Having already defined what supply chain management is, its importance, and the difference between the e-commerce and the traditional industries, it’s time to elaborate a bit more on the supply chain of Amazon and what makes it one of the most efficient supply chains in the world.
In fact, Amazon’s state-of-the-art international logistics capabilities and availability of products are what enabled them to grow to over 200 million paid Prime members globally and hundreds of millions of worldwide active customer accounts.
Amazon is the world’s biggest e-commerce company. There you can find anything you need as a customer, and as one, you for sure aren’t interested in their supply chain as soon as your purchased product arrives on time.
The Supply Chain of Amazon
But what do you need to know about Amazon’s supply chain system when you are on the other end? As a brand owner selling on Amazon you will be interested to learn as much as you can about its supply chain network, its logistics, and how you can grow your business thanks to Amazon’s supply chain.
You need to know that Amazon’s supply chain model is one of the largest, most efficient, supply chain operations in the world.
What do we mean by the supply chain of Amazon? In fact, it addresses the whole process of inventory management, pricing, warehousing, shipping, and delivering the finished goods. The company is making its efforts to make this the most smooth supply chain, but in reality, things are not as smooth as they look at first glance.
When you are a brand owner you know that you have different fulfillment options on Amazon. This means you can choose to handle the fulfillment on your own or you can let Amazon sort, package, and ship products through their fulfillment center.
As a third-party seller, you can use either of these services. The FBA, fulfillment by Amazon where Amazon takes care of the orders made on Amazon’s marketplace, or FBM, fulfillment by merchants where you are the one that handles the fulfillment.
What does the supply chain of Amazon look like? After you ship your finished goods to Amazon’s fulfillment centers, they distribute them to different locations based on your product demand. Once the products are in the warehouse they are ready to be sold.
Amazon’s Supply Network
The next steps are what we understand as the Amazon supply network.
The customer will place an order through Amazon’s website. Your products may be split into ones coming directly from Amazon or ones that are registered on a third-party platform/ website. Even if you are selling on a website that’s off Amazon, you can still use their fulfillment centers (FBA). That’s done easily by integrating the e-commerce platform you are using on the website (for example Shopify), and your Amazon Seller Central.
The next step is sorting the items. Amazon stores the items in bins that are tracked by a computer, they are used to transport the products based on size.
After that follows, picking the orders. The order barcode is matched with the product, the product is being placed in a crate on a conveyor belt, and goes through the distribution center before being sorted, where later it arrives at the central point. Then again the barcode of the product is matched with the order to make sure they are fulfilling the right one, they are sorted automatically into chutes before being boxed. Barcodes are crucial for fulfilling orders as they identify both the product and the order placed.
When the product and order are matched they are subject to quality assurance. This means they are checked manually to ensure that address and information are correct.
Finally, the order is ready to be packed. Items that belong to different shipments are organized and scanned before being sent to pack stations. There they will be measured and packed into an adequate box. The third-party vendor items are shipped in original boxes.
This is how Amazon organizes their supply chain and makes sure the product you ordered will be delivered to you.But what made Amazon this big as we know it today? Why do new entrepreneurs consider selling on Amazon?
Why the Supply Chain of Amazon is considered as its Best Competitive Advantage?
Through the years they worked on their pricing, warehousing, technology, and delivery.
One of the most important things every business owner tends to achieve is lowering their costs. Amazon has successfully separated regular customers from prime customers.
The prime customers pay more for the product and have fast delivery times, in contrast to standard ones that have slower delivery times. Also wanting to be seen as a distributor and not a long-term warehouse center, Amazon has increased its long-term fees for the FBA sellers.
The result of this is that nowadays sellers send inventory that will be enough for their six to eight weeks of sales, and prevent having higher costs. In turn, Sellers keep their excess inventory in 3rd party warehouses where the storage costs are lower.
Warehousing is the main part of Amazon’s success. Having lots of warehouses, fulfillment centers, and distribution centers located near large cities they have ensured products are within reach. Today Amazon’s warehouses are positioned strategically near big cities – this makes delivering the products more convenient. Apart from their own warehouses, Amazon has partnered with wholesalers. If they can not fulfill their orders they use their partners instead.
The next big thing that separates Amazon’s supply chain from others is its delivery. They have an excessive amount of delivery options. One of these options is the free two-day prime delivery. Another is the prime Now Option which gets products from one place to another in less than two hours. All these come into play to make Amazon’s delivery fast and easy. They have put in place other delivery services that tend to meet everyone’s needs.
As the world’s number one e-commerce site Amazon has introduced us to new technology for managing orders. They have introduced the technology in the supply chain in order to cut down costs and work smarter. This led to improving company efficiency and delivery speed. Amazon started using automation and robots in their fulfillment centers to pick, pack and ship inventory. As a result, they have cut down costs on warehousing and staffing.
Amazon as a company that is primarily oriented to satisfying customers’ needs will do anything to reach this goal. Continuous improvement of the supply chain innovations is making them stay on top of the e-commerce industry. They have the resources to organize their supply chain management in a way that competitors can’t keep up with them.
Here at AMZ Operations, we understand the importance of supply chain management and how to best utilize Amazon’s ever-evolving network.
We understand how better management of the inventory can lead you to better sales and higher profit margins for your products.
And although Amazon has made it very efficient to get involved in selling using the supply chain, when running a business and selling multiple products, without help and proper tracking of all of the numbers and stages of your products, you as the Seller can become easily lost in Amazon’s backend – Seller Central or just feel overwhelmed of all of the things that need to be done.
That’s why our mission is to take care of the inventory using top-of-the-line software and manual tracking which give us the assurance that everything is running smoothly, and the profitability is at its highest potential. We want to relieve the sellers of having to spend time on tasks like tracking, ordering, fulfilling, stocking, etc.
The business owner’s time is the most important asset, and that’s what is going to propel the Brand on Amazon, not the fulfillment of the everyday, mundane, operative tasks.
If lack of time sounds like the missing piece that’s causing your business not to grow, or you simply want more time for yourself, your family, or your hobbies, please schedule a call with us to find out how we can help.