supply chain management

1. Introduction
 Amazon.com is American international electronic commerce company
with headquarters in Seattle, Washington.
 Amazon was founded in 1994 by Jeff Bezos.
 Amazon.com in 1995 started as an online bookstore, but soon
diversified, selling DVDs, VHSs, CDs, video and MP3
downloads/streaming, software, video games, electronics, apparel,
furniture, food, toys, and jewelry.
 Amazon operates as a pure internet retailers that does not have retail
store at all.

2. Supply chain strategy of Amazon.
Amazon has identified their customers as highly responsiveness. In
order to respond with high uncertainty demand and availability of
products, the four main components drive the outcome of Amazon
are having
 several distribution centers as a storage facilities
 multi-tier inventory management
 highly efficiency transportation and
 implement information systems to provide real time information
within its supply chain

3. Why is Amazon building more warehouses as it
grows? How many warehouses should it have
and where should they be located?
 As it grew the company added warehouses allowing it to react more
quickly to customer orders. Increasing the number of warehouses
near customers will reduce the response time.
 Amazon aims to be able to deliver most items the day they’re
ordered, so it can keep rivals such as EBay and Wal-Mart
Stores from peeling off customers.
 Amazon has around 50 warehouses, 20 in US and rest in Canada,
France, Germany, Italy, UK, China, Japan

4. What advantages does selling books via internet
provides over traditional book store? Are there any
disadvantages to selling via internet
 It is proved to be a more convenient option for the customer. The
customer did not have to drive or walk to the store to buy a book.
 The reader received a catalog containing reviews about books and
information about popular books in the market.
 Don't have to advertise and find the buyers, post the message at any
book purchasing website, and concerned buyers would automatically get
in touch with.
 Can get the best money, as one can select from the buyers that hit on the
book.
 the elimination of costs related to maintenance of retail stores and the
direct contact with the customer online.

5.  Online trade removes geographical barriers and allows the customers to
shop 24/7.
 Customers can view all the information about the book, book reviews
and books on similar topics. This gives them far more information than
looking at the single book at the bookshelf of a retail store.
 The security of online payments is a problem preventing many people
from shopping online. The totally secure system has not been introduced
yet, and customers might find it confusing revealing their payment data
online.
 Delivery of books also might not happen timely, due to many factors.
 The customer never has the chance to see and “feel” the book; many
people dislike buying books online because they cannot sense the book,
turn over the pages and read a few lines.

6. Should amazon stock every book it sells?
 No
 If Amazon stocked every book it sells, it would need a
warehouse the size of Nevada. It would also have gigantic
inventory costs.
 Amazon uses three basic methods for selling books
 standard inventory
 "just in time" inventory
 third party sellers
 Physical inventory of the most popular books it sells.
 Less popular books are subject to "just in time" inventory
management.

7.  Amazon doesn't have the books, but has arrangements with the
publishers to ship the books as soon as it receives orders.
 Results in a slight delay in shipping to the customer, but Amazon saves
a lot of money in inventory costs.
 Has network of third party merchants who sell through Amazon. These
third party merchants generally specialize in out-of-print books or books
that deal with relatively arcane subjects. Those books are shipped to the
customer directly from the third party and are billed by the third party to
the customer's credit card or PayPal account. Amazon takes a small
commission for acting as a middleman.
 Stock only those product with high demand

8. What advantage can brick-and-mortar players drive
from setting up an online channel? How should they
use the two channels to gain maximum advantage?
 Stand out from the competition
 Saving customers a trip to the store
 Low-cost way to expand your business.
 Inexpensive yet Highly Targeted Marketing Channel
 Complete Range of Products Selection & In-Depth Information
 Easily Automate Cross-Sell and Make more Money
 Pre-order done easily
 Increase Customer Value over Lifetime

9. Warehouses of Amazon

10.  Transportation
 rely primarily on national parcel couriers
 UPS, FedX
 Own logistics network

11. Supply chain diagram

12.  Inventory
 High inventory
 Multi-tire inventory network.

13. Pricing
 Amazon does make millions of price changes daily
 In March 2014, Amazon changed prices on an
average of 15-18 percent of its assortment every
day and this number is growing. Many retailers
today are struggling to emulate, or even react to,
this level of price dynamism.
 Price dynamism varies by season
 Some categories are more price-dynamic than
others.
 Amazon's price dynamism varies between
categories,

15. Strategic fit
 Competitive strategy
 Respond to wide range of demand
 Fulfill orders in short lead time
 Meet high service level
 Supply chain strategy
 Both cost effective and responsive

16.  Facility: more towards centralization
 Inventory: high
 Transportation: Faster
 Information: high investment

17. Should traditional bookseller like integrate e-
commerce into their current supply chain or
manage it as separate supply chain?
 It is better to integrate e-commerce supply chain to
their current supply chain.
 Advantages:
 Common warehouse.
 Global market
 More competitive