Amazon Supply Chain Analysis

With a market capitalization of $602 billion (Ciolli), reigning as the most valuable online retailer in the world, and serving an extensive network of customers worldwide including 65-80 million of their own Prime Subscription Members (Gustafson), Amazon Inc.’s supply chain is certainly complex. Despite this complexity, Amazon promises to deliver products even faster and more efficiently than ever before in history. The company’s technological advances and innovative supply chain strategies have forever changed the supply chain industry. Every “mile” of the supply chain is highly integrated and innovative which is a testament to its “customer obsession”, “eagerness to invent and pioneer” and “patience to think long-term”, according to Jeff

At FCs, customers’ clicks transform into an order placements and eventually shipments via the assistance of employees and innovative technology. Amazon enforces its supply chain agility by stowing items in its inventory prior to customer demand, thus quickening product replenishment especially for the e-tailer’s grocery delivery service “AmazonFresh”. The company’s inventory is also stocked with products from third-party vendors. It essentially operates as a 3PL company through its “Fulfillment By Amazon” service (FBA) where Amazon stores, sells, and ships these items for outside sellers a commission fee. Once customers place orders on Amazon.com, “pickers” are informed of which specific items and subsequent barcodes to select the appropriate customer orders. During a prompt time sequence, they pick and place these products into crates and these crates onto conveyor belts eventually transported throughout the FC and simultaneously sorted by barcodes. The already sorted products are matched with the correct customer orders and transferred through a system of chutes into

However, Amazon developed evolutionary strategies to address these challenges leading business experts to assume that the company is planning to “to become a full-fledged logistics company” rather than just an online retailer (Team Trefis). The “middle mile” begins at Sortation Centers (SCs) where orders from FCs are “sorted”. Although Sortation Centers are much smaller than Fulfilment Centers, Jay Green of the Seattle Times reported that the difference between them is the SC’s “absence of any visible product” where packages are sorted onto conveyor belts by region and zip code to be shipped out to local USPS post offices, even for Sunday deliveries (Tombes). Innovatively, Amazon has leased over 40, 767 Boeing cargo jets for its “Amazon Air” service where packages are transferred from SCs to air gates and finally delivery stations. In late 2017, the company discreetly launched its “Relay” application which assists truck drivers with quicker access to Amazon warehouses. These new endeavors by Amazon have the potential to shorten the middle mile while reducing the costs that agents and brokers historically