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Supply chain mngt of amazon

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Supply chain mngt of amazon

  1. 1. Segmentation in Supply Chain Management Alicia Dereza Ena Fejzagic
  2. 2. • What is the first thing that comes to your mind when you see this logo? • “Amazon is a black box.“ (Time Magazine, 2012)
  3. 3. • Amazon's warehouses have more square footage than 700 Madison Square Gardens and could hold more water than 10,000 Olympic Pools • The first book Amazon.com ever sold was from Bezos' garage in July 1995: "Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought " • Amazon's current logo was designed to depict a smile that goes from A to Z. "This signifies that the company is willing to deliver everything to everyone, anywhere in the world."
  4. 4. • Amazon.com, Inc. - an American international multibillion dollar electronic commerce company • Headquarters: in Seattle, Washington, US • World's largest online retailer • Originally an online bookstore, soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry • Producer of consumer electronics – Amazon Kindle e-book reader and Kindle Fire tablet computer
  5. 5. • Jeff Bezos’ critical insight when he founded Amazon was that the Internet allowed a retailer to have both (effectively) infinite selection AND lower prices (because you didn’t need to maintain a limited-in-size-yet- expensive-due-to-location retail space) • Amazon was founded on the premise of there being a dominant strategy: better selection AND better prices
  6. 6. • Amazon‘s story: systematically taking down an entire existing industry, a story that called for strategic depth, and not technical wizardry, design brilliance or sheer energy • Vision: to offer Earth’s biggest selection and to be Earth’s most customer-centric company • Customer-centric strategy and partnership strategy • Customer preference as the operational level of business - basis for its service differentiation advantage
  7. 7. • Supply Chain Management Strategy: the Amazon Effect • Amazon is almost everybody’s competitor • Tipping points - intersection between business strategy and supply chain strategy
  8. 8. Development Of Warehouses • Ingram etc. • Space for the storage of goods did not matter External suppliers • For bestsellers only • Base for the Amazon , but it began to collapse • 0,25 % profit compared to 30% possible Few own warehouses • transportation costs • inventory carrying costs, • the taxes and a couple of • other factors to come up with a network of DCs to service customers in a set of zip codes Reducing costs • 3 markets strategy: • same day delivery in major markets • next day delivery in secondary markets • two day delivery in tertiary markets Warehousing and service
  9. 9. Assessment of Amazon’s Supply Chain • Items displayed online are unique to each country • Customer Service Representative localized to each country • 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 - Higher prices - Possible competitors on second and third markets - Additional products which need different approach (electronic devices etc.)
  10. 10. 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
  11. 11. 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
  12. 12. Recommendations  Offline shops  New products need totally different distribution approach  Diversification from their competitors  New way of delivering orders (to the store)  Saving money
  13. 13. Thank you for your attention Alicia Dereza Ena Fejzagic

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