Supply chain integration is a major contributing factor to organizational success. The goal of supply chain integration is alignment within the supply chain. As a business leader, how can you achieve greater supply chain integration with suppliers and customers?
Amazon is a prime example of a company that has successfully managed its supply chain to achieve growth and profitability. Research the progression of Amazon’s supply chain integration. Write a 1,000-1,250-word paper that address the following questions:
How do sales and operations planning in supply chain integration impact the company overall? What would Amazon’s medium- and long-term forecast inform the operations management department? How do logistics, transportation modes, and warehouse locations impact Amazon’s competitiveness?
How does global sourcing and procurement impact the overall effectiveness of the supply chain? What are the benefits and challenges that have occurred when outsourcing logistic and other functions?
How has Amazon successfully leveraged e-commerce strategies to promote supply chain integration and boost sales and growth for the organization? Which strategies have been particularly effective and why?
Do you feel that Amazon sets an example for other companies to model regarding supply chain integration? Be sure to explain your rationale.
How would conscious capitalism and a Christian worldview impact Amazon’s supply chain integration?
Amazon’s Supply Chain Integration
Impact of Sales and Operations Planning in Amazon’s Supply Chain Integration
Founded and headquartered in Seattle, Washington, Amazon is among the world’s largest e-commerce companies and the world’s fastest growing e-commerce firm (Houde et al., 2017). It became the most profitable as well as fourth treasured public company in the third quarter of 2016 (Aversa et al., 2020). Sales and operation planning (S&OP) in Amazon’s supply chain impacts the company in various ways. First, S&OP balances between the company’s supply and demand. S&OP enables Amazon to plan its categories of customers, goods, and marketing approaches to meet its demand needs (Kaipia et al., 2017). Lii and Kuo (2016) add that S&OP assists when categorizing clients and offerings and when defining marketing approaches, allowing the company to effectively and efficiently meet or address customers’ needs. Through the S&OP, Amazon’s commercial dealings and costs are allocated in line with its supply needs. Similarly, the process enhances the company in its commercial units and the costs, therefore making sure its supply needs are met.
Secondly, the S&OP betters Amazon’s performance in all its functional supply chain spheres. The S&OP enhances flexibility in handling Amazon’s customer needs, its operational costs are minimized, and its workforce is impacted positively (Lii & Kuo, 2016). Thirdly, S&OP concentrates the company’s ability to set targets and coin plans aimed at achieving the targets (Kaipia et al., 2017). Additionally, S&OP enhances effective and efficient leadership in Amazon since it crosses borders between organizations. Finally, S&OP depend upon strategies of phases with integrated business processes. Chaudhuri et al. (2018) note that S&OP enables Amazon to have linkages with various organizations and bodies and offers opportunities for receiving objects/materials and transfer the same to buyers. Therefore, S&OP affects positively Amazon’s performance as a result of the improved flexibility as well as enhanced opportunity to meet and address the needs of customers.
Amazon’s medium- and long-term forecast
The medium- and long-term forecasts are essential for Amazon. Along with Amazon’s operational management division, the forecasts help the company to see that organizational decisions that are made by the company are suitable and can balance its products that are not obtainable at the same time (Rivet, 2017). Aversa et al. (2020) explain that the forecasts inform Amazon’s operations management division that the company has to make choices vividly and properly weigh tradeoffs. Additionally, Amazon’s long-term forecasts are consistent with its investment policy and they are customer-oriented, working to establish crucial things that customers value. Stevens and Johnson (2016) explain that Amazon has optimized its shareholder value by focusing on long-term achievements. Nonetheless, the company’s concentration on long-term approaches has impacted its short-term goals/objectives and financial performance (Bruque et al., 2015). Its stock prices have suffered, resulting in fluctuating operation margins. Thus, when devising strategies, Amazon ought to consider the short-terms objectives/goals to better a balance.
Further, logistics, transportation modes, as well as warehouse locations have affected Amazon’s competitiveness in various ways. First, Amazon has more than 145 warehouses globally, enabling their customers to get their products from the company within relatively shorter time periods and free (Rivet, 2017). Secondly, Amazon employs the e-commerce logistics model whereby products, like freight, are promptly and efficiently delivered, thus enhancing customers’ satisfaction (Houde et al., 2017). The transportation models, such as the free shipping mode, alongside a two-day free shipping have significantly improved the company’s customers satisfaction, therefore establishing the clients’ trust and confidence (Aversa et al., 2020). Therefore, logistics makes sure that Amazon is able to decently operate its supply chain since it allows Amazon to make the storage and flow of products efficiently and cost-effectively and to tackle customers’ needs. Warehouse and transport modes also enhance Amazon’s accessibility of distinct cities and regions, thus increasing the number of offerings and clients.
Global Sourcing and Procurement and the Effectiveness of Amazon’s Supply Chain
Global sourcing and [procurement affects Amazon’s supply chain effectiveness by cost minimization, quality assurance, and risk reduction (Bruque et al., 2015). According to Stevens and Johnson (2016), global sourcing allows a company to enjoy lower costs of raw materials and labour. Similarly, global sourcing and procurement increases a company’s productivity. The program opens new marketplaces and allows commercial establishments to employ trending fashions and cultures into their present commercial models (Houde et al., 2017). Besides, global sourcing offers quality assurance by meeting customers’ needs and eliminates risks to businesses through quality systems and control and products (Rivet, 2017). Global sourcing and procurement offers Amazon with an opportunity to get measurable and in-depth supplier performance that relates directly to augmented cost savings. It also allows the company to choose providers who provide the best quality and cost from across the world, allowing Amazon to keep high and quality inventory levels (Stevens & Johnson, 2016).
Through the use of global sourcing, Amazon has the ability of enhancing its operations. It obtains opportunities to minimize freight costs, while improving its services and products’ quality simultaneously. It is able to be extra flexible, thus streamlining the process of product delivery besides allowing it to address its customers’ needs. This way, turnover can be increased, while fixed assets can be minimized and inventory investment can be restricted to allow saving of costs. The use of outsourced functions betters the company’s information technology usage, making accessibility to the needed data easier and permitting Amazon to work with experts. Nonetheless, there are various challenges with global sourcing. There are hidden costs involved and confidential information is in danger of being exposed (Houde et al., 2017). Additionally, small unspecified time and standard quality services impact negatively outsourcing.
Amazon’s E-Commerce Strategies to Promote Supply Chain Integration and Boost Sales
Amazon, according to Houde et al. (2017), controls listing in online search engines, ensuring that its prospective clients will without problems and ease find its website on top. Amazon’s are often accompanied by long-tail key phrases, implying that more distinct search requests will result in the same product (Stevens & Johnson, 2016). The search engines used on the website permit defining of various product characteristics.
Amazon’s clients also receive individualized recommendations. The company also offers free shipping, thus increasing the number of clients who would usually reject the likelihood of online buying due to shipping costs (Aversa et al., 2020). Amazon also offers all its customers an opportunity to write product reviews online and thereafter read comments by other clients. Reviewing of different costs on the company’s digital platform is free. The online platform allows the company’s customers and prospects to compare costs extra efficiently. The customers are also capable of finding all needed information online regarding Amazon’s products that they have interest in at a glance without necessarily have to physically visiting the company’s stores (Aversa et al., 2020). The company also employs cross-sell, which increases the likelihood of related products to be purchased. Amazon has equally been able to discriminate its pricing strategy via the use of suitable cost lining and justifiable pricing.
Amazon as a Model to Companies
I feel Amazon sets out an example for other firms to model supply chain integration. First, Amazon has constantly been developing distribution centres across the globe to better product delivery in less than an hour to clients within the U.S. along with launching four university bookstores (Chaudhuri et al., 2018). Additionally, it has bettered its international shipping via cargo jets and a French package delivery firm, making it reach its clients within the shortest amount of time. Through Amazon’s Global Supply Chain by Amazon, strategies have been formulated for carrying out Amazon’s freight services, thus eliminating middlemen and consequently reducing its operational costs to allow it price its products differently (Rivet, 2017). This has lessened the company’s global burden of long logistics processes and enhanced its e-commerce strategy. The employment of online technology has bettered Amazon’s visibility throughout its supply chain. Lastly, Amazon has been distinct in minimizing its supply costs, while enhancing its products’ margins. Thus, Amazon has effectively and efficiently integrated the supply chain and should be a model to its competitors.
Aversa, P., Haefliger, S., Hueller, F., Reza, D. G. (2020). Customer complementarity in the digital space: Exploring Amazon’s business model diversification. Long Range Planning, 101985. https://doi.org/10.1016/j.lrp.2020.101985
Bruque C. S., Moyano F. J., & Maqueira M. J. M. (2015). Cloud computing, Web 2.0, and operational performance: The mediating role of supply chain integration. The International Journal of Logistics Management, 26(3), 426-458. https://doi.org/10.1108/IJLM-07-2013-0085
Chaudhuri, A., Boer, H., & Taran, Y. (2018). Supply chain integration, risk management and manufacturing flexibility. International Journal of Operations & Production Management, 38(3), 690-712. https://doi.org/10.1108/IJOPM-08-2015-0508
Houde, J., Newberry, P., & Seim, K. (2017). Economies of Density in E-Commerce: A Study of Amazon’s Fulfillment Center Network. ERN: Networks (Topic). DOI:10.3386/W23361
Kaipia, R., Holmström, J., Småros, J., & Rajala, R. (2017). Information sharing for sales and operations planning: Contextualized solutions and mechanisms. Journal of Operations Management, 52, 15-29. DOI:10.1016/j.jom.2017.04.001
Lii, P., & Kuo, F.-I. (2016). Innovation-oriented supply chain integration for combined competitiveness and firm performance. International Journal of Production Economics, 174, 142-155. https://doi.org/10.1016/j.ijpe.2016.01.018
Rivet, D.J. (2017). Amazon’s Superior Innovation: A Study of Amazon’s corporate structure, CEO, and reasons behind why it has become the most innovative company in today’s market.
Stevens, G.C., & Johnson, M. (2016). Integrating the Supply Chain … 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), 19-42. https://doi.org/10.1108/IJPDLM-07-2015-0175