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Amazons Supply Chain - Case Amazon
Case Amazon
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International Markeitng (International Market)
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Use the globalEDGETM website (globaledge.msu) to
complete the following exercises:
Amazon is passing through about $160 billion in sales via
its global supply chain channels and partnerships annu-
ally, a staggering amount given that the company rarely
takes possession in any true sense of the products that it
channels to customers from various companies.
has ranked among the top companies for years in the
“Gartner Global Supply Chain Top 25” ranking. Other
regular entries among the companies with the best global
supply chains include Unilever, McDonald's, and Intel.
a. What are the benefits to IKEA of shifting so much
of its global production to China?
Amazon Inc.—typically referred to as just Amazon—
4. Reread the Management Focus on IKEA production
in China and then answer the following
questions:
6. What type of interorganizational relationship
should a global company consider in the (a) in-
bound portion of its supply chains if the goal is to
buy commodity-oriented component parts for its
own production and (b) outbound portion of its
supply chains if the goal is to establish a
strong partnership in reaching end-customers?
people aware of the differences in manufacturing
costs worldwide. The US Department of Labor's
Bureau of International Labor Affairs publishes
the Chartbook of International Labor Compari-
sons. Locate the latest edition of this report, and
identify the hourly compensation costs for manu-
facturing workers in China, Brazil, Mexico,
Turkey, Germany, and the United States.
5. Explain how the global supply chain functions of
(a) logistics and (b) purchasing can be used to
strategically leverage the global supply chains for
a manufacturing company producing mobile
phones.
c. What strategies might IKEA adopt to maxi-mize
the benefits and mitigate the risks asso-ciated
with moving so much product?
1. The globalization of production makes many
Amazon is based in Seattle, Washington. It has now
become the largest online retailer in the United States,
As customers, we have come to expect that Amazon will
deliver whatever we buy in the shortest cycle time
b. What are the risks associated with a heavy con-
centration of manufacturing assets in China?
Identify the top 10 logistics performers. Prepare
an executive summary highlighting the key find-
ings from the LPI. How are these findings help-
ful for companies trying to build a competitive
supply chain network?
2. The World Bank's Logistics Performance Index
(LPI) assesses the trade logistics environment
and performance of countries. Locate the most
recent LPI rankings. What components for each
country are considered to construct the index?
3. A firm must decide whether to make a compo-nent
part in-house or to contract it out to an
independent supplier. Manufacturing the part
requires a nonrecoverable investment in special-
ized assets. The most efficient suppliers are
located in countries with currencies that many
foreign exchange analysts expect to appreciate
significantly over the next decade. What are the
pros and cons of (a) manufacturing the compo-
nent in-house and (b) outsourcing manufacturing to
an independent supplier? Which option would you
recommend? Why?
surpassing Walmart as the most valuable retailer in 2015
by market capitalization (but Walmart's revenue is still
gigantic at about $500 billion annually). Amazon started in
1994 as an online bookstore but has diversified to a variety
of products, including music downloads, furniture, food, and
almost all consumer electronics. These days, customers
can seem-ingly buy whatever they need via the Amazon
platform. In the United States alone, roughly 150 million
customers per month visit Amazon. But this massive
availability of products also puts a strain on Amazon's global supply c
research task globaledge.msu
CLOSING CASE
Global Production and Supply Chain Management Chapter 17 513
Amazon's Global Supply Chains
Machine Translated by Google
delivery partners—not replace them—during the very busy
peak periods like the holiday seasons.
1. Do you think Amazon will become customers' fa-
vorite retail shopping interaction, taking over the
retail shopping from companies like Walmart and
Target, for example, in the next few years? Will
cus-tomers buying commodity products such as
tooth-paste and other relatively low cost items want
to do that in brick-and-mortar stores or have it
shipped directly to their doorstep in two days or less?
So far, in addition to the United States, Amazon has
retail websites for Australia, Brazil, Canada, China, France,
Germany, India, Italy, Japan, Mexico, the Netherlands,
Spain, the United Kingdom, and Ireland. And, the Amazon
Prime service places great strain on Amazon's supply
chains where it is available in its worldwide locations (eg,
Canada, France, Germany, Italy, Japan, and the United Kingdom).
2. Some people say that the prices for the product
In addition, Amazon's customer service centers span
some 15 countries worldwide. Plus, the company operates
retail websites for international brands such as Sears
Canada, Bebe Stores, Marks & Spencer, Mothercare, and
Lacoste. This means that Amazon is benefiting from both
its global supply chains for delivery of vendors' products
and its service as a technology supply chain vendor to businesses.
associated with Amazon Prime are always higher
than if you buy the same product on Amazon or
elsewhere without the guaranteed two-day ship-
ping. But, what do you think customers are buying
when they use Prime—the quick service of getting
it in two days or the guarantee that they will get
the product in two days?
Another interesting development—or, at least, idea at
this stage—is the speculation that Amazon is thinking
about launching a global shipping and logistics operation
that can compete with United Parcel Service (UPS) and
FedEx. Of course, Chief Financial Officer (CFO) Brian
Olsavsky downplayed Amazon's ambitions on this front.
possible, often no more than two days, especially if a cus-
tomer is signed up for Amazon Prime. The Amazon Prime
service includes free two-day shipping (on many products),
video streaming, music, photos, and the Kindle lending
library for an annual fee (currently $99 per year or $10.
per month). All these services are welcomed by customers,
but the free two-day shipping is really what drives the
Amazon Prime service.
3. Should Amazon, and companies like it, get into
the supply chain and logistics business and start
having their own shipping platforms? Do you
think operating global supply chains can become
one of Amazon's core competencies, is it already
a competency they profit from, or should they
focus on simply connecting buyers and sellers online?
He said that Amazon was just looking to supplement its
The free two-day shipping (and a myriad of other ship-
ping alternatives for a fee) requires Amazon to leverage its
inventory management practices, global supply chains,
and technology to cost effectively reach customers. Deliv-
ery speed and efficiency require Amazon to have strategi-
cally located fulfillment centers worldwide that can be used
by select vendors on the Amazon platform. This includes
strict requirements for packaging, labeling, and shipment.
Amazon stores these vendors' products in bulk or in
individual “pickable” locations.
Endnotes
Design Elements: Implications (idea): ©ARTQU/Getty Images; Problem
(jigsaw): ©ALMAGAMI/Shutterstock; All Others: ©McGraw-Hill
Education.
February 11, 2016.
Sources: Todd Bishop, “Amazon Sales Rises 22% to $43, Profit Beats
Expectations But Stock Slips on Revenue Miss,” GeekWire, February 2,
2017; Spencer Soper, “Amazon Building Global Delivery Business to Take
On Alibaba,” Bloomberg Technology, February 9, 2016; V. Walt, “How Jeff
Bezos Aims to Conquer the Next Trillion-dollar Market,” Fortune, January 1,
2016; B. Stone, “The Secrets of Bezos: How Amazon Became the Everything
Store,” Bloomberg Business, October 10, 2013; A. Cuthbertson, “Amazon
Buries Zombie Apocalypse Clause in Terms of Service,” Newsweek,
514 Part 6 International Business Functions
Case Discussion Questions
3. See the articles published in the special issue of the Academy of
Management Review on Total Quality Management 19, no. 3
(1994). The following article provides a good overview of many of
the issues involved from an academic perspective: JW Dean and
DE Bowen, “Management Theory and Total Quality,”
2. DA Garvin, “What Does Product Quality Really Mean?”
1. T. Hult, D. Closs, and D. Frayer, Global Supply Chain Management:
Leveraging Processes, Measurements, and Tools for Strategic
Corpo-rate Advantage (New York: McGraw-Hill Professional, 2014).
Sloan Management Review 26 (Fall 1984), pp. 25–44.
Machine Translated by Google
Was this document helpful?
Amazons Supply Chain - Case Amazon
Course: International Markeitng (International Market)
49 Documents
Students shared 49 documents in this course
Was this document helpful?
Use the globalEDGETM website (globaledge.msu.edu) to
complete the following exercises:
Amazon is passing through about $160 billion in sales via
its global supply chain channels and partnerships annu-
ally, a staggering amount given that the company rarely
takes possession in any true sense of the products that it
channels to customers from various companies.
has ranked among the top companies for years in the
“Gartner Global Supply Chain Top 25” ranking. Other
regular entries among the companies with the best global
supply chains include Unilever, McDonald's, and Intel.
a. What are the benefits to IKEA of shifting so much
of its global production to China?
Amazon.com Inc.—typically referred to as just Amazon—
4. Reread the Management Focus on IKEA production
in China and then answer the following
questions:
6. What type of interorganizational relationship
should a global company consider in the (a) in-
bound portion of its supply chains if the goal is to
buy commodity-oriented component parts for its
own production and (b) outbound portion of its
supply chains if the goal is to establish a
strong partnership in reaching end-customers?
people aware of the differences in manufacturing
costs worldwide. The US Department of Labor's
Bureau of International Labor Affairs publishes
the Chartbook of International Labor Compari-
sons. Locate the latest edition of this report, and
identify the hourly compensation costs for manu-
facturing workers in China, Brazil, Mexico,
Turkey, Germany, and the United States.
5. Explain how the global supply chain functions of
(a) logistics and (b) purchasing can be used to
strategically leverage the global supply chains for
a manufacturing company producing mobile
phones.
c. What strategies might IKEA adopt to maxi-mize
the benefits and mitigate the risks asso-ciated
with moving so much product?
1. The globalization of production makes many
Amazon is based in Seattle, Washington. It has now
become the largest online retailer in the United States,
As customers, we have come to expect that Amazon will
deliver whatever we buy in the shortest cycle time
b. What are the risks associated with a heavy con-
centration of manufacturing assets in China?
Identify the top 10 logistics performers. Prepare
an executive summary highlighting the key find-
ings from the LPI. How are these findings help-
ful for companies trying to build a competitive
supply chain network?
2. The World Bank's Logistics Performance Index
(LPI) assesses the trade logistics environment
and performance of countries. Locate the most
recent LPI rankings. What components for each
country are considered to construct the index?
3. A firm must decide whether to make a compo-nent
part in-house or to contract it out to an
independent supplier. Manufacturing the part
requires a nonrecoverable investment in special-
ized assets. The most efficient suppliers are
located in countries with currencies that many
foreign exchange analysts expect to appreciate
significantly over the next decade. What are the
pros and cons of (a) manufacturing the compo-
nent in-house and (b) outsourcing manufacturing to
an independent supplier? Which option would you
recommend? Why?
surpassing Walmart as the most valuable retailer in 2015
by market capitalization (but Walmart's revenue is still
gigantic at about $500 billion annually). Amazon started in
1994 as an online bookstore but has diversified to a variety
of products, including music downloads, furniture, food, and
almost all consumer electronics. These days, customers
can seem-ingly buy whatever they need via the Amazon
platform. In the United States alone, roughly 150 million
customers per month visit Amazon.com. But this massive
availability of products also puts a strain on Amazon's global supply chains.
research task globaledge.msu.edu
CLOSING CASE
Global Production and Supply Chain Management Chapter 17 513
Amazon's Global Supply Chains
Machine Translated by Google