How does Amazon manage its supply chain and logistics?

Amazon is now the world’s largest e-commerce company. Many small and medium-sized companies benefit greatly from Amazon. If you are a curious person and an entrepreneurial nature, you may very often wonder how the Amazon supply chain works. Amazon’s logistics are quite complex and quite extensive. Over the years, Amazon has improved its supply chain operations and many other things. Amazon’s supply chain is one of the most demanding today.

Storage strategy
Sophisticated delivery network
Use of robots
External procurement and in-house production
Inexpensive supply chain
Automation at a high level
Outsourcing of inventory management and insourcing of logistics
Push-pull strategy for success in the supply chain
FAQ

So let’s take a look at the full process of Amazon’s supply chain management

Amazon’s supply chain is one of the most complex supply chains in the world. It has reached such great heights because of its supply chain. So let’s look at the basics of how Amazon manages its logistics. and some of the advanced tweaks Amazon is making to work more efficiently.

Storage strategy

Amazon warehouse
Amazon warehouse

Amazon is one of the most influential e-commerce companies because of its advanced warehousing strategy. It has a strategy that allows it to properly locate the product it needs. All products are strategically placed so that they can be easily found. The products are seldom in demand and rarely in demand. Warehouses are really well optimized so that goods can be procured faster.

They carry out demand forecasts and keep the products in high demand ready for use. In addition, depending on the product, they also follow certain quality control rules so that the customer receives the best quality product.

Sophisticated delivery network

Amazon drone delivery
Amazon drone delivery

Amazon’s delivery system is very sophisticated. The supply chain is very well planned which helps the company deliver the product correctly. For members with a Prime subscription, their products must be delivered within 2 hours or the next day, depending on their location. Amazon has introduced a number of techniques for arranging, packaging, and shipping your product to your home.

Amazon has used a number of drones, robots, and other logistics technologies to help the goods get to your home faster. There are also many other delivery robots that they use to deliver the goods to their customers.

Use of robots

Amazon Kiva robot
Amazon Kiva robot

Amazon uses technology in its warehousing to improve its efficiency. It uses a number of robots in its warehouse to help organize the goods and move them from one place to another.

Amazon had an automation company called. accepted Kiva systems… It has been renamed Amazon robotics after acquisition. These robots reduced human intervention and improved delivery speed.

Amazon has also implemented drones so that they can deliver their goods to where logistics companies cannot. Amazon has also deployed many small delivery robots that deliver goods to other people. These technologies increase the delivery speed and make the whole process very easy.


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External procurement and in-house production

Products made by Amazon
Products made by Amazon

Amazon isn’t just a retail e-commerce website that sells third-party products. It’s a company that ultimately focuses on customer satisfaction. Over time, Amazon has looked for ways to reduce product costs.

Over time, Amazon started making its own products such as headphones, iPhone chargers, and many other things. These goods were much cheaper than those from third-party suppliers.

The product quality is also much better since the quality control is done by Amazon itself. This leads to many simplifications and reduces many complications on the part of Amazon.

Inexpensive supply chain

Amazon has kept its supply chain costs very low. Because of its enormous economies of scale, it has been able to keep its costs very low. Delivery per unit is very inexpensive. Amazon has several warehouses of its own and has largely automated itself. Because of this, they have much lower operating costs than other companies.

Automation at a high level

Amazon delivery robot
Amazon delivery robot

From its warehouses to delivery, Amazon has used many robots to automate this. There are robots that move and arrange the goods in the warehouse and also pack the goods. For delivery, Amazon used drones, delivery robots, to deliver the product to the customer’s home. This reduces human involvement and thus lowers operating costs.

Outsourcing of inventory management and insourcing of logistics

Amazon is outsourcing its inventory management to third parties wherever they deem it feasible. Outsourcing helps you cut costs and reduce unnecessary expansions in the supply chain.

The third-party supplier stores the goods in their local warehouse and it is not stored in an Amazon warehouse. These external warehouses are usually located in special locations and are supplied with the goods that are in high demand there.

Push-pull strategy for success in the supply chain

Amazon implements a push-pull strategy in its warehouse management. Amazon’s warehouses are in more strategic locations. While the third party’s warehouses are in different locations. In the case of the Amazon warehouse, it implements a push strategy, and in the case of a third-party warehouse, it implements a pull strategy.


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diploma

Amazon designed a supply chain where it can optimize every part of it. It introduced a high level of automation with robots to reduce human employment. This helps them cut costs. From warehouse to delivery, it used multiple robots to arrange the packaging and deliver the product to the customer’s home. Amazon’s supply chain and logistics are unique in the world.

FAQ

Does Amazon have the best supply chain?

Yes, Amazon’s supply chain is considered to be one of the most efficient supply chains in the world.

What is Amazon’s turnover?

Amazon’s sales in 2020 were $ 21.33 billion.

What tasks does Amazon outsource?

Product listing and optimization, product photography services, sponsored ads / PPC management, and customer service services are some of the tasks that are outsourced by Amazon.

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