Report on Operations Management Strategies at Amazon (2024)

This report examines the operations management strategies employed by Amazon, a multinational technology company. It delves into key approaches such as Just-in-Time, Six Sigma, and Lean Production, highlighting their value in optimizing processes, reducing waste, and enhancing product quality. The report also explores the importance of quality management and capacity/process design within Amazon's operational framework. It emphasizes how these approaches enable Amazon to manage its global operations efficiently, maintain high levels of customer satisfaction, and ensure long-term sustainability in the competitive e-commerce market. Furthermore, the report underscores the role of leaders and managers in implementing these strategies and fostering a culture of innovation within the organization.

Amazon.com

Table of Contents
Key approaches to operations management
Importance of operations management
Factors within business environment that affect decision
making
Amazon is a multinational technology founded in the
year 1994. Company offer wide range of products and
services and deal in Cloud computing, digital distribution,
consumer electronics and e-commerce industry.

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Effective functioning of organisational activities is depending on roles and
responsibilities which are played by leaders and managers. As they are those
individuals who engage in the process of effective formation of strategies and
policies for company which will further aid company to conduct their business
operations in best effective manner. With Amazon working structure both leaders and
managers perform their roles in a well defined suitable manner in order to ensure
long term sustainability of company in marketplace. Amazon is a multinational
leading organisation performing their activities in different places of world. Thus, it
is not that much easy to manage company operations. For that managers and leaders
takes advantage of different approaches with the help of which they can perform their
roles within company in a well defined and effective manner:
1. Just in Time approach: This is one of most common and widely used approach in
order to manage company operations. With the help of this approach managers and
leaders of Amazon order raw material for their manufacturing or production when
there is an actual requirement in order to decrease ratio of wastage. This approach
proves to be very effective for multinational companies like Amazon, as this will
benefit them to allocate required amount of resources and reduce wastage level of
raw materials. It will further help company to increase their quality of product and
services with rise in their efficiency level.
Value: This approach hold great value as with the help of this, Amazon
leaders effectively analyse requirement of actual raw material and communicate the
same with managers as to further order only necessary ratio of raw resources
(Morschett and Zentes, 2015). This directly helps in reducing the wastage level by
ensuring product quality. With the help of this approach manager of Amazon order
required raw material and provide that directly to company production hub. This will
further help manager to manage company budget in well defined manner.

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2. Six Sigma: This approach is used by companies in order to lessen the ratio of
error and defects in their operations. With the help of six sigma methodology leaders
and managers of Amazon effectively decreases estimated ratio of unusual error and
defect in their process of production and other related functions. This benefits
company to perform their organisational functions in much easy and faster manner
while ensuring quality of their products.
Value: Six sigma approaches proves to be very effective for Amazon as
with the help of this approach managers and leaders effectively able to perform their
functions. This approach help company to decrease their overall ratio of input cost
and further aid them to save their time and use that on other process such as decision
making in order to increase overall efficiency of organisation. As Amazon perform
their functions on multinational level thus, six sigma approach acts a great value for
them as to decrease errors and defect in their large working structure.
3. Lean Production: Lean production is a formative approach which is widely used
by companies in all around the world. With the help of this approach organisations
can effectively able to cut out their unnecessary waste and further quality of their
production. In Amazon leaders and managers take advantage of lean production
approach within all of their business aspect such as, designing, production and
distribution. This will benefit them to make their business operations more effective
and responsive as per according to market needs.
Value: Six Sigma hold great value of Amazon as it is a multinational
organisation performing its functions in wide level. With the help of this approach
company can effectively able to ensure its quality and cut cost of their wastage.
Along with this, this approach will further create value for Amazon as it will benefit
them to minimise those unnecessary those activities who does not hold any kind of
value to company. Some of that activities include, unnecessary movement of product
and people, holding of stock and repairing of faulty product. This will further help
Amazon to conduct their business operations in well defined manner.

Operations management can be referred to as an area which is associated with
designing and re-designing as well as control of production activities across the
organisational premises. This is concerned with management of process where
inputs (raw materials, energy, labour etc.) are transformed into finished outputs
ready to be consumed (products or services). This process comprises of a number of
activities related to management such as planning, organising, reviewing, monitoring
and controlling (Kato, 2014). Operations management is also referred to as supply
chain and logistics management. It is a process which is aimed at supervision of
business activities and procedures in a manner that ensures maximum level of
efficiency in the organisational premises. Within every organisation, the person who
possesses the skills and competence to manage operations with a view to increase
efficiency while reducing cost to the lowest is known as operations manager.
Amazon is a leading global brand which needs to take into account the
cost and quality of operations so as to ensure operational efficiency at all the times.
This company’s success within e-commerce world is largely owing to the high
efficiencies attained in its operations management (OM) which directly aims to
enhance overall organisational productivity. Being the leading player within e-
commerce, Amazon is an exceptional example of utilisation of operations
management process to ensure effective execution of business activities in the most
feasible manner. In this relation, importance of operations management in context of
this company is given below:-
1. Design of products and services : The design of output of an organisation
in terms of goods and services is included in the strategic decision making
area of operations management. Amazon is a company which make uses
of effective technologies to feasibly address this. For instance- This
organisation makes use of advanced ICTs (Information and
Communication Technologies) to make sure that its retail service offerings
within online market are efficient as well as convenient to give satisfaction
to target audience. Such technologies provide assistance to the entity in
facilitating maximum possible efficiency within e-commerce operations of
Amazon.
2. Quality Management: The objective associated with this strategic decision of
operations management is to ensure maximisation of quality of outputs in the form of
products and services of company to meet the needs and expectations of people
(Amazon.com Inc. Operations Management: 10 Decisions, Productivity. 2019). The
operations management approach taken into use by Amazon comprises of initiatives
to ensure constant improvement of its e-commerce activities. The organisational
culture of Amazon fosters innovative idea development among workforce employees.
For instance- Amazon does brainstorming of ideas so as to motivate the employees to
become pioneers in relation to creation of unique and innovative ways to develop
solutions to problems faced by community and subsequently enhance the business
productivity.
3. Capacity and Process Design: Another crucial and significant importance
associated with operations management is optimisation of production and capacity
processes. In this regard, Amazon has executed extensive automation through which
it has succeeded in streamlining the processes and activities of business. For instance-
Within e-commerce retail industry, the organisation has automated the process of
ordering with a view to enhance the capacity of accepting maximum simultaneous
orders possible. This approach of Amazon towards operations management
demonstrates the value of automation and other effective technologies which have aid
in supporting the success of company by giving a boost to the capacity and design
procedures of entity.
The value of operations management within an organisation can be
comprehended from the widespread perception that this process strives to enhance the
overall productivity by way of putting emphasis upon utilisation of resources in an
optimum manner with a view to attain the targets within time. Its value in Amazon
can be depicted from the fact that this process strives to deal with issues like
maintenance, design and operations of systems taken in use for manufacturing
process.

There are different types of factors prevailing that affect decision making
functioning of managers and leaders. Some of those factors are effectively described
below:
Customers:
Primary goal of every organisation is “satisfaction of customer”.
Consumers are those individuals who are paying money for company product and
service. They are those people who provide profit to organisations that are targeted
by them. Thus, it is Amazon managers effectively focus their attention on
consumers. As Amazon is a multinational company performing their operations in
different region of world thus, it is important for managers to analyse need and
preferences of their customer and formulate strategies according to it in order to
satisfy them in best effective manner.
Employees:
Employees or workforce is a key essential element in an organisation those
who perform different types of task for the administration (Liu, 2015). If this labour
force is managed in an effective way they return company with high profitability. As
Amazon is a large organisation with having numerous employees working under
them and acts as a one of the major source of company growth. Thus, to increase
their effectiveness and loyalty towards company manager of organisation provide
them effective training and skill development courses which help employees to
increase their capabilities and knowledge. This will further aid company to increase
their sustainability and overall effectiveness.
Stakeholders:
These are one of the most important factors in a business organisation who
affect decision making process of leaders and managers. Amazon is a multination
organisation who has numerous stakeholders as their key essential elements. Thus,
managers and leaders of company effectively take care of their needs and involve
company stakeholders in decision-making process. They do this because stakeholders
hold authority to know about business issues and outcomes as they are also the key
component of company. Managing stakeholders turns out to be the best way for
company to increase quality of their decision making process as additional expertise
will help in solving complexities of decision making process and help in gaining
qualitative solutions.
Corporate Social Responsibility:
As Amazon is one of the leading and multinational organisations perform
their activities in different geographical location. Thus, they hold a sense of
responsibility towards society as factors within society effectively influence the
decision making process of leaders and managers. In this regard, Managers and
leaders of company framed effective techniques and strategies with the help of which
they perform their organisation activities for the common good and interest of general
public (Webb, 2017). This will benefit Amazon to perform their operations in
different geographical locations in positive way.
Competitors:
Competitors are major factor of a company that affect decision making
process of leaders and managers. As Amazon is a leading company conduct their
operations in different geographical locations. This makes them to deal with different
types of competitors in all around the world. Thus, in order to take more competitive
advantages managers and leaders of company effectively study and understand
policies and strategies of their competitors in order to remain one step ahead. After
that evaluation they make modifications in their policies as per the current
requirement.