Amazon is an American electronic commerce and global computing company in Seattle, Washington in the USA. The corporation is an expertise colossal under the metrics of market capitalization. It has grander sales and it is operational by the aid of using a website which is the business platform. Moreover, the company has a website “amazon.com” that began as a bookstore and later on progressed to deal in video and mp3 downloads and streaming, audio book downloads and streaming, video games, software, electronics, furniture and apparel. The supply chains of Amazon company takes into account the activities from production to the ultimate goal of consumption. The Amazon Company has a gap to close in logistics and supply chain management. The company has developed its operations with time and that is the reason behind its success.
Table of Contents
1.0.Introduction to Amazon Company…………………………………………………………4
2.0.Relationship between Supply Chain Management and Logistics…………………………..4
3.0.Significance of Effective Logistics Management Function…………………………………6
4.0.ERP in Customer Satisfaction in Amazon Company………………………………………..9
5.0.Reduction of Costs in Amazon Company……………………………………………………10
6.0.Conclusion…………………………………………………………………………………..11
1.0. Introduction of Amazon Company
Amazon is an American electronic commerce and global computing company in Seattle, Washington in the USA. It was initiated by Jeff Bezos on July 5, 1994. Amazon is an expertise colossal under the metrics of market capitalization. It has grander sales and it is operational by the aid of using a website which is the business platform. The Amazon has a website “amazon.com” that began as a bookstore and later on progressed to deal in video and mp3 downloads and streaming, audio book downloads and streaming, video games, software, electronics, furniture and apparel.
Amazon offers international shipping of some of the products to other countries. The company now is the leading retailer in the USA and it is rated as the fourth valuable public company globally. Amazon has employed many people in the USA. The Amazon deals with internet marketing and therefore it deals with supplying the products to customers. As a company it has good supply chain management and effective logistics system that has enabled it succeeds in the market.
2.0. The Relationship between Supply Chain Management and Logistics (LO1)
Christopher (2016) states that supply chain management are the dynamic streamlining of business’ supply side processes to optimize customer value and earn a competitive pro in the market (p. 25). It deals with the drudgery of suppliers to generate and contrivance the supply chains that are competent and less costly as it is possible. The supply chains take into account the activities from production to the ultimate goal of consumption. The supply chain management literally acts as a controller of the link established between fabrication, consignment and dissemination of a product. The critical agenda of the SCM is to make the business process more effective by cutting on costs and inventory levels and establishing an advantage to the whole supply chain.
Logistics is pains taken as part of the supply chain as it entails the planning, execution and controlling the adeptness flow and storage of products from the manufacturer to the consumer in a bid to accomplish the chucks of the client. Logistics deals in sequences as identifying the customers’ service needs, defining the customer service objectives and using the knowledge from the two steps to design the efficient logistics system itself (Mentzer et al 2001, p.10). Logistics and supply chain management have to go in hand for effective operation of a business.
In the past at around 1980s, competition was highly effective that it ensued to sundry companies to lessen the prices of their products, produce high quality goods and develop ways of effectual delivery of goods and services to their customers. This initiated the companies to develop modus operandi of survival in the market like just in time deliveries, efficient customer response and electronic data interchange. These plug-ins abridged inventories and enhanced good flow of products to the consumers (Sachan and Datta 2005, p.666). This was all related to the logistics. The companies began to apprehend the advantages of better relationships with suppliers and it led to the advent of supply chain management.
The other relationship between the supply chain management and logistics is the activities that each one deals with. The supply chain management deals with the efficient flow of products and information among the involved companies to the chain. The logistics deals with the enactment and monitoring the effective and efficient flow bi-directionally of the information and products. It shows that the latter is wholly responsible for the functioning of the former. The supply chain management has more courses than the logistics.
The supply chain management deals with the critical delineation of the supply chain composure that develops the framework inside which all logistical operations occur. For instance, the supply chain management issue of the location is directly effective on the in-house inventory class that clients must have. Suppliers that are far away locations will incur high conveyance that implies high inventory levels (Kaminsky 1999, p.33). The logistics can also affect supply chain management in that the use of transport ways that is inexpensive allows a company to supply its products to distant suppliers without really incurring the inventory costs.
Relationship between Supply Chain Management and Logistics Management at Amazon Company
Amazon supply chain management significantly depends on outsourcing inventory management (Kaur and Kaur 2018, p.64). Notably, the products which are not consistently purchased by the clients are not kept in the Amazon warehouses. Approximately 82 percent of the sales revenues at the Amazon are made up of the third parties (Lara, Garcia and Chico, 2017, p.10). Moreover, the company has a plan in which goods are shipped within a day to the customer (Simoes, G., 2017, p.11). Ultimately, the corporation has an excellent transportation system which ensures its success and eventually the top company in logistics globally.
Significance of Effective Logistics in Achieving Customer Satisfaction at Amazon Company
Amazon Company has diversified products and client preferences of the delivery options (Christopher 2015, p.11). Notably, prime consumers delivery, first class, super saver, and one day delivery are some of the options employed by Amazon and are made available to the customers (Lierow 2016, p.20). Additionally, the consistent efforts of Amazon to make goods delivery in the fastest way possible make them giant and the leader in the retail industry (Querin and Gobl 2018, p.2). Also, Amazon utilizes the delivery tracks for the same day in one hour. The firm understands the effects of depending on the third party logistics and, therefore, it emphasize on making their logistics efficient.
Significance of an Effective Logistics Function in Achieving Customer Satisfaction in the Case of Amazon Company
The Amazon Company deals with multiplicity of products and henceforth has an eclectic base of customers globally. This has been aided by the good logistics system that has made many customers feel gratified by the services they are offered with. According to the Global Index, 70% of customers are satisfied with the products and services that are provided by the Amazon Company (Cooper, Lambert and Pagh 1997, p.9). The company has an established logistics system which in turn has an influence on the supply chain that deals with the delivery of products to the consumers at large.
The Amazon has an effective logistics management function that has enabled the products to be delivered to customers on time and precisely (Cooper, Lambert andPagh 1997, p. 12). The Amazon Company has adopted the practice of logistics as an integrated process developed through combination of different activities. The integration between the organizations has resulted to the customers’ integration externally with suppliers. Through this there has been impeccable coordination between marketing and logistics functions that are as a requirement of a successful chain supply process. This synchronization has enabled the suppliers to reach the customers conveniently enabling the delivery of products on time and in precise modus hence satisfying their requirements.
Sadagopan (2003) state that effective logistic system has enabled the customers incurs fewer errors (p. 171). The Amazon has advanced in its operations by the use of technology in storage of data. The company has adopted logistics automation features such as the integration to one’s commodities via the ERP system and accesses your address book. The case of manual feeding of data has been done with hence the information stored is more accurate thus lessening the cases of paying twice the freight cargo as a result of wrong data entry details. This has made many customers be satisfied with the logistic system used by the Amazon Company.
The Amazon has developed an efficient communication way where the customers can easily convey their messages to the suppliers. A good logistics system should provide the most effective communication system where there is free interaction between the suppliers and customers (Sachan and Datta 2005, p. 669). In the case of the Amazon as an electronic company, the customers can easily get access to the website portal and make their orders as they wish. The company has a website that is user friendly and easy to use. There is other way of making communications such as through the use of emails and even making phone calls. The efficient logistic system has enabled the customers to express their concerns, keep a follow up with the suppliers and at the end of it all their prerequisites will have been fully met and hence achieving customer satisfaction.
The Amazon allows its customers to return goods that do not meet their satisfaction as they use reverse logistics at times. The machinery and equipment are products that are ever due to faultiness. Every company is in an aim to increase the number of customers rather reducing it and protecting its reputation. The Amazon has well established and efficient logistic system management that allows for reverse logistics. The reverse logistics allows for customers to return the products may be due to defaults under the warranty clauses (Ballou 2007, p.19). The customers are then given new products of the same type and hence they satisfy their requirement.
3.0. ERP in Improving Customer Satisfaction in Amazon Company (LO2)
ERP is an acronym that refers to Enterprise Resource Planning (ERP), which is a process that a company manages and integrates the important parts of its businesses. The parts of a business that can be integrated are areas such as planning, purchasing, inventory, sales, marketing and finance (Ragowsky 2002, p.14). The ERP uses the software to manage this function effectively. The Amazon Company considering its size has hugely employed the ERP technique to its operations and this has satisfied the customers’ desires as well as the company’s statutes.
Barton (2001) stated that ERP software enables the Amazon Company to implement the integrated solution (p. 13). The integrated solutions will bring the people together and the informational flows within the company. This will result to the proper management of data and real time access to it. As the software keeps the information on a central platform, there is easy facilitation of coordination and communication between the employees and customers. This reduces on cost as the company stores the data in a single database and minimizes the employees (Ragowsky 2002, p.15). The customers will be satisfied with the products because of engagement with the employers frequently on their orders.
The Amazon uses the ERP software as it improves on purchasing process. The system is enabled to synchronize the acquisitions. This enables the customers to place their purchases on the Amazon website and the suppliers can easily access the data to ensure the products to be shipped are the right ones (Sadagopan 2003, p. 172). The Electronic Data Interchange applied by the Amazon allows electronic transfer of documents between departments hence lowering on cost and efficiency to the customers.
The Amazon Company has warehouses in the premises for storage of products. The use of ERP software enables the company to integrate it with the WMS to facilitate management of warehouses more effectively. The information can be transferred between headquarters and warehouses hence reducing on rents, charges and staff expenses. The products are in the correct warehouses and the dissemination process is easier. The customers get the right products which have been properly stored and ready for consumption.
4.0. Amazon in Reducing the Logistics Cost
The Amazon Company has had rising logistics cost every year as stated in the economics survey. However, the costs can be cut as the main reason for operating a business is making profits as high as possible. The Amazon has adopted the full use of consolidated shipments. The company should use the Full Container Loads rather than the use of Less Container Load. The FCL is safe and effective as the goods are loaded with the specifications of the customer and not shared (Christopher 2016, p.26). This enables cheap shipment and products reach the customer in a sound manner.
The Amazon should use the single, integrated platform for the whole of its operations. The company is large and has many offices and departments. The number of employees is large and there is duplication of services (Barton 2001, p.17). Through the adoption of ERP programs, the Amazon Company can bring the services together and reduce the operational costs.
The Amazon Company should consider outsourcing their supply chain operations. The operations that should be outsourced are the transportation and storage. This will cut on cost, increase the efficiency and also major part of the work will be done by professionals. The company however should agree with the customers on the frequency and size of shipments. The other technique is the full utilization of resources. The Amazon should exploit all the potential it has to maximum production. This will increase the level of output and increase the sales. The increase in sales means the profit will be higher hence no more costs incurred.
5.0. Conclusion
The Amazon Company has still a gap to close in logistics and supply chain management. The company however has developed its operations with time and that is the reason behind its success. The efficiency of operations and customer satisfaction will soar the company’s name to greater heights and hence increase in sales. The highlighted effective ways of operation and reduction of costs if adopted will enhance the accomplishment of the company’s objectives.
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