Supply Chain Information Management - Amazon - Assignment Example

Supply Chain Information Management Question One Introduction Generally, the distribution channel refers to the means through which business chains or even their intermediaries transfer their goods and services to the end consumer. Traditionally, according to (Wang 2013), the distribution channel is composed of the wholesalers, retailers, distributors and currently the internet. In fact, the internet has grown to be a major distribution channel replacing the traditional costly means. In this regard, the internet has introduced a direct channel that is shorter and is often preferred by businesses and consumers. The Amazon distribution channel has grown rapidly in the last decade and is expected to grow further. This paper evaluates the Amazon’s distribution channel and its evolution. Amazon’s Original Distribution Model Amazon started in 1994 as a book store that was launched by Jeff Bezos and it took its shape of the Amazon.com since then. Notably, Amazon was initiated on a value proposition anchored on four dimensions. The four dimensions helped Jeff Bezos to focus on service to the customer, the price, selection and the convenience of the products and services it would offer online. The Amazon online inventory consisted of many items and this offered the customers a wide range of choices as compared to any physical store. Moreover, the website was constructed such that it kept the download period very low while offering platforms for reviews that were later used for its improvement. Originally, the online store was constructed such that customers for books would be satisfied by being supplied from the warehouse of Amazon while it enjoyed its benefit of time and cost efficiencies. As such, the Amazon built several ten warehouses that were situated in ten states with least or no tax for sales (Jansen, Bernard, Amanda & Isak 2009). Amazon would then order books from the warehouses after customers had agreed to pay for them and hence low return costs. After a period of time, the Amazon warehouses were increased worldwide and also the number of products stored in the warehouses increased. The products in the warehouse were well kept and computerized so that the number lines of a product in the warehouse matched those of the product stocked online. When a customer ordered a product, for example, a book, automatically the order mentioned the title of the product and then a barcode. As a result of this process, computers would then signal the workers that a particular product was not supposed to be on the shelf and then they would verify the order and pick it for parceling. Amazon’s Current Model Currently, the distribution channel has greatly evolved from the original especially due to improvements when dealing with encountered challenges. In this consideration, the Amazons potential distribution center features the so-called centers of sortation (Loton 2014). Today, Amazon basically provides an online B2C retail services and relies heavily on human resources for distribution. However, the company has been keen to pursue its objective to provide services that are enjoyable, speedy and simple to use by consumers. Notably, the company has reduced the size of the inventory considerably and hence they can be managed efficiently. In addition, today the number of inventories has been kept at low levels as the company. To facilitate its operations, the company relies on wholesalers to supply the books upon a request by customers. When a customer makes an order online, the system without human intervention notifies the relevant wholesalers who then supply the customer. Further, IT systems have been applied to integrate specific operations to suppliers according to the locations, quantities timing and efficiency of the relevant services and products (Fletcher, Jim & Rod 2004). The wholesalers, once they receive the order, they either supply through their smaller outlets or ship the products using UPS or FedEx or even both. On the other hand, Amazon has constructed distribution centers that store varieties of products. The distribution centers have conveyor systems in place that are of the highest speed and many people employed for moving the products as fast as possible upon the order of a customer. Important Features of the Current Distribution Model The most important features of the present distribution channel are included in the Amazon Sortation network that has fulfillment centers. The typical fulfillment center may be approximately 1.1 M2 and needs around 1000 to 1500 attendants working full time. Hill and Gareth (2012) suggest that their main objective is to meet or fulfill the orders made by customers. This fulfillment centers with the sortation centers have taken away the control of transport from parcel courier’s companies to Amazon hence reducing costs and improving the reliability of Amazon distribution channel. On the other hand, the sortation centers are relatively smaller than the fulfillment centers and require fewer attendants, 100-300, to operate as compared to the fulfillment centers. Conventionally, they are located near a large fulfillment center so that they can aggregate shipments from various fulfillment centers. According to Wang (2013), the objective of aggregation by the sortation centers is to groups orders that are to be delivered to a particular region normally identified by its zip code. The sortation centers have facilitated the next day delivery objective or, at times same day delivery, through the provision of separate infrastructure that efficiently solves logistical problems related to routes that are outbound. Amazon’s Outsourcing Services At the last resort, every e-commerce merchant must decide how the product will reach the consumer in order. On the other hand, Amazon.com is viewed as a role model in the e-commerce business especially due to the improvements it introduced to the distribution feed (Kerpen, Theresa & Valerie 2013). Accordingly, the company now provides warehousing and fulfillment expertise to the merchants of e-commerce who seek their services. These services are provided by the company through its ‘Fulfillment by Amazon services. Generally, this service offers three means by which e-commerce sites may communicate with it. One, the seller central is an interface that allows traders to sort orders one by one after they have got an order and processed the fee. Secondly, the feed support allows e-commerce merchants to communicate issues with the experts of Amazons Fulfillment by Amazon. Lastly, the Integrated Processing Interfaces (IPIs) allow larger sellers to automatically integrate their sites with the Amazon site. In this consideration, Amazon has not only improved the supply chain for the betterment of only the customers but also seeks to consider other players in the distribution chain. Question Two Set Up for Facebook Home Delivery Business Basically, a small business can open a Facebook storefront from where consumers can buy products. The design and construction of a storefront on Facebook requires one to create a Facebook page that has the name of their business. One would then post the pictures of their products with some short descriptions. Craig (2013) advises that the business page would require customizing such that it would allow customers to interact with the page. For example, applications may be found from Facebook or from outside vendors that may allow the user to customer page for things like shopping, entering contests and seeing the menu. The above-described process may be used to start a home delivery business model. However, this will require the combination of the identified Facebook features with the Amazon’s distribution model to start the business. In addition, the business would entail liaising with manufacturers of home products so that one may stock their products in their Facebook store. As such, the business may depend on the owner for delivery or may agree with the manufacturers who would be willing to supply customers to their homes upon order. If the model includes supply, a possible distribution mechanism would include inventories for the different types of products stocked. Strategy for Making the Business Successful The best marketing strategy would involve identifying the specific goods that can be stocked due to their ability to be easily saleable for home users (Tittle 2000). For instance, perishable products like vegetables are important for home users while they may not be a good choice for an online store. Contrary, home utensils and furniture may be good choices due to the imperishability and also because an online store can store more products hence a wider choice for the customers as opposed to a physical store. After ascertaining that the right choice of product has been made, then various marketing strategies may be pursued. Facebook avails marketing strategies of different types starting with the simple and free ones to the paid advertisements. The Facebook page should be designed with a cover page that not only suits the owner but also identifies with the customers. For instance, the cover photo for a home delivery business may include the products in a home setting or use. Further, after posting the pictures it is necessary to pin, friends in Facebook. Posting should also be done often, should be descriptive, appealing and not too formal. Marketing should also include offering choices for the customers so that the wide range of products suits many customers. Marketing strategies should also include posting regularly, use of videos, encouraging comments by replying promptly and using the Facebook features to know about the target customers. Lastly, Witham (2011) suggests that the Facebook page should be promoted using the advertisement packages that Facebook offers. Structure of the Supply Chain Typically, a supply chain should include all the parties that indirectly or directly assist in the fulfillment of a customer’s order. Traditionally, the supply chain should identify the manufacturers or assembles and the finished products, the suppliers, and the consumers, and how the funds, information and goods and services will flow. The chart below illustrates the supply chain for a Facebook home delivery business. Flow of goods Flow of information and Funds This supply chain structure for the home delivery business identifies various entities. The suppliers provide raw materials to home-making-product manufacturers. The Facebook distributor stores an inventory from various manufacturers that are delivered to homes upon ordering. As goods flow funds move in the opposite direction but the information moves in all directions. This implies as Witham (2011) indicates, that all participants in the market share information regarding the market and the product. In the supply chain, various services may be outsourced by the business. For one, the delivery services may be contracted to another parcel company or another business in the running heralds business. The IT system of the business may make use of Amazon’s ‘Fulfillment by Amazon’, especially the seller central interface, for facilitating its transactions. Most probably, the business would outsource the functions of Amazon that has been successful in constructing online stores. The inventory stores may be also outsourced from businesses running warehouses around major towns or may be conducted by the business though it might be costly for startups. The best arrangement from the manufacturers may be performed by them were they will be requested to deliver the specific products to the warehouses (Witham 2011). Ethical Issues Finally, there are various ethical issues that must be addressed in the nature of the Facebook delivery business. In fact, some of the ethical issues may land the business into legal issues if it doesn’t address them at the outset. First, some material on the internet is protected by copyright. Consequently, one has no right to copy such works without the consent of the owner and placing them for the public to see. Therefore, it is important to be aware of the type of content posted on the businesss page. For instance, copying images and descriptions of manufacturers without their consent may constitute an illegality. Similarly, one may control the reuse of their content by the use of appropriate options for sharing, showing their license and publishing the business’s terms and conditions. Finally, the type of content in the site should not constitute an immorality to a group of individuals as even some customers may share the sediments of that group (Wankel, Matthew & Jurate 2010). As such, demoralizing content should be discouraged as may also cause customers not to take the business seriously. Conclusion In conclusion, the content of the site should be evaluated in terms of the reputation of the business, information and the impact it may have on others. If used well, Facebook offers a business opportunity that may be utilized by businesses. However, by the nature of the of the operations of an online business, it may be necessary to have a business entity particularly dealing with it as compared to traditional businesses starting an online outlet. Bibliography Craig, Randall. 2013. The Everything guide to starting an online business: the latest strategies and advice on how to start a profitable Internet business. Avon, MA: Adams Media. Fletcher, Richard, Jim Bell, and Rod B. McNaughton. 2004. International e-business marketing. London [u.a.]: Thomson. Hill, Charles W L., and Gareth R. Jones. 2012. Strategic Management. London, Cengage Learning Jansen, Bernard J., Amanda Spink, and Isak Taksai. 2009. Handbook of research on web log analysis. 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