Amazon Fulfillment Center (FC)
Amazon's fulfillment system shipping system is more
complicated among logistics companies. This complex system is
responsible for driving the success of Amazon. Amazon
analyzes and anticipates the shipping process's problems and
plans the logistics accordingly. Amazon is more of a large
logistics company rather than the largest retailer. Amazon uses
the data to predict what products to sell, where to sell, the time
required, and many other decisions.
Forecasting and Ordering:
The inbound process starts with forecasting and ordering
before anything arrives to the fulfilment center.
Amazon’s forecasting engine is used for over 400 million
products daily.
Fulfillment Center (FC):
Products are received in the trailers full of vendor and small
and medium nosiness seller items arrive at the receiving
work stations of FC.
Inventory and Amazon Aurora:
Fulfillment center carries millions of items of inventory and
using the service known as Amazon Aurora -> management
for inventory and other relational database needs.
Amazon Robotic Drive:
Amazon robotic drive units are activated when an associate logs into their workstation to
perform their task. Then an associate loads the products into the storage pods according
to the ASIN - Amazon Standard Identification Number. This helps to track the quantity and
location of a particular item.
Amazon Neptune:
To manage the inventory history, Amazon uses Amazon Neptune - a fast fully managed
graph database service from AWS. Amazon uses randomized method to store the item.
Once this process has been completed, a physical and digital match is created in the
systems. And now, within just few seconds an item is stowed, we can order it on
Amazon.com.
Amazon Sagemaker:
When machine learning model has low confidence, it uses Amazon Sagemaker that
grounds the truth from AWS
After you hit the buy button
Thousands of robot drive units are spread throughout each floor and these drive units
pick up the mobile shelves and deliver them to employees at ergonomic workstations
Once you hit the buy button on the Amazon.com, the systems commands robot to find
the inventory pod with the item that you ordered. Then an associate inspects the item
using visual inspection system.
Packaging:
Now packaging in carried in two ways according to number of items that is,
single item packaging and multiple item packaging. The size of box or
envelope, barcode and other packaging requirements are automatically
selected and then further they are dispensed.
But what if the items you order are at two different
FC's then do you get one box or two?
• Deliver in estimated time
• Lowest cost
• Lowest environmental Impact
Option one:
Deliver from two different
FC’s and hence two
different packages
Option two:
From one FC to another FC
Option two:
From one FC to another FC
and then to final destination
SLAM:
Scan , Label , Apply and Manifest
Here technology identifies the correct shipping label for
delivery . Along with this a final quality check is done with
respect to item's initial and present weight. If the difference is
detected then they are routed to a different location where an
associate takes care of the problem.
Every single day this complete process is monitored by AWS
IoT services. This help them maintain, coordinate and inspect
the processes. Amazon also collaborates with the automation
suppliers, using AWS ML models to predict and address
equipment failures.
Porter's 5 Forces Infographics
If Amazon sells a product whose
suppliers are in small proportion, then Customers tend to be price
the power suppliers increase sensitive and hence can look for
moderately. substitutes
Supplier Power – Competitive
Rivalry - Buyer Power - High
Low to Moderate
Moderate to
High
Threat of New Entry - Low Walmart, Flipkart, Threat of Substitution - High
Alibaba
Switching costs: Difficult for
Amazon competes with
competitors like Walmart
substitutes in the online retail as
Economies of scale: Amazon has
well as with the offline retail
reputation of largest retailer
market.
Customer Loyalty: Customer’s first
choice
VALUE CHAIN
Inbound Logistics: Operations: Outbound Logistics: Marketing & Sales: Services:
• Vertically • Marketplace • Order fulfilment • Amazon Prime • Warranty and
integrated operations, • Order handling and • Customer services support
• Decentralized packaging dispatch • Order and • Education and
fulfilment centers • AI – software • Invoicing customer tracking training
• Quality control Development • Promotions
• AWS Operations
Margin
HR & Finance & Legal: Hiring talented people, creating sustainable operating cashflow and risk mitigation
Technology:
Advance customer database and analytic tools for recommendation and personalization. Scalable Amazon Web Services for
Amazon’.coms technology infrastructure , B2B and B2C customers.. Fully optimized as well as automated warehouses and
distribution centers along with robotics technology.
Procurement: Vast number of vertically integrated suppliers
Ensuring Supply is Sufficient for the Demands
There are times when the demand for some products is incorrectly forecasted by Amazon supply chain
analytics and this affects consumer satisfaction. The problem is that the forecast depends on a product’s
CHALLENGES sales history and prevailing trends. This cannot always be relied on while making decisions related to
stocking up for the peak shopping seasons.
As efficient as it may be, Issue of Delays
everything comes with a host of
problems or there are always There is the issue of delays in the time taken for Amazon to log all the inventory into their system. This in
some risks involved. Let us take a turn causes delays in the packages being ready to deliver. This sort of delay has a direct negative influence
look at some of the challenges on customer satisfaction which results in negative star ratings and reviews. Unforeseen delays of this sort
faced by Amazon result in sellers’ capital being affected.
Chances of Products Getting Lost
The Amazon supply chain risks also include the chance of your product getting lost in the sea of products
that are dealt with on an hourly basis. Amazon compensates sellers for any items that may get lost, but they
decide on the amount irrespective of how much you spent on it. This results in sellers suffering losses.
Shipping Costs for Sellers
While the Prime service is great for customers, it works differently for sellers. The sellers’ products qualify
for free shipping, but they have to bear the shipping costs of their products. They don’t have the option to
choose which of their products to offer with free shipping. Since all their products come under this service,
the shipping costs tend to eat into their profit margins.
Recommendations
1. Amazon Cloud services for consumers- Amazon can role out cloud storage services along with prime membership for it’s
consumers.
2. Use of blockchain for payments- Amazon can integrate blockchain technology to support digital-currency payments.
3. Omnichannel experience with "Amazon Showrooms” - Amazon can have their own retail stores where the customers can
pick up their pre-booked orders or can shop around.
4. Amazon courier services- With amazon starting it’s own delivery system and leverage it to develop courier services to pickup
and drop from the comfort of consumer’s home.
THANK YOU
