Earlier, in part 1 we looked at the Netflix Effect on Supply Chains. The focus was on the visibility in Supply Chains as reflected by Netflix. Finally, in the second part of this series, we will look at the Amazon Effect and its impact on Supply Chains as we know it. Let’s find out if there are similarities or not, shall we?
Amazon is the largest internet based retailer in the world by market cap. Selling over 100s of millions of products is not easy, but Amazon has managed to dominate the e-commerce landscape. The ‘Amazon Effect’ revolves around the online accessibility of goods and services to consumers in comparison to physical stores. The most important point for Amazon seems to be the ‘Fulfillment’ of orders.
Let’s break down the Amazon effect into smaller components:
Be it delivering overnight or within a two day period, Amazon does it all. Clearly, Amazon drives its competitiveness by fulfilling orders fast. The Amazon effect has extended this expectation to other platforms as well. This means that your Supply Chain has to be capable of handling large volume. Furthermore, you should be able to fulfill the orders placed over a short period in due time. Chances are that you have to deliver more frequently and in shorter batches, rather than waiting till the end of the day to ship out everything together. So, make sure you have the means to:
- Offer Drop Shipping
- Provide order updates to users
- Support Automatic Replenishment
Vast product offering
Amazon boasts a product catalog that contains millions of items. Offering such a huge variety comes with its own rewards and risks. This means that online retailers offering various goods must track their inventory. We recommend implementing a serialized inventory system so that you can achieve:
- Quality control
- Process improvement
- Product tractability
Also, using bar codes and scanners can help you keep a track of where your goods are. And you would not have to worry about losing them along your Supply Chain. Ultimately, feel free to add more products to your catalog as you can now manage them better.
3PL and Warehouse
More recently, Amazon has started investing in its own fleet of vehicles to offer quicker deliveries. However, not every retailer has the resources to do the same. This means that to streamline the sales process, you should focus on your warehousing and 3PL operations. Have a system in place to speed up functions like receiving, cycle count and more. Opt for paperless picking and packing by digitizing records. Then, you can focus on more important functions and not worry about the shipments.
In conclusion, there’s a lot we can learn from both Amazon and Netflix, in terms of our supply chains. Amazon focuses on making your supply chain process faster, whereas Netflix wants to create visibility. You must prioritize your goals and take actions accordingly. Interested to know how CLEAR SPIDER can help your Supply Chain? Feel free to reach out to our experts for a demo.