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<\/a>2015 to $4.0 billion in 2018 at a compounded annual growth rate of 76% [2]. With the definition of convenience and service continuously evolving, Amazon has had to innovate relentlessly in its supply chain, but can it win against consumer needs?<\/p>\n<\/p>\n
\u00a0<\/em><\/strong><\/p>\n \u201cThe Amazon Effect\u201d [3] on Supply chain<\/em><\/strong><\/p>\n Amazon\u2019s digital marketplace not only disrupted the retail business model but also adopted key elements of Supply Chain 4.0[4] such as integrated planning and execution, logistics visibility, smart warehousing and prescriptive analytics.<\/p>\n Amazon\u2019s Oracle based ERP system automated order matching to nearest distribution center, thus expediting the order fulfillment process and reducing distribution mistakes. From the beginning, Amazon sought to create speedy delivery as a\u00a0competitive advantage and invested accordingly in more than 70 fulfillment centers in the US alone [5], partnering with sellers through its Fulfillment by Amazon (FBA) Model. This kept accelerating delivery times from 48 hours to next day and now couple of hours. Big Data Analytics recorded customer purchasing patterns to make personalized recommendations and predictive supply chain models preempted sales and expedite delivery. However, Amazon\u2019s big futuristic push to embrace smart manufacturing was investing heavily in automation of fulfillment centers. In 2012, Amazon acquired robotic and automated warehouse solution provider, Kiva Systems [6] and placed mobile robots in its warehouse that work on object recognition and depth sensing technologies to automate order picking and packing process. Even with the implications on the cost structure, this move made the warehouses more productive and fulfill precise delivery dates in their Prime Model. \u00a0 Given the extent of these advancements, it is fair to say that other online retailers have had to play catch up in adopting similar digitization elements in their Supply Chain Models.<\/p>\n Building Next Level Customer Experience: Integrating technology<\/em><\/strong><\/p>\n In 2015, Amazon brought the one-click shopping experience to life by creating dash buttons. These small thumb sized devices let consumers buy common household products (such as detergent, toilet paper) by merely clicking a physical button. The goal as per Amazon is to \u201cmake shopping disappear\u201d [7] and make buying products as easy as thinking about them. As of April 2017, Amazon received around 5760 orders daily through dash and had more than 300 buttons for different products. [7]<\/p>\n With an intent to disrupt physical retail, Amazon opened its prototype Amazon Go store in Seattle in December, 2016. This revolutionary concept combines checkout free shopping<\/strong> experience with just walk out<\/strong> technology and automated payments by utilizing same technologies used in self-driving cars: computer vision, sensor fusion and deep learning [8].\u00a0 Balancing the future and Long-term play<\/strong><\/em><\/p>\n Given its rapid pace of innovation, Amazon should choose carefully between ambitious, over the top and customer relevant, value driving innovations. In 2013, Amazon launched a demo of a drone based delivery system through which customers can receive their packages via drones within 30 minutes or less [9]. However, there is a risk of this concept being considered just a publicity stunt. Can the marginal benefit of delivery time reduction by few hours justify the cost of last mile distribution particularly with small value orders? With Amazon ahead of other eCommerce and conventional retailers in Supply Chain capability, its true competition remains the ever-evolving consumer preferences. Amazon has created a customer convenience innovation cycle and may be guilty of spoiling consumers for service, but it needs to address consumer preferences on a sustainable cost basis. A common trap would be to focus on providing ornamental experiences (such as facial recognition while shopping [10]) while neglecting cost saving interventions in logistics and fulfillment. Ultimately, low prices and broad assortments drove consumers to online retail and futuristic purchase experiences, though aspirational, might not be enough to retain price sensitive consumers. Looking ahead, Amazon should also further invest in integrating logistics capability and unifying its massive supply chain across countries to achieve greater scale and efficiency advantages.<\/p>\n Questions to consider <\/strong><\/em><\/p>\n With massive disruptions, the Amazon effect on supply chain is real but can Amazon continue the pace of effective innovations while not compromising profitability and long-term value? Will the consumers respond favorably to futuristic shopping experiences or are those efforts misdirected? Is Amazon winning this self-created battle?<\/p>\n As the clich\u00e9 goes, only time (and in this case, consumer) will tell!<\/p>\n Word Count : 794<\/p>\n References:<\/p>\n In the current tech savvy world, Amazon has been the clear winner against online and offline retailers through disruptive advancements in digitization of its Supply Chain. However, it might be important to realize the implications of rapid innovation and understand where the real war is.<\/p>\n","protected":false},"author":9575,"featured_media":23288,"comment_status":"open","ping_status":"closed","template":"","categories":[52,3301,219,3631],"class_list":["post-23287","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-amazon","category-amazon-prime-air","category-ecommerce","category-supply-chain-40","hck-taxonomy-organization-amazon","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n\n