What’s behind Amazon’s logistics management model

Amazon.com is one of the best-known e-commerce companies in the world. Its logistics management model, and personalized supply chain enhanced by systems of delivery, challenge many players in the sector.

What’s behind this company?

According to its website, Amazon seeks to be:

“The most customer-focused company on Earth, where people can find and discover basically anything they want to buy online.”

In 1995, Amazon started as a book purchase website that grew to become one of the richest companies on the planet. Today, Amazon.com manages retail websites and platforms that allow the sale of products from other suppliers.

  • 2 million sellers of new, refurbished and used products, from books to car products
  • 563,100 part-time and full-time employees around the world
  • In 2017, its net profits reached US $3billion
  • 310 million active global users

Internally, the company offers services to customers in the United States with merchandise staked out in a few warehouses. “Each warehouse concentrates demand from a broad geographic area, leading to more stable predictions and lower total inventory,” according to Sunil Chopra and ManMohan S. Sodhi, in an article in the MIT Sloan Management Review.

On the other hand, Amazon’s structure has a reduced a number of levels. “The levels of retail, considered as an efficient mechanism to improve the dynamics of the supply chain, go through the flow of data and material through information technologies,” according to S.M. Disney, M.M. Naim, and A. Potter, who have studied the impact of electronic commerce in the supply chain.

In working with other suppliers, Amazon.com collaborates with logistics operators such as ProLogis, the largest provider of integrated distribution services, with more than 1,500 distribution centers in North America and Europe, as well as DHL for direct shipments.

According to Rebecca Saunders’ book, Business the Amazon.com Way: Secrets of the World’s Most Astonishing Web Business, the central philosophy of the company is the alignment of distribution and logistics with strategic plans.

According to the vision of the company’s management, Amazon seeks to:

  • Understand the shipping needs of customers
  • Offer current titles and hard-to-find editions with wholesale suppliers and independent producers
  • Ensure a two-day delivery limit on most orders through the warehouse management model
  • Allow customers to check the status of their purchases and monitor their shipments
  • Align the offer and the office with other areas of the company such as marketing, sales and customer service
  • Innovations in the supply chain

The company has grown exponentially in its scope and range of services. According to the TechCrunch portal, the Amazon development process follows the following structure:

  • Identify inefficiencies
  • Develop a technological solution
  • Scale the solution on a platform
  • Offer the platform as solutions for third parties
  • Robotic supply systems

Their warehouses and centers of abstention work with intelligent machinery. By ordering certain items online, the system scans where the products are in the inventory and then dispatches them to a staff member.

There are investments that can revolutionize the industry. A report by Bloomberg Business advances its long-term strategies, with the potential to compete directly with UPS, FedEx, and Alibaba. Amazon is in the process of leasing airplanes and registering in the field of cabotage to create “a network of global shipments that control the flow of goods from factories in China and India, to the door of customers,” according to the publication.

According to Computer World, Amazon “would collect inventories from thousands of dealers around the world, and buy space from fleets of trucks, planes and boats at reduced prices. Merchants can reserve cargo space online or on mobile devices, creating what Amazon describes as a “one-click shipping, for commercial transactions and continuous international shipments.”

Both the CRM system and the ICT are the basis of this type of strategy, as companies register critical data on consumer behavior, to optimize the delivery system and increase the utilities of their inventory management, each time more personalized and segmented, with the capacity to project its future demand.

The company patented the model with the number # 280903232037, as a:

“System for early transportation, which will not only fill the capacity of shipping centers but will help place products in dispatch trucks before the customer makes the purchase.”

Once the purchase is confirmed, the firm will receive an alert on the way to reach a final destination. This implies:

  • Pack one or more items for potential shipment
  • Select a geographical area as destination to which to send the package
  • Send the package to the destination area without specifying the address
  • While the packets are on the route, the full address is specified

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