Amazon’s Supply Chain Innovation Delivers Results

• by Alexa Cheater
• Published April 1st, 2016

There’s no denying Amazon is a Goliath in the online marketplace. Selling more than 480 million products, a mix of its own items and products drop-shipped by others; its supply chain is a force to be reckoned with.

I’ve written before about how the company is revolutionizing omni-channel strategies, but a recent post andinfographic by MBA@Syracuse, the university’s online MBA program, shines a spotlight on just how customer-centric Amazon’s supply chain really is.

According to the article, “Amazon continues to reinvest all of its free cash flow into growth initiatives rather than shareholder dividends and to pioneer innovative approaches, such as delivery drones.” That plan appears to be working as many customers see Amazon as the golden standard when it comes to fast, reliable, online retailers.

By beginning with the customer and working backwards, Amazon’s supply chain management team has had to up its game, keeping pace with the company’s constantly evolving definition of rapid delivery, which now includes Prime Now, promising two-hour delivery on tens of thousands of items to Amazon Prime members.

So how does the supply chain handle it all? Through the use of innovative technology like 1-Click ordering, patented in 1997, and ‘anticipatory shipping’, a predictive algorithm patented in 2013 that starts boxing and moving productsbefore the shopper clicks buy.

MBA@Syracuse notes that after an order is placed, “delivery takes one of several paths, depending on the order’s dollar amount, size and weight, geography, and customer inputs.”

Here’s a look at a simplified view of its supply chain.

Brought to you by MBA@Syracuse: MBA@Syracuse’s Supply Chain Management specialization

And boy is that a simplified view of things! Anyone who works in supply chain or logistics knows how many more steps are actually happening behind the scenes.

In order to keep up with its own rapid delivery models, Amazon’s supply chain has been forced to adapt, greatly expanding the number of nodes to include 115 million square feet of distribution facilities worldwide–104 centers in the US, and 69 more abroad. Since 2013, it has been adding sortation centers, required for Saturday and Sunday deliveries, which are roughly a quarter the size of fulfillment centers and sort packages by zip code for efficiency and cost savings.

Amazon also had to find solutions to make its same-day shipping model a reality. And so Amazon Flex was born, a service using gig economy workers to deliver packages.