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Amazon supply chain


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Amazon supply chain

  1. 1. Horizons Team
  2. 2. Amazon International  What should be consolidated to the Europe level? What should remain localized by country?  How should the distribution network be configured to support growth?  Should a European Distribution Network (EDN) be created? How will inventory placement, the customer experience, staffing, etc. be affected by these changes?
  3. 3. Europe: An Aggregate Of Regional MarketsItems displayed online are unique to each countryCountry lawsCustomer Service Representative localized to each countryFixed and control PricingPayment options
  4. 4. Options Considered by Amazon1. Keep three locations using them as backup alternatives when the primary country location cannot fulfill an order.2. Selectively group inventory by categories at certain locations, reducing inventory costs.3. Fully integrate all locations with a centrally managed European Distribution Network.
  5. 5. Wholesalers (US Division) has choices for suppliers and only useswholesalers as a backupIn Europe: Lack of wholesalers demands relationships withhundreds of publishers and distributors  Expensive directcontractsDifficult and limited EDI penetration Difficult to maintain low costs for customers
  6. 6. Three Independent Distribution Centers They have unified many of the operations of the subsidiaries,including marketing, and customer service, and yet still keep threeindependent operations Each country has access to different kinds of products Repetitive Inventory at different locations. Excellent postal services for local shipping but unreliable cross-border logistics Future expansion will amplify these problems
  7. 7. Recommendations Adopt Centralized Operations Management Implement European Distribution Network (EDN)  Centralize management office in the United Kingdom where most operations take place. Use strategic order fulfillment to minimize lead time Use strategic inventory distribution to reduce cost
  8. 8. RecommendationsCreate Cross-Docking enabled warehouses  Preferably in Southern Europe where Amazon faces higher demand  Amazon’s Infrastructure is already established for communication between the DCs  Using the existing DC would be more cost efficient
  9. 9. RecommendationsLeverage some techniques Drop shipping: May increase price but customer service level will remain high Pick profiles: Multi item orders may need to be fulfilled by more than one location Technology investments: “virtually” centralized inventory in a single system, EDI internally and externally
  10. 10. RecommendationsManage Shipping Costs Continue free shipping for local products, extending the use of Postal Injection for some high demand products  Full truck loads from DCs to major cities Reduce postal service charges, maintain low shipping cost and offer free shipping in some new places
  11. 11. Questions? ?