Amazon : A Complex Supply Chain Network Essay

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Amazon has a complex supply chain network that utilizes sophisticated warehouse systems known as Fulfillment Centers (FCs). The company has over 96 FCs globally and 55 FCs in North America (Bishop,
2014). As such, Amazon offers almost 200 million products in its FCs. Each FC has a team of workers who sort the boxes into storage units through an inventory algorithm, where the employees transfer the boxes to a conveyor belt and then begin opening and unpacking them. This aspect implies that Amazon has to employ a large number of workers to walk, search, and select ordered items.
Amazon relies on external delivery companies, an aspect that might lead to uncontrollable service problems such as delays in delivery. It is notable that the use of external delivery companies has exposed
Amazon to the risks of service problems to customers, and increased the cost of delivery of products because of the changing dynamics of the transportation industry. The chart below shows an increase in Amazon’s outbound shipping cost between 2006 to 2015 (Schreiber, 2016).
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Outbound shipping cost in million U.S dollars Years
Amazon’s outbound shipping cost since 2006 up to 2015
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AMAZON 'S DIRECT FULFILLMENT AND VENDOR ENGAGEMENT 5
This trend is attributable to the impacts of extraneous variables such as fuel prices and automobile taxation, which inhibit the cost of delivery of the products. If Amazon does not absorb
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