Supply Chain Management Amazon a (1).pptx

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1. Supply Chain Management Amazon Shouvik Pal

2. Company Background E-Commerce: The Foundation of Amazon Amazon started as an online bookstore in 1994 , but quickly expanded into a global e-commerce giant . Today, it is the largest online retailer in the world , offering a wide range of products across multiple categories,Amazon has built one of the most advanced supply chains in the world, combining logistics, automation, and AI to ensure fast and cost-efficient delivery . Core Components of Amazon’s Supply Chain Fulfillment Centers (Warehouses) Thousands of massive warehouses globally. Automated with robots (Kiva, AI sorting, and drones) to speed up order processing. Amazon Logistics & Delivery Network Owns its fleet of delivery trucks, planes (Amazon Air), and cargo ships. Amazon Flex : Uses gig-economy drivers for same-day deliveries. Prime & Same-Day Delivery One-Day & Same-Day shipping available in major cities. Amazon Fresh & Whole Foods integrate fast grocery delivery. AI & Predictive Inventory Management Uses big data to forecast demand and place products in the right warehouse locations . Anticipatory shipping : Ships products to local hubs before customers even order them. ‹#›

3. Traditional vs New Age The traditional supply chain follows a linear, sequential model , where goods move step-by-step from manufacturers to distributors, then to retailers, and finally to customers. This system relies heavily on manual processes , centralized warehouses, and bulk inventory storage , often leading to overstocking or delays. Traditional logistics depend on postal services and third-party freight companies , making deliveries slow, typically taking days or even weeks. Customer involvement is minimal, with limited tracking and slow returns, and the overall system is rigid and difficult to scale . Data usage is minimal, relying on paper-based records or simple databases , leading to inefficiencies in forecasting and demand planning. On the other hand, the new (modern) supply chain is dynamic, flexible, and tech-driven , integrating real-time data, automation, and AI to optimize every step. Instead of a rigid pipeline, modern supply chains are interconnected networks where manufacturers, fulfillment centers, and last-mile delivery systems work together seamlessly. Companies like Amazon and Alibaba use AI-driven inventory management to predict demand and position products closer to customers. Warehouses are automated , using robotics and IoT sensors for faster sorting and packing. Shipping is lightning-fast , with same-day or next-day deliveries made possible through in-house logistics networks, drones, and gig-economy drivers. Customers have real-time tracking and personalized shopping experiences , making returns and exchanges much easier. Furthermore, modern supply chains emphasize sustainability , using optimized delivery routes, eco-friendly packaging, and green logistics solutions. The shift from traditional to modern supply chains is driven by technology, consumer expectations, and the need for speed and efficiency . While traditional models worked well for physical retail and mass production , today’s digital economy demands flexibility, automation, and customer-centric operations to stay competitive.

4. Amazon Supply Chain - WareHousing A mazon’s warehousing system is the backbone of its fast and efficient supply chain , enabling same-day and next-day deliveries across the world. Unlike traditional warehouses , which focus on bulk storage and slow-moving inventory, Amazon’s fulfillment centers are highly automated, strategically located, and optimized for speed . 1. Types of Amazon Warehouses Amazon operates different types of warehouses, each serving a unique function: Fulfillment Centers (FCs) – Large-scale storage and shipping hubs where customer orders are processed. Sortation Centers – Packages are sorted by destination before final delivery. Delivery Stations – The last stop before customer delivery, often using Amazon Flex drivers. Amazon Fresh & Whole Foods Warehouses – Specialized for grocery storage and quick fresh food delivery. Return Centers – Handle returned products efficiently to resell or recycle. 2. Robotics and Automation Amazon’s warehouses are powered by advanced robotics and AI to ensure high-speed processing : Kiva Robots : Small, orange robots that transport shelves of products to human workers, reducing walking time. AI Sorting Systems : Automatically classify and route packages for shipping. Automated Packing Stations : Machines pack products to optimize box sizes and minimize waste. Drones & Autonomous Vehicles (future): Amazon is testing Prime Air drones for ultra-fast deliveries.

5. 3. Just-in-Time Inventory & AI Optimization Amazon does not store excess inventory but instead uses demand forecasting AI to ensure the right products are available in the right locations. This reduces storage costs and improves delivery speeds . 4. Strategic Warehouse Locations Amazon builds warehouses near major cities to enable same-day and one-day delivery . By placing fulfillment centers closer to customers , Amazon minimizes shipping costs and delays.

6. Amazon Supply Chain - Delivery Amazon’s delivery network is one of the most advanced and efficient supply chain systems in the world, designed to ensure fast, reliable, and cost-effective deliveries to millions of customers. The company employs a combination of technology, logistics infrastructure, and third-party partnerships to achieve its industry-leading delivery speeds, including same-day, one-day, and two-day shipping . 1. Fulfillment Centers to Last-Mile Delivery Amazon’s delivery process involves several key stages: Fulfillment Centers (FCs) : Once an order is placed, it is picked, packed, and shipped from one of Amazon’s highly automated warehouses . Sortation Centers : Packages are sorted based on their destination before being sent to regional distribution hubs . Delivery Stations : Packages are organized for final delivery, ensuring they are efficiently routed to customers.

7. 2. Amazon’s Delivery Network Amazon relies on multiple delivery methods to optimize speed and efficiency: Amazon Logistics (AMZL) : A dedicated last-mile delivery network, using Amazon-branded vans, delivery partners, and gig-economy drivers (Amazon Flex). Amazon Air : A fleet of cargo aircraft used for rapid inter-city and inter-state transport , reducing dependency on third-party carriers. Third-Party Carriers : While Amazon has built a strong in-house logistics network, it still partners with UPS, FedEx, and USPS for certain deliveries. Amazon Drone Delivery (Prime Air) : An initiative focused on using drones for small, lightweight packages to enable ultra-fast deliveries. Amazon Hub & Lockers : Self-service pickup points where customers can collect their packages at their convenience, reducing last-mile delivery costs. 3. Last-Mile Innovations Amazon continuously improves its last-mile delivery process with advanced technologies: Route Optimization Algorithms : AI-powered systems optimize driver routes to reduce delivery time and fuel consumption. Amazon Scout (Autonomous Robots) : Small robotic vehicles tested for sidewalk deliveries in select urban areas. One-Day & Same-Day Delivery : Enabled through hyper-localized fulfillment centers , reducing the distance between inventory and customers.

8. Amazon Supply Chain - Manufacturing Amazon is not traditionally known as a manufacturing company, but its supply chain involves strategic manufacturing partnerships, private-label brands, and a growing presence in on-demand production . The company's focus is on efficiency, scalability, and cost control , ensuring a seamless transition from production to fulfillment. 1. Amazon’s Role in Manufacturing Amazon operates as both a retailer and a manufacturer in various ways: a) Third-Party Manufacturing (Marketplace Model) Amazon’s marketplace consists of millions of third-party sellers , many of whom manufacture their own products and use Amazon’s Fulfillment by Amazon (FBA) services for logistics and distribution. Instead of direct manufacturing, Amazon serves as a platform for these manufacturers, providing global reach.

9. Amazon Supply Chain - Manufacturing b) Amazon Private Labels & In-House Manufacturing Amazon has launched its own private-label brands in multiple categories, including Amazon Basics, Solimo, and Amazon Essentials . These products are contract-manufactured by third-party suppliers, often based in China, India, and the U.S. Amazon controls the design, branding, and distribution while outsourcing actual production. c) On-Demand & Custom Manufacturing Print-on-Demand (POD) : Amazon owns Kindle Direct Publishing (KDP) and Amazon Custom , allowing books and products to be manufactured on demand rather than stored in bulk. AWS for Manufacturing : Amazon Web Services (AWS) provides cloud-based AI and IoT solutions to improve predictive maintenance, supply chain optimization, and factory automation for other manufacturers.

10. Amazon Supply Chain - Multi Tier SC Multi-Tier Supply Chain A multi-tier supply chain consists of multiple layers of suppliers, manufacturers, distributors, and retailers involved in the production and delivery of goods. Unlike a single-tier supply chain , which focuses only on direct suppliers, a multi-tier system extends beyond the immediate supplier (Tier 1) to include Tier 2, Tier 3, and further upstream partners . 1. Structure of a Multi-Tier Supply Chain A multi-tier supply chain typically includes the following levels: Tier 3 Suppliers – Raw material suppliers (e.g., mining, agriculture). Tier 2 Suppliers – Component manufacturers (e.g., metal parts, semiconductors). Tier 1 Suppliers – Final product assemblers or direct suppliers to manufacturers. Manufacturers – Transform raw materials and components into finished goods. Distributors & Wholesalers – Handle bulk transportation and storage. Retailers & E-commerce – Sell products to end customers. Customers – The final consumers of the product.

11. Amazon Supply Chain - Multi Tier SC 2. Benefits of a Multi-Tier Supply Chain Risk Mitigation : Diversifying suppliers reduces dependency on a single source. Cost Efficiency : Sourcing from multiple tiers helps optimize costs across the chain. Supply Chain Visibility : Advanced tracking systems (IoT, AI) provide real-time insights into supplier performance. Flexibility & Scalability : Businesses can quickly adapt to changes in demand and supply. Sustainability & Compliance : Ensuring ethical sourcing and environmental regulations across all tiers. Amazon sources products from thousands of Tier 1 suppliers , who in turn rely on Tier 2 and Tier 3 manufacturers for raw materials and components. Amazon manages its supply chain efficiently using AI-driven demand forecasting, automated fulfillment centers, and diverse supplier networks to minimize risks and maximize efficiency.

12. Amazon’ s Key Competitive Advantage Amazon has established itself as the dominant player in e-commerce and cloud computing by leveraging several competitive advantages that differentiate it from competitors. These advantages enable efficiency, scalability, and customer loyalty , making Amazon a leader in multiple industries. 1. Customer-Centric Approach Obsessive Focus on Customer Experience – Amazon prioritizes customer satisfaction by offering low prices, fast delivery, and easy returns. Personalization & AI Recommendations – Amazon’s advanced machine learning algorithms analyze customer behavior to provide personalized shopping experiences, increasing conversion rates. 2. Unmatched Logistics & Fulfillment Network Fulfillment by Amazon (FBA) – Amazon's vast network of fulfillment centers and warehouses allows it to store, pack, and ship products efficiently. Prime’s Fast Delivery – Amazon Prime offers same-day or two-day delivery , creating strong customer loyalty. Global Reach – Amazon’s extensive supply chain and distribution centers ensure seamless international operations.

13. Amazon’ s Key Competitive Advantage 3. Economies of Scale & Pricing Power Massive Buying Power – Amazon’s scale enables it to negotiate better prices with suppliers, leading to cost advantages over competitors. Dynamic Pricing & Discounts – Real-time price adjustments based on demand and competitor pricing keep Amazon highly competitive. Private Label Brands – Amazon develops its own low-cost private-label products (Amazon Basics, Solimo, etc.), boosting profitability.

14. Amazon’ s Key Competitive Advantage Conclusion: Amazon’s Supply Chain as a Competitive Asset Amazon’s ability to generate value from its supply chain is driven by: Economies of Scale – Handling billions of packages annually reduces per-unit costs. Automation & AI – Robotics & AI improve efficiency, lowering fulfillment costs. Vertical Integration – Controlling warehouses, logistics, and delivery eliminates middlemen. Prime Membership Flywheel – Faster delivery = higher Prime adoption = higher customer lifetime value . Third-Party Seller Fees – Monetizing logistics services adds billions to revenue. Through a combination of cost efficiencies, automation, and monetization of logistics , Amazon transforms its supply chain into a profit-generating powerhouse , giving it a sustainable competitive advantage in global e-commerce. 🚀

15. Amazon - Metrics 1. Revenue & Profitability from Supply Chain Operations Total Revenue (2023) : $554 billion Amazon Retail Revenue (2023) : ~ $434 billion (79% of total revenue) AWS Revenue (2023) : $90 billion (high-margin, funds logistics expansion) Fulfillment by Amazon (FBA) Revenue (2023) : $135 billion (third-party seller fees, shipping, and warehousing) Amazon’s retail business relies heavily on supply chain efficiencies to maximize margins , while AWS funds expansion into logistics automation and delivery speed improvements.