At present, the competition in the e-commerce retail industry is becoming increasingly fierce. Factors such as the improvement of service standards and the competitiveness of product prices have led to the continuous increase in operating costs of enterprises. The management level of the supply chain has become the key to the success of the retail industry. However, in the red ocean competition in the e-commerce retail industry, Amazon has always maintained a rapid growth trend. So how does the retail giant Amazon stand out by virtue of its supply chain management?
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retail giant amazon
supply chain management
01. Innovative FBA model
As the world's largest retail technology company, Amazon has launched the FBA model to meet the needs of different retail environments around the world, that is, "seller sells, Amazon ships." Amazon gathers the goods of third-party sellers on the platform to Amazon's fulfillment centers all over the country. Amazon is responsible for the storage, sorting, packaging, delivery, return, and after-sales services of the goods, and charges a certain service fee; in terms of decision-making optimization, FBA provides sellers with an inventory performance index based on multiple factors such as seller inventory, excess inventory, stranded inventory and sales rate, to help sellers optimize inventory and improve operating efficiency. With the help of intensive material management methods, the processes of commodity distribution, delivery and warehousing have become more efficient, helping hundreds of millions of sellers to greatly save labor and material costs related to contract fulfillment.
02. Advanced supplier management mode
In terms of supplier management, Amazon adopts a modern management method to deal with inventory problems. For each type of product and the sales volume of each specification, it will be synchronized to the supplier in time, and then the goods will be sent directly to the corresponding supplier through the replenishment order. Place. During this whole process, Amazon reduced its own inventory reserves, broke through the traditional siloed inventory management model, fully reflected the integrated management thinking of the supply chain, and adapted to the requirements of current market changes.
03. Strong information support
In terms of informatization, Amazon is the first in the industry to use big data, artificial intelligence, and cloud technology to manage warehousing and logistics, and build a big data smart logistics operation system. support. After the Bin system receives the purchase order, it regards the purchase order as one storage space, and the truck as another storage space. When the products are put into storage, they are transferred from the storage space of the purchase order to the storage space of the warehouse one by one, thereby improving the accuracy of management. . With the strong support of the system, the product has a very high flexibility in the whole process from receiving, putting on the shelf, inventory, inspection, and shipping. All information is stored in the storage system, and any needs can be met at any time. Amazon's powerful information system maximizes the binding relationship between goods, locations, and quantities, supporting an annual sales scale of 40 billion US dollars. Relying on advanced information technology, Amazon saves an average of 3 minutes per order compared to the original . In an operation center that handles tens of thousands of items every day, saving 3 minutes for each order increases the overall operating efficiency by more than 3 to 4 times.
04. Efficient performance system
In terms of warehousing and distribution network, Amazon's efficient and fast fulfillment system has benefited from its emphasis on and investment in warehousing and logistics infrastructure since its establishment. The compound annual growth rate of Amazon fulfillment center area reached 25%. Not only that, the layout of Amazon's logistics infrastructure network is also continuing to evolve. After 2013, Amazon proposed the "Operation Dragon Boat" strategy to gradually build its own transportation, distribution and contract fulfillment capabilities. In 2014, Amazon began to build sorting centers and distribution sites on a large scale in places close to big cities, increasing the proportion of self-built transportation and distribution, and improving the service quality and efficiency of terminal distribution as a whole, gradually involving the back-end from fulfillment centers to terminal consumers Chain service, strengthen the control of the delivery quality of the customer's last mile. In addition to self-built logistics, Amazon also outsources its express delivery business to third-party large logistics companies such as the US Postal Service, FedEx, and UPS, and has created two major models: "Express Service Partner" and Amazon Flex, to realize the "delivery of the terminal delivery network". Crowdsourcing" operation. By integrating social logistics and its own transportation resources, it also ensures the efficiency of order fulfillment and improves the delivery speed.
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How asset-intensive industries can learn from
Amazon's supply chain
Amazon's supply chain management has demonstrated unique market competitiveness in the e-commerce retail industry. Inossem believes that from the perspective of technology application and industry demand, this model will provide significant reference value for asset-intensive industry supply chain management In summary, the future development of asset-intensive enterprises can learn from the following three aspects.
01. Strengthen the establishment of the company's internal contract performance system
The retail industry has a high fault tolerance rate for product supply shortages. Out-of-stocks may only result in loss of sales opportunities. However, asset-intensive industries have much higher supply standards for materials than the retail industry. Safety and timely supply are the first priority. 2. The orderly progress can only be ensured under the third premise of economic supply. The shortage of materials in asset-intensive enterprises may increase the production and operation risks of enterprises. Adopt a procurement mode that is higher than the actual demand as much as possible to ensure the normal operation of the enterprise, which makes it difficult to solve the problem of inventory backlog; asset-intensive material management usually involves multiple units and multiple warehousing and logistics links in a single purchase order, and the final delivery Sometimes in the process, third-party logistics, quality inspection, and confirmation of receipt are required, which is not only inefficient, but also difficult to manage. Multi-level transmission often produces a bullwhip effect, which brings great challenges to the company's internal delivery of contracts.
In order to better ensure the efficiency of material supply and reduce supply costs. Asset-heavy enterprises need to build a three-dimensional contract fulfillment infrastructure network through a rationalized warehousing and logistics network layout in the fulfillment link of warehousing and distribution, and establish a coordinated and intensive contract fulfillment mechanism, so that products of the same category and in the same demand area can be sourced and collected together. Single distribution, avoiding the inefficient delivery experience brought about by the multi-level delivery method, and making differentiated adjustments according to the priority of material categories. For strategic materials and special reserve materials, use self-built part of the infrastructure to ensure internal supply chain performance Terminal service quality and supply timeliness.
02. Build digital capabilities - Internet of Things + big data
Faced with hundreds of millions of orders from users around the world every day, Amazon can complete the fulfillment and delivery in a timely and efficient manner, which is inseparable from powerful information management methods. With the help of Internet of Things technology and cloud information platform, information collection and recording and real-time visualization of data can be realized in the links of warehousing, transportation and even production management. For asset-intensive enterprises, material management is an indispensable and important part, which directly affects the resource layout, deployment and utilization of the enterprise.
For example, in terms of material management , asset-intensive enterprises have various types of materials and scattered storage, which puts forward higher requirements for the storage of materials and the consistency of accounts. Learn from Amazon's innovation in the field of information technology, make full use of the Internet of Things technology, and connect all materials to the Internet, so as to realize the management of the whole life cycle from material production to material scrapping, and effectively solve the problem of long inventory cycle and unrealistic accounts in traditional material management. Inconsistencies etc.
In terms of warehousing management , the difficulty of recruiting workers for asset-intensive enterprises has become increasingly prominent. Relying on low labor costs to improve warehousing management capabilities has been gradually eliminated by the market. The loss of front-line operators has forced enterprises to upgrade their warehousing management. Hardware” and “software” reduce the workload of operators. You can refer to the informatization support capability of the Amazon Bin system to provide operators with support for daily material management. Through IoT devices, combined with the characteristics of the warehouse, use RFID, PTL and other technologies , realize the operation assistance of front-line personnel, accelerate the familiarity of warehouse workers with the warehouse, and at the same time avoid the learning cost of the new and old personnel due to the aging of personnel, release the labor force while ensuring the safety of production and operation, with the help of rich data collection Dimensions and quality, optimize management decisions, and improve operational efficiency; with the help of big data algorithms, build a data model by collecting and organizing historical records, predict the future demand quantity and geographical distribution of materials, and carry out distribution planning in advance to determine the inventory in warehouses in different regions Optimum allocation among them, calculate the optimal inventory level for each area, can strike a balance between inventory level minimization and working capital efficiency. With the help of the supply chain system, logistics, transportation, warehousing, distribution and other links are effectively integrated to help enterprises complete the deep integration of business with higher efficiency and lower cost, and continuously enrich and improve the warehousing and logistics ecosystem.
03. "FBA" warehouse distribution integration model
For asset-intensive industries, the distribution of warehouses is scattered, and there is a lack of scientific warehouse planning. Distribution usually has the form of coexistence of internal distribution resources and social resources, and it is impossible to centralize and coordinate superior resources to maximize the benefits of internal resources. Learn from Amazon's FBA's intensive overall planning management model, establish an integrated warehouse and distribution management model around warehousing and logistics distribution, and unite various demand parties within the company to intensively demand materials, and effectively integrate demand, warehousing, logistics, distribution and other links. And integrate third-party warehouse resources to generate economies of scale. For example, inter-regional material storage and joint preparation can be carried out to realize the intensive saving of inventory resources in the region, which will help to form the procurement advantages in the region. The warehousing and distribution center of its own business ecosystem integrates warehousing and distribution resources and operation management models, realizes unified management and distribution of materials, reduces operating costs and improves resource sharing within the enterprise.
Summarize
Inossem believes that if the innovative supply chain model promotes the rapid development of Amazon, then the technological empowerment of digital intelligence can bring a qualitative leap to Amazon. Overall, fully combining information technology to realize the overall planning and optimization of material warehouses, transportation, and distribution, efficient management capabilities in the storage, transportation, and distribution of materials, and reduce inventory backlogs and insufficient performance levels caused by inefficient demand decision-making; improve The end-to-end visualization capability of the whole link promotes the layout of the supply chain, and at the same time strengthens the cooperation with three-party resources, which is conducive to the deeper and wider development of asset-intensive enterprises and the construction of collaborative capabilities. Through digital intelligence technology, the coordination and integration of resources in the region can be realized at a lower cost and higher efficiency, and the use of artificial intelligence, big data analysis and other means to strengthen collaboration with upstream and downstream partners will become an asset-intensive enterprise. An important starting point for digital transformation.