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Supply Chain Strategies at Amazon

Introduction

Amazon is one of the innovative companies that have taken a lead role in employing the most successful supply and management strategies in the American and international markets. The supply chain is integral in determining the link between the client and the company. Amazon is based on the online market platform that gives all users an opportunity to interact with various products before making a purchase. The role of Amazon in the success of online markets such as eBay and the rest has been highlighted in Forbes list of most innovative companies in the world. The world has numerous companies and for Amazon.com to make it to position six in the world, it must have taken a great measure of success in terms of management strategies and the supply chain strategies.

How Amazon.com is innovative

1. The incorporation of buying history to market individual products to seasoned customers.

Amazon has taken a technological strategy to outwit its rivals. Once a customer has made several visits to the site, their browsing history is captured. The data is presented to the customer when they return to the shop. Therefore, most customers do not have to keep on searching for similar products that they have in the market. The customers simply log into Amazon.com and get updates on the latest products in the category that is mostly frequented. The company is simply using an analysis of the client’s past purchasing behavior to sway their choice of purchase. In most cases, when a client has made several clicks on a Samsung Phone, the site will reproduce various deals on the same item when they return. This strategy helps to give the client an easier experience in the market. Also, the client is convinced to purchase a product that he has shown an interest in (Wagner, 2012).

2. Innovative Inventory Outsourcing

Amazon have taken pride in giving the consumers exactly what they want. They have chosen to reduce costs by only stocking what is often required . This strategy has given Amazon an edge over the rest because clients only get what they have an interest in. Though the move was highly skeptical in the first phase, it has yielded more profits for Amazon because of the reduced costs in terms of stocking. Amazon only stocks what is needed by the client and does not stock everything at once like some other companies would opt to do. Therefore, the company had to outsource partner companies to ensure that clients get to access the products posted on the site as soon as they made the purchase. This model has allowed Amazon to grow exponentially to the most innovative companies in the world. Having a stock of all the products on the site would lead to numerous damages and costs concerning the warehousing challenges. The company has outsourced the services of online payment services like PayPal and also taken the services of courier companies like FedEx to ensure that the supply is fast and efficient (Wagner, 2012).

3. The Customer Centrality Supply chain

At Amazon, the customer is the most vital determinant of the innovative measures that the company has adopted to ensure that there is a high-quality supply service. The customers enjoy an array of services from the companies’ technology and IT department. Sometimes, the CEO can pick a customer phone call and provide services that are usually done by the sales team. The feeling of being served by the CEO of Amazon improves the market experience and elevates the Amazon brand. The company constantly uses technology to ensure that the supply chain is efficient and interactive. Of course, Amazon does not stock all the products that are advertised in the site. However, the IT department ensures that all partner companies give the client whatever they need within the stipulated period. The arrangement has relieved the company of the high energy costs and rental rates that come with overstocking. The customer-centric model allows Amazon to use the services of other whole sale suppliers and companies like Ticketmaster, papaya, ftopia, Netflix, Dropbox, Hitachi Systems and others (Priem, & Swink, 2012).

Summary of the supply chain at Amazon.com (make-to-order or a make-to-stock supply chain)

The make-to-order supply chain is the strategy that Amazon has adopted to outdo the rest. The company does not have all the items that are advertised on the site. They only act as the middle men in the supply chain. They connect the clients with the sellers and facilitate the supply of the items. Amazon concentrates on brand management and gives the customers the authenticity and confidence to use their services. The company has made to the most innovative companies because it adopted an innovative inventory outsourcing model. The company focuses on giving the customers a superior customer service experience and leaves the production to the other partner companies in the chain. The company officials believed that it was a risk, but they did not relent. Now Amazon.com has incorporated an online system for negotiating prices and determining the number of days a product should reach the client (Fine, 2013).

The client pays for the level of speed of delivery. The client, therefore, has some control over the supply chain. The parcel services have helped relieve the company of the costs incurred when using the make-to-stock system. The company has found it easier to interact with the customers and understand the clients because of the make-to-order process. Clients get the best quality products and at the stipulated time.

Amazon has used the Buy-Back or return policy contracts to ensure that the customers trust the products that are on the site. At Amazon.com, clients get the value for their money. Most clients have made complaints and received a full refund or a new product in return. This policy has helped the company grow into one of the best shopping sites in the world. Secondly, the Quantity Flexibility contract allows the buyer a certain degree of flexibility with regards to quantity. This implies that the ultimate purchase quantity may deviate from the original order quantity. Thirdly, pricing is another type of supply chain contract that is common with Amazon.com. The use of discounts determined by the wholesale prices is a common way to lure customers to any company. Amazon is not an exception; they have super discounts on different items every Friday to entice the customers to buy certain selected items (Priem, & Swink, 2012).

In conclusion, I would suggest that the company should improve on the customer buying experience by ensuring that all purchases are followed up to the point of delivery. Sometimes the third party companies fail to make certain deliveries, and it becomes frustrating. Amazon should have special attention to the sales of books because the diversification might damage the brand and image of the company. The company should change its approach with book sales and have Subsites within the large cities that offer an ambiance and serenity for book sales and marketing. Lastly, the company should consider regionally based sites that can give the customers exactly what they need. Some regions have very specific demands, and this must lead to regional sites that are configured to give quality services to the numerous customers across the world. Amazon.com deserves to be on the list as one of the most innovative companies because it has transformed the buying and selling experience within the online platforms (Fine, 2013).

References

Fine, C. (2013). Intelli-Sourcing to Replace Offshoring as Supply Chain Transparency Increases. J Supply Chain Manag, 49(2), 6-7. doi:10.1111/jscm.12018

Priem, R., & Swink, M. (2012). A Demand-side Perspective on Supply Chain Management. J Supply Chain Manag, 48(2), 7-13. doi:10.1111/j.1745-493x.2012.03264.x

Wagner, S. (2012). Tapping Supplier Innovation. J Supply Chain Manag, 48(2), 37-52. doi:10.1111/j.1745-493x.2011.03258.x