Operations Management Assignment: The Pivotal Issues In Amazon’s Supply Chain Management
Task: Prepare an operations management assignment on the topic “To study the pivotal issues in the amazon supply chain and to examine those issues by applying qualitative and quantitative approaches”.
1.1 Research Background
Supply chain management (SCM) is a crucial division for the effective operations of multinational organizations, whichhelps the organization to provide their service through both online and offlineplatform to deliver its products to the consumers. In addition, the supply chain management helps the organizations through providing raw material for production. However, in the case of Amazon, the US based company, which serves every kind of products to its consumers, holds a vast range of supply chain management throughout the world, through its efficient operation by the beneficial influence of the online platform (Trivedi and Madan, 2018). Depending on the vast supply chain management, the company has been able to grab a large range of online market through its efficient and effective operation. However, there are still some problems during its organizational operation of supply chain management service.
1.2 Problem Statement
During the entire process of supply chain management of Amazon, there are few issues like, poor supply chain management, suppliers’ mistakes, and inefficiencies in the supply chain management that become as interruptive hindrances; due to which, the organization faces some challenges in its organizational operations. Due to such problems, the organization is still facing some lacking in the entire process. In addition, due to the outbreak of corona pandemic, the management of supply chain of Amazon has greatly been hampered. However, during the research study, it has analysed that the organization focuses on its development of supply chain management through implementing eight cross-firms and cross-functional business process (Lambert and Enz, 2017).
1.3 Aims and Objectives
The aims of the research are to determine the fundamental issues that hamper the organizational operation of Amazon and its supply chain management service. Furthermore, the aims of the research are to discover the prominent significance of the supply chain management service and target the fundamental issues in the management process of the supply chain. Through which, the research will be accomplished within an informative way.
The objectives of this research are formed to assist the research aims through which the research will be accomplished. The research objectives are:
• To evaluate the crucial performance of supply chain management.
• To assess the significantprocess of supply chain management in Amazon's organizational operations.
• To discover the fundamental issues of supply chain management service.
• To analyse the effectiveness of supply chain management on Amazon's organizational business.
H0: The research is unable to analyse the key factors to deal with the issues of supply chain management of Amazon.
H1: The research will find out the fundamental issues of supply chain management that hamper the organizational operation.
2. Literature Review
According to the statement ofQin et al. (2020), the interactive decision and cooperative relationships behaviours within the online stores and third-party logistics have drawn to enhance the supply chain management performance through increasing the relationship. In the case of Amazon’s supply chain management, the management prominently depends on the outsourcing of inventory management (see appendices 1). Due to the infrequency in the order process of products, the third-party seller is nearly 82% of the entire selling amount of Amazon (Leblanc, 2019). Also, the supply chain management service of Amazon applies the push-pull strategy; through which, the organization has been able to provide the fastest delivery of products to its consumers.
As per the statement of Kuupielet al. (2019), due to poor process of supply chain management service, nowadays, the organizations still face with major issues to deliver its products and get hampered to engage the buyers. Sometimes, due to the careless manner of supply chain management service, the security of the deliverable product has decreased; therefore, the wrong delivery of products has been seen in the service of supply chain management. Hence, Amazon started to focus on its supply chain management service to develop its procedure with the more caring distribution process.
According to the viewpoint of Imeriet al. (2019), the trust issues in supply chain management is a potential concern in between the stakeholders that cooperate in supply chain management. In the process of transportation and logistics, due to some lacking like, wrong delivery of a product that ordered, etc. sometimes the stakeholders lost its effective trustworthiness on the supply chain management. Therefore, to enhance the trust of the Amazon supply chain management, the organization implements some strategies like, pull-push strategy, etc.; through which, the organization tries to improve its supply chain management.
Kurniawanet al. (2017), states that, due to agitation of justice for the workers of Amazon, the organizational culture has been transformed, which also impacts the supply chain management system of this organization; through which, the supply chain management system has victimized by the vulnerability. Therefore, the supply chain management somewhere gets down to its internal organizational cultural issues. On the other hand, Fan et al. (2016), stated that, in the era of digitalization, the supply chain management had adopted few strategies to improve the quality of its distribution process. In this way, the supply chain management of Amazon has adopted the push-pull strategy and so on to develop the entire service of supply chain management; through which the organization has been able to distribute their products within fastest service process.
Furthermore, as per the viewpoint of Mollenkopf, Ozanne&Stolze (2020), due to the outbreak of corona pandemic, the organizational operation has negatively affected. As a result, the supply chain management becomes unable to efficiently manage its worldwide organizational operation. In order to evaluate the issues in the supply chain management service in a precise manner, Gardner et al. (2019), states that since last few decades the supply chain management had suffered through the appropriate communication problem with the management. However, due to the technological innovation, the supply chain has transformed its system through monitoring, disseminate data, etc. have contributed in the process of development of the management.
According to the statement of Moe (2018), due to continuous enhancement of cost for supply chain management hampers the organizational operations, through increasing the cost of the deliverable products and services. Similarly, in the case of Amazon, the worldwide supply chain management has enhanced its service cost due to the outbreak of corona pandemic. Therefore, the organization has compelled to enhance its cost of products and service and also requires the delivery charge for low-cost products.
Fundamentally, the study of this research paper is based on the philosophy of positivism; through which, it has evaluated that the study of research provides the effective outcome to the future learners or the future researchers of this topic. Furthermore, the data was collected by utilizing both the quantitative and qualitative methods to accomplish the entire study of the research. The quantitative method helped to collect specific information about the research topic. Due to which, the research becomes more legalized to study and to get the efficient and legal data about the topic, which has been able to provide many opportunities for the future research (Kumar&Ryntathiang, 2016). Moreover, on the other hand, the qualitative method helped to collect the data through analysing the existing scholarly articles, journals, research papers, etc. in an explorative way; through which, the research becomes as more informative. Due to the utilization of both quantitative and qualitative method, the research has formed as the most informative and most effective that helps to provide adequate knowledge to the learners of this research topic.
4. Data Analysis
To conduct the research, both quantitative and qualitative methods have been used, and thus, a mixed analysis becomes the key paradigm of the current research study. Therefore, the data derived from the non-numerical observations are specifically of contextual knowledge (Subedi, 2016). The qualitative sources of data are usually collected from existing reports, scholarly articles, spellbound records, column papers and different forms of information. For the quantitative data collection, structured interviews were usually conducted to get the proper information about the pivotal issues in the supply chain management of the organisation Amazon. To evaluate the quantitative analysis of data, the interview conducted helps to extract the exact information regarding the organization Amazon. In the process of subsequent analysis of data, the quantitative methods were usually analysed on the grounds of the objectives of the research (Mertens, Pugliese&Recker, 2017). The information and data obtained from diverse sources are assured that they are properly organized to derive the essential points and outcomes. The data collected by the method of the interview are properly analysed and checked to ensure that the obtained information for the research remains exact and accurate. The research is usually conducted by analysing both the qualitative and quantitative method of data that helps to meet the main aims and objective of the research.
The data and information of the research are collected through both quantitative and qualitative method of data. For the collection of data from the quantitative method, a structured interview was usually conducted by approaching the supply chain manager of the company Amazon in the United States (Robischon, 2017). The research further analyses qualitative data from journals and articles to study the pivotal issues in the supply chain management of the company Amazon.
The structured interview was usually conducted with the SCM of the organisation Amazon to analysethe pivotal issues of the management of supply chain of the organisation Amazon. Three questions were usually asked to analyse the supply chain management of the company.
Question 1: What are the challenges that occur in the supply chain management of Amazon
There are usually issues related to the disruptions in the services, business models and products. The disruption in the management of supply chain of the organisation occurs in maintaining the logistics of the company as well as there are issues related to the final delivery, speed, fulfilment canter automation and personalization.
Question 2: What are the elements to Amazon’s supply chain strategy
The key strategies adopted by Amazon include a vast distribution and warehouse network. A diversified delivery fleet and the combination of humans and automation. To build such a massive and innovative supply chain, these three key elemental strategies helped the company to successfully to maintain its supply chain process.
Question 3: What is the primary advantage of the framework of Amazon’s supply chain and the management of the company’s operations
The key advantage of the supply chain of the company includes inventory control, increased labour savings, reduction in the failure of the product. When a consumer orders a product light in the warehouses of the company blinks and the ordered product of the customer is packed and shipped, and the supply chain management is carried out in this process.
5.2 Qualitative Theoretical findings of the research
The report from Bloomberg Business stated a detailed multiyear plan of Amazon to compete with FedEx, Alibaba and UPS (Soper, 2016). The plan of the company includes launching a global shipping and logistics operation that will provide competitive gain to the company over its competitors. As per the reports, the company was usually leasing planes and has therefore established an ocean freight business to enhance the process of its supply chain management. The chief financial officer of the company Brain Olasavsky displayed Amazon's ambitions. The company has its aim to supplement its delivery partners but not replacing them especially during the full seasons like the shopping season during Christmas. Furthermore, according to the reports of 2013 the senior management team of Amazon proposed the global expansion of the company in an aggressive way for fulfilment of the company's service that includes packing, storing and shipping for merchants selling products on the website of the organisation. The report further provides a delivery channel of the company that controls the goods flow from factories in India and China to the doorsteps of customers in London, New York and Atlanta. Amazon further adopted the ease and transparency strategy so that sellers directly book its product from Amazon. To build the global enterprise, Amazon will make a partnership with the third-party carriers, and the business will gradually squeeze the carriers once the business reaches sufficient volume. The strategy involves the company's move to the cloud services that help the company to grow faster. The global logistics operation of the company is expected to become $400 billion business for Amazon. The company usually takes baby steps to expand its market.
Figure 1: Cross-Border Online sales until 2020
(Source: Soper, 2016)
After predicting an up stick in the merchandise flow, Amazon laid out its strategy of logistics in 2013. The new business of the country will usually rely on manufacturing country like China to consolidate its inventory in the shipping hubs. In the last December, Amazon had been considering 20 Boeing Co. 767 freighter jets to reduce its cost and delivery.
Figure 2: Supply chain management system of Amazon
(Source: Trivedi&Madan, 2018)
The research aims to determine the fundamental issues that hinder the management of supply chain of the organization. The research evaluates how supply chain management evaluates the performance of the organization Amazon. The research further analyses the process of supply chain management in the organizational context of the company Amazon. The company implements inventory management to assess the supply chain process, as well as the company, uses a push-pull strategy that usually helps in providing faster delivery (Gupta et al., 2019). The effectiveness of the supply chain management of the organisation is further analysed through the research, and the entire procedure of the supply chain management of the company is discussed in the entire study of the research. The research usually uses a mixed methodology for the analysis and collection of data and information, and the implementation of both methods helps in deriving accurate information. Therefore, a structured interview is conducted for quantitative analysis of data as well as theoretical information for the research study is derived from journals and scholastic books. The information derived from findings serves to present an overall view of the issues related to the supply-chain management challenges faced by the organization Amazon to analyse the pivotal issues of the process of supply chain management.
7. Conclusion and Recommendation
To conclude, the research outlines the pivotal supply chain management issues of the organization Amazon and further provides solutions to enhance the supply chain management of the organization. The research identifies the various strategies that Amazon implements to manage the supply chain of various departments to assure the smooth functioning of its operation process. Amazon uses an inventory management strategy to maintain its supply chain as well as implements both labour and automation to conduct its operation. The company further plans for logistic operation and global shipping to enhance its supply management process. The data derived from the interview reveals the various challenges that the company faces in its operational process as well as helps in recognizing the strategies for management of the company's supply chain.
Amazon can integrate its supply chain management with the aspect of “bullewhip”. The company can adopt a cooperation model to a coordination mode with its suppliers. This will help the company to share its information between its suppliers and partners by implementing the latest technology (Persico, Montieri&Pescape, 2016). The consumer interaction of the company seems to be deficient; Amazon can improve its supply chain management through better transportation by creating its own fleet of personnel and delivery vehicles. Therefore, the company can further enhance its supply chain management by developing a unified IT system that generally involves all the stakeholders and suppliers and not Amazon alone. It is also recommended that the business should have lesser than one wide IT network to unify the supply chain and assure all the components of the supply chain are clear, consistent and accountable. Amazon must incorporate the complete supply chain into a centralized IT network to detect and take action on bottlenecks.
8. Influence of the Study on Organisation
The study of the research helps the company Amazon to identify the pivotal issues of its supply chain management and suggests a proper solution that effectively helps the company to manage its process of operation (Trivedi&Madan, 2018). The research identifies the key strategies of Amazon that the company implements to manage its operation and the process of its supply chain. The research study further helps the company to analyse its entire process of the supply chain as well as provides a recommendation to improve its supply chain management.
Esoimeme, E. E. (2020). Using the risk-based approach to curb modern slavery in the supply chain. Journal of Financial Crime.
Fan, H., Cheng, T. C. E., Li, G., & Lee, P. K. (2016). The effectiveness of supply chain risk information processing capability: an information processing perspective. IEEE transactions on Engineering management, 63(4), 414-425.
Gardner, T. A., Benzie, M., Börner, J., Dawkins, E., Fick, S., Garrett, R., ...&Mardas, N. (2019). Transparency and sustainability in global commodity supply chains. World Development, 121, 163-177.
Gupta, B., Aalund, M. P., &Mirchandani, J. G. (2019). US Patent No. 10,464,212. Washington, DC: US Patent and Trademark Office.
Imeri, A., Agoulmine, N., Feltus, C., &Khadraoui, D. (2019, July).Blockchain: Analysis of the New Technological Components as Opportunity to Solve the Trust Issues in Supply Chain Management. In Intelligent Computing-Proceedings of the Computing Conference (pp. 474-493).Springer, Cham.
Kumar, R., &Ryntathiang, T. L. (2016).New laboratory mix methodology of microsurfacing and mix design. Transportation research procedia, 17, 488-497.
Kurniawan, R., Zailani, S. H., Iranmanesh, M., &Rajagopal, P. (2017). The effects of vulnerability mitigation strategies on supply chain effectiveness: risk culture as moderator.Operations management assignment Supply Chain Management: An International Journal. Kuupiel, D., Tlou, B., Bawontuo, V., Drain, P. K., &Mashamba-Thompson, T. P. (2019). Poor supply chain management and stock-outs of point-of-care diagnostic tests in Upper East Region’s primary healthcare clinics, Ghana. PloS one, 14(2), e0211498.
Lambert, DM &Enz, MG, (2017). Issues in supply chain management: Progress and potential. Industrial Marketing Management, 62, pp.1-16.
Leblanc, R., (2019). How Amazon is Changing Supply Chain Management. The balance small business. [online] Retrieved from: https://www.thebalancesmb.com/how-amazon-is-changing-supply-chain-management-4155324#:~:text=The%20combination%20of%20sophisticated%20information,%2Dfrom%2Dhome%20world%20possible.[Accessed on: 25.08.2020].
Mertens, W., Pugliese, A., &Recker, J. (2017).Quantitative data analysis. A companion.
Moe, T. G. (2018). Financial Stability and Money Creation: A Review of Morgan Ricks: The Money Problem. Accounting, Economics, and Law: A Convivium, 8(2).
Mollenkopf, D. A., Ozanne, L. K., &Stolze, H. J. (2020). A transformative supply chain response to COVID-19. Journal of Service Management.
Persico, V., Montieri, A., &Pescape, A. (2016, October).On the network performance of amazon s3 cloud-storage service. In 2016 5th IEEE International Conference on Cloud Networking (Cloudnet) (pp. 113-118). IEEE.
Qin, X., Cao, Y., Wu, S., Lin, Q. & Yang, D., (2020). Interactive decisions analysis in an online shopping service supply chain considering reciprocal altruism. IEEE Access.
Robischon, N. O. A. H. (2017). Why Amazon is the world’s most innovative company of 2017. Fast Company Magazine, 2. Soper, S. (2016, February 09). Amazon Building Global Delivery Business to Take On Alibaba. Retrieved August 25, 2020, from https://www.bloomberg.com/news/articles/2016-02-09/amazon-is-building-global-delivery-business-to-take-on-alibaba-ikfhpyes
Subedi, D. (2016). Explanatory sequential mixed method design as the third research community of knowledge claim. American Journal of Educational Research, 4(7), 570-577. Trivedi, S. &Madan, MV, (2018). Amazon Supply Chain Management: A Case Study. NOLEGEIN-Journal of Supply Chain and Logistics Management, pp.23-27.
Figure 1: Amazon’s Supply Chain Management Performance
(Source: Qin et al., 2020)
Figure 2: Cross-Border Online sales until 2020
(Source: Soper, 2016)
Figure 3: Supply chain management system of Amazon
(Source: Trivedi&Madan, 2018)