Inventory management. Amazon - Research Paper Example

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Logistics is one of the key issues for any business enterprise; even for service and software enterprises whose output is not physical in nature. It is however, the main consideration for retail businesses. The growth of enterprises in the retail industry has depended on their ability to manage inventory which is a part of the larger process of logistics management. …
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Download file to see previous pages The competitive advantage possessed by a company is also determined by similar factors. Efficient management of logistics allows a company to focus on other activities such as adding value to existing products, etc which indirectly increase the productivity of the organization. However, in today’s business scenario, the retail market has evolved and efficient logistics management is no longer just an advantage, it is the norm. Companies have found several different ways in which to achieve this, usually in alignment with their business models. The use of IT technologies has been one of the main factors that have hastened this process since companies are now able to communicate between offices regardless of the distance that separates them (CILTUK, 2007: 10-11). In order to understand the practical issues concerning inventory management, we examine the case of Amazon in the below report.
Aims and Objectives of the research
The following case study which examines the case of Amazon reflects on the growth of the company with respect to various theories associated with logistics management, in particular with the subject of inventory management. It attempts to relate the issues faced by the company and its subsequent successes to the research available in the field. It also explores the alternatives available for the company that might help it grow further. With the above information, the study also attempts to predict the future direction of the company based on the current status of the company and available business scenarios. Literature Review Company and market overview Amazon was setup in 1994 by Jeff Bezos as an online book store. Similarly, it was established in Europe as a book store in 1998. As a result of its successes, it was launched in other countries as well. Amazon International consists of a number of subsidiaries such as Amazon Japan and its operations in Europe. Its Europe operations have needed an improvement to match its expected growth rate. In particular, its distribution strategy has been looked at more closely and an attempt has been made to emulate the American structure. Due to advancements in technology, Amazon has been able to enter a number of markets. However, technology, coupled with the opening up of new markets across the world has also led to an increase in the number of competitors in the field. Lessons from American Distribution strategy Reducing the costs incurred due to the purchase and holding of inventory or stocks is one of the main challenges for a retail store. However, the challenges faced by an online store are unique. Amazon was setup at a time when most of its competitors, other book stores, were brick and mortar stores or mail – order catalog businesses. The challenge of maintaining a low cost for stocks, at the same time satisfying customer demands is magnified for an online store. Amazon initially tackled this problem by holding minimum stocks while relying of wholesalers to satisfy most of its demand. This helped reduce the holding cost of stocks. At the same time, Amazon also tied up with publishers so that the unit cost of stocks would also decrease (Waters, 2003: 52). A combination of the two helped the company's capacity grow from 1 million book titles to 2.5 million book titles in the early years. This also helped ensure that orders were completed ...Download file to see next pagesRead More
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