An Analysis of Amazon's Supply Chain Management Strategy

This report provides an analysis of Amazon's supply chain management strategy, examining how the company maintains a competitive edge in the market. It explores the strategic fit of Amazon's supply chain, highlighting its ability to balance distribution costs and service levels through efficient transportation logistics, information systems, multi-tier inventory, and adequate storage facilities. The report delves into key aspects such as inventory outsourcing, which allows Amazon to focus on core operations while optimizing service and distribution. It also examines Amazon's product differentiated customer approach, including delivery options and customer segmentation. Furthermore, the report outlines Amazon's inventory segmentation, which utilizes distribution centers, partner-distributed control systems, and vendors to meet consumer demands. The conclusion underscores the importance of Amazon's effective and unique supply chain management in achieving financial success and competitive advantages in the marketplace. The report references various academic sources to support its analysis.

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Table of Contents
Introduction.................................................................................................................................................3
Supply chain management strategy............................................................................................................3
Conclusion...................................................................................................................................................4
References...................................................................................................................................................4
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Introduction
The main aim of this paper is to outline and explain the supply chain strategy of Amazon
company that helps to overcome the competitors in the marketplace.
Amazon is an American multinational Corporation that renders various types of innovative
products for the customers. The organization is located in Washington, United States of America.
The company was incorporated in 5th July 1994. The company uses effective and dynamic supply
chain management within the organization (Marston et al, 2011).
Supply chain management strategy
The effective supply chain management helps the company to respond and evaluate the
customer’s preferences and tastes effectively and efficiently. By using effective supply chain
management strategy, Amazon has been able to make a balance between distribution costs and
level of services. The supply chain management of Amazon includes the following.
Strategic fit: To become successful in the marketplace, it is essential to maintain an effective
and unique supply chain management in order to facilitate the supply of products and services.
The unique supply chain management provides wide range of benefits to the customers across
the world. Such advantages include inventory reduction, shorter commodity life cycle and
improve and enhance the delivery services. The supply chain management also provides
competitive advantages to the firm. Amazon wants to fulfill the needs and requirements of the
consumers by maintaining effective supply chain management. The four parts of the Amazon
supply chain management include efficient transportation logistics, an effective information
system, multi tier inventory and adequate storage facilities. These four factors explain that how
supply strategies and competitive are aligned together to make the company most successful and
effective (Keller, Parameswaran and Jacob, 2011).
Inventory outsourcing: One of the significant benefits of outsourcing is that it provides
business organization to focus on its primary activities and operations as a strategy of eliminating
its operation costs. Amazon is one of the significant companies that need to take the benefits of
the benefited connected with inventory outsourcing. The company has outsourced just only some
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parts of its inventory as a tool and method of handling challenges and service optimization. By
using inventory outsourcing, the company can distribute and store its products effectively. The
company can provide satisfaction to the customers by shipping of products and services (Ritala,
Golnam and Wegmann, 2014).
Product differentiated customers: Amazon uses dispatch and delivery options in dividing its
customers into two main groups in the marketplace. The company offers various types of
deliveries at appropriate prices like first class delivery, one day delivery and free super saver
delivery as well. The main objective of the customer segmentation is to manage and control the
cost and service level. The company has established a membership program in order to render
one day delivery services to the target market.
Inventory segmentation: There are three tiers of inventory system of Amazon. Distribution
center is one of the significant tires that help the business to keep minimal inventories. The other
tier includes partner distributed control system and wholesaler. The third tier of the company
consists of publishers, manufacturers and vendors that play a significant role in fulfilling the
demands and needs of the consumers. Apart from this, the organization also focuses on the
transportation costs and product delivery to make an effective and dynamic image in the minds
of the consumers (Christopher, 2016).
Conclusion
The above analysis shows that Amazon maintains an effective and unique supply chain
management to make a financial position in the market. It helps in gaining competitive benefits
in the competitive market.
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References
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Keller, K.L., Parameswaran, M.G. and Jacob, I., 2011. Strategic brand management: Building,
measuring, and managing brand equity. Pearson Education India.
Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J. and Ghalsasi, A., 2011. Cloud computing—
The business perspective. Decision support systems, 51(1), pp.176-189.
Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of
Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
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