Operations are composed of many different processes to fulfill customer needs and requirements. The value chain is a higher-level view of those processes from a customer view. In order to meet customer requirements like quality and cycle time, organizations need to identify the value chain, subprocesses and measures needed to meet the customer needs.
Consider a process from an organization you are familiar with. In 500-750 words, complete the following:
Identify the steps in the high-level value chain required to fulfill the customer requirements from beginning to end.
From the high-level value chain steps, identify the operational subprocesses.
Identify those metrics that the organization should monitor at both the value chain level and subprocess level.
Based upon the process you described above, if an organization needs to improve a process within the value chain, how would you analyze the process and metrics to know that the process is not working
Explain what steps the organization could take based upon your analysis for value chain improvement
Value Chain and Process Improvement at Amazon Inc.
Amazon’s Value Chain Analysis
Amazon Inc. is a renowned global leader in the retail sector, primarily due to its efficient value chain. It suffices to highlight that the company’s value proposition revolves around high quality products/services, positive relationship with consumers, speedy delivery, and the provision of a facilitative infrastructure (Eling & Lehmann, 2018). Such a unique vision is normally attained in five key steps, including inbound logistics, operations, outbound logistics, marketing and sales, and service respectively. Notably, each of these steps necessitates the integration of various support activities, including firm infrastructure, technology development, human resource, and procurement.
Amazon’s inbound logistics is characterized by direct and indirect procurement of inventory. The company has fulfilment centers established in strategic locations to allow it to deliver its short delivery time promise. Procurement is a sub-process which is implemented directly by acquiring products from suppliers then selling them as the company’s inventory or indirectly by offering retailers the Fulfilment by Amazon logistics services (Onyusheva & Seenalastaporn, 2018). Success in inbound logistics is measured by the speed of delivery. Quality is a major metric in the sub-process (procurement) since failure to acquire high quality products from suppliers jeopardizes the organization’s value in the eyes of the market. Horizontal integration is a key solution for enhancing the outcomes of this process in case suppliers fail to deliver quality.
Amazon operations mainly include its phenomenal Amazon Web Services, Artificial Intelligence Software ‘Alexa’, and its various regional websites. It is fair to assert that this step of Amazon’s value chain is largely influenced by its technological prowess (Eling & Lehmann, 2018). Such a claim affirms the notion that technology development is the key sub-process at this phase. Key performance metrics for this step include the robustness and breadth of technological solutions it offers. On the other hand, a fundamental performance metric for the technology development sub-process are system security and cost, especially since the company deals with data collected from millions of people. When the process fails to work, the most appropriate solution would involve outsourcing of technological systems to facilitate Amazon’s services.
Outbound logistics at Amazon Inc. integrates various elements, including fulfillment centers, physical stores, digital delivery (downloadable content and drone supplies), as well as outsourcing (mainly via UPS, TNT, and FedEx). The key sub-process at this stage is firm infrastructure (Ziobro & Mattioli, 2019). It is wise to argue that an inconvenient structure constrains the company’s capacity to meet its goals. For this reason, both the value chain step and the sub-process are measured by factors such as strategic positioning on physical locations and logistics providers’ competency. The most efficient move for Amazon in case of failure in its firm infrastructure would be to outsource through methods such as drop-shipping from suppliers who operate close to customers.
Marketing and Sales
Amazon’s marketing and sales are largely influenced by capital and human resources. While the first factor plays the key role in boosting the company’s progress in terms of marketing and sales, the human resource is the driving force behind strategic techniques. In this sense, key performance metrics for this stage include capital usage and sales rates while the metrics for human resource sub-processes include employee qualifications, cultural diversity, and organizational behavior. When sales and marketing are not resulting in desirable outcomes, the organization should consider promoting employee representation at the decision-making levels.
Apart from the highlighted digital offers, Amazon gives its stakeholders unique services such as education and training on matters pertaining to the system and information technology at large (Onyusheva & Seenalastaporn, 2018). When placed into perspective, training is a sub-process which is measurable by observing the success of learners (includes independent clients and suppliers) in real-life settings. Any failure in this process can be resolved by increasing investment in educational materials and improvement of course content.
Inasmuch as Amazon Inc. is renowned for its robust value chain system, it can improve it by implementing a few steps. First, the company should invest in the creation of content-based platforms for video/audio consumption and interactions. This move will give it an opportunity to reduce the costs of marketing while improving its relationship with clients. Second, Amazon should embrace vertical integration to have a grip on the logistics aspects of its business. This approach will enhance its capacity to deliver its promises with limited strain.
Eling, M., & Lehmann, M. (2018). The impact of digitalization on the insurance value chain and the insurability of risks. The Geneva papers on risk and insurance-issues and practice, 43(3), 359-396.
Onyusheva, I., & Seenalasataporn, T. (2018). Strategic Analysis of Global E-Commerce And Diversification Technology: The Case Of Amazon. Com INC. The EURASEANs: journal on global socio-economic dynamics, (1 (8)), 48-63.
Ziobro, P., & Mattioli, D. (2019). FedEx to end ground deliveries for Amazon. The Wall Street Journal.