To be known as the “giant” of online retail, how special must the way Amazon's supply chain model operates be? Is this a model that trading and transport companies in Vietnam should adopt? Sbiz.vn answers all these questions below!
About Amazon
Founded in 1994, Amazon was developed by Jeffrey P. Bezos from its original idea as a simple online bookstore into an e-commerce “giant” offering goods in many different categories, such as pet care products, CDs, sports products, household goods...
This has brought Amazon an impressive annual income higher than the GDP of half the world's countries, reshaping the entire global retail market.
Besides its online retail business, the group also runs what is considered the world's largest cloud computing platform, along with many other impressive products such as online drives, video platforms and music streaming.
About Amazon
Thanks to good customer service and a comfortable shopping experience for both long-time shoppers and casual browsers, Amazon has always earned customers' trust and satisfaction when shopping on its e-commerce marketplace.
With annual revenue higher than the GDP of many countries, a customer base roughly the size of the US population and assets worth up to US$1,100 billion - larger than some national economies - Amazon is seen as holding enormous resources and growing extremely strongly.
How Amazon's supply chain model works
Amazon's supply chain model is run in an extremely methodical, clear way. Specifically:
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All warehouses in Amazon's supply chain model are built in highly strategic locations, such as near city centers, densely populated areas or large supermarkets. In addition, the company sets up some small warehouses in less populated areas to ensure flexible, fast delivery times.
Warehouses in Amazon's supply chain model
Amazon also optimizes internally within its warehouses. Notably, goods don't need to be arranged in any particular order (for example, a novel can sit in the same bin as a brush and a doll), so warehouse staff can pick goods quickly without spending time putting items back in the right place. At the same time, many orders can be completed at once by using a management system that optimizes picking routes.
Distribution
One of the biggest differences between Amazon's supply chain model and other online retailers is that the company offers many different delivery options, including 2-day Prime delivery, free delivery and even Prime Now delivery within two hours of ordering.
To achieve this, the company has applied many different approaches, from traditional methods to cutting-edge technology, as well as making use of existing delivery routes through UPS and FedEx.
Technology
Amazon's approach to managing its supply chain model is to apply high technology. The company has adopted a variety of automation and robotics solutions for picking and packing orders and managing inventory, such as:
Drone distribution and delivery systems.
Using Dash Wand (which lets users give voice commands) and Dash Button (a small IoT device that lets users order easily and quickly with a single press).
The Dash Button is linked to a specific product or brand
Robotic warehouses: robots automatically pick, pack and sort shipments in the warehouse.
Mobile data collection: Amazon's supply chain model uses software solutions that can collect mobile data and integrate in real time with back-end systems, letting the company share order information across geographically distributed warehouse locations and speeding up delivery.
Cloud computing: with the Amazon Web Services cloud computing solution, which can integrate inventory management software, the company can manage inventory efficiently and smoothly.
Manufacturing
Besides letting sellers operate on its platform, Amazon also creates similar products itself and sells them at lower prices. The company offers goods under a variety of brands, from household items to baby and pet products... and the list keeps growing.
What are the strengths and weaknesses of Amazon's supply chain model?
Strengths of Amazon's supply chain model:
Large-scale warehouses spread across the US, applying many modern, highly scientific technologies, together with owning its own warehouses, give it many advantages in managing goods and warehousing, ensuring initiative and flexibility.
Trading a wide variety of goods, combined with having many suppliers, makes it easy for the company to expand its market and reach many types of customers around the world.
It ensures continuity of supply. The delivery system is always flexible across carriers and postal services, making things convenient for customers.
Amazon's supply chain model brings many advantages, ensuring initiative and flexibility
Weaknesses of Amazon's supply chain model:
High warehouse investment costs, which in turn mean high shipping and storage costs.
Applying many modern technologies in the warehouse requires highly skilled, thoroughly trained staff to keep operations running well.
It can suffer major losses when the system fails.
Should companies in Vietnam adopt the strengths of Amazon's supply chain model?
Its strong growth and current success are the clearest proof of the effectiveness of Amazon's supply chain model, which offers many outstanding strengths that trading and shipping companies in Vietnam should adopt.
This requires companies to invest in technology innovation to build up and strengthen the role of the supply chain, emphasizing automation by combining smart technology platforms such as SmartBiz IoT and AI. This increases delivery speed and efficiency and significantly cuts operating and management costs.
>>> See also: IoT technology platforms - the power behind the transport industry
As you can see, Amazon's supply chain model is extremely effective. So it is no surprise that the company has grown so rapidly in a relatively short time. This is a model that trading and shipping companies in Vietnam should absolutely adopt to boost their business growth in the market. If you would like more detailed advice on IoT technology platforms, please contact Sbiz.vn right away for detailed support!