions could be taken in order to enhance
organizational performance (Ptak & Schragenheim, 2016).
 It has been recommended to the Amazon that to improve the supply chain management
as whole, it is required to segregate the supply sources so that it could be identified that
which segment is disturbing organizational performance. With the help of this,
appropriate actions could be taken in time with the objective of improving organizational
performance. Supply chain network is linked and dependent on all departments of the
organization such as sales, finance, purchase, etc. By improving supply chain
management, overall performance of the organization could be improved. Teamwork
could also be promoted to perform the tasks in supply chain management process in an
effective manner so that the goals could easily be attained (Fernie & Sparks, 2014).

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 Tracking consumer demand is another effective option and way to enhance
organizational performance. It is must for every organization to determine its operations’
effectiveness, thus, determining the demand for the goods is also necessary. Those goods
which are demanded by consumers lot should be made available every time and those
goods which are not much demanded by the consumers should be promoted so that
consumers could feel the demand for those products. Promotion and advertisement is the
biggest tool though which organization could easily enhance the demand of their
products in the target market (Chen, Preston & Swink, 2015).
Most of the companies invest a huge amount of their earnings and revenues in research and
development department to determine the needs of their target audience. But in scenario of
Amazon, it deals in numerous products and their major concern is integrating all its product and
service offerings in one system so that demand for each product could be tracked. With the help
of an effective system, organization could easily boost up its performance along with managing
its inventories in an appropriate manner. Supply chain management executes on demand and
supply concept. The more will be the demand for product, the higher will be the supply so that
the demand of consumers could be fulfilled. Supply and demand has indirect relationship and
when prices for one product increases due to shortage of supply, demand for the substitute or
alternative product increases. Thus, it is recommended to the organization to manage its supply
chain operations in an effective and appropriate manner so that the desired goals and objectives
could be adopted in an effective manner along with satisfying target audience’s demands (Wild,
2017).

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