Amazon's Supply Chain Process

1458 WordsDec 19, 20156 Pages
The supply chain process begins when the customer places an order on the website. What is invisible to the customer is the sophisticated, yet streamlined process that occurs behind the scenes in order to deliver the order as promised. Amazon used to subscribe to the pull strategy of inventory management maintaining an endless volume of on hand inventory with the intent of always being able to satisfy customer demands. Over time this process became expensive and inefficient prompting the company to review its inventory management. In 2000, Amazon made a decision to adjust its inventory management system to promote efficiency and maintain . Warehouse layouts were changed and its proprietary warehouse software adjusted to help forecast inventory demands The improved inventory model called for inventory to be managed as follows: (1) High demand inventory based on past sales and forecasts is retained at multiple distribution centers (2) Drop shipment where after searching Amazon’s inventory it searches inventory of manufacturer and wholesaler transferring the customer’s order to the wholesaler or manufacturer to complete the customer’s order (3) The third inventory mechanism is to allow vendors and retailers to offer products on Amazon’s website. One of the benefits of this inventory sourcing is that the customer is able to compare prices and make selection about price and delivery options after comparison. Additionally, in tapping into this three prong inventory system, the
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