Amazon’s Supply Chain Management

Amazon collects, stores, processes and analyzes data and personal information from every person that browses or makes a purchase on their website. Amazon uses data from these people and customers such as time spent browsing, shipping address, census information such as income based on location, etc. to help with predictive analysis. Amazon recommends items by collecting this data instead of making you search through the entire website, which simplifies the task. By Amazon using information and information technology collecting specific data, the company has grown into a giant among online retail stores, which helps them remain competitive in industry.

(Marr, 2019)

Porter’s Five Forces Model in relation to Amazon’s

Amazon is the biggest actor in the e-commerce market, but still has competition with other online retailers such as Wal-Mart, Target, etc. “Porter’s Five Forces Model helps business people understand the relative attractiveness of an industry and industry’s competitive pressures in terms of: buyer power, supplier power, threat of substitute products or services, threat of new entrants, and rivalry among existing competitors.

” (Hagg & Cummings, 2013, pg. 19)

Buyer Power is high, because Amazon is a customer centric company that strives for the highest levels of customer satisfaction and product quality. But with that said, customers have a number of options where to shop due to the increased number of online retailers. Supplier Power is low, because Amazon has a large number of suppliers that follow their strict set of rules and regulations. Due to the large number of sales for every item, no supplier is attempted to impact the product prices of Amazon.

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Threat of Substitute Products or Service is high, because Amazon has typically does not have a lot of unique goods, except for some tech products, such as Amazon Fire Stick, Kindle, Alexa, etc. Most goods purchased on Amazon can be bought elsewhere. Threat of New Entrants is low, because not one online retail business can beat Amazon because it would take a lot of investment, time and effort to get as big as Amazon is in the online retail world. Rivalry Amoung Existing Competitors is high, because the online retail environment is competitive due to the increased number of online retailers over the years. Many people also still to choose to shop at brick and mortar stores, which is also a competition. (Dudovskiy, 2018)

Amazon’s Supply Chain Management

Amazon’s efficient supply chain management is broken into 4 sectors: warehousing, delivering, technology, and manufacturing. (Johnson, 2018)

Warehousing

Warehouses are placed thoughtfully near big metro areas and population hubs with inventory spread throughout each of them to ensure the supply can meet the demand.

Mini-warehouses are placed in smaller areas to ensure orders can be sent and delivered fast in these areas as well.

Delivery

Amazon has a number of delivery options available which differentiates them among many other online retailers.

Amazon also has many delivery modes; branded trucks and vans, drones, FedEx, UPS, USPS, and also bikes in certain areas.

Amazon’s delivery is fast and efficient everywhere in the world, including remote and rural areas.

Technology

Amazon truly embraces technology with its supply chain management system, which makes it quick and efficient.

Amazon uses automation and robotic solutions to both pick and package orders as well as stacking and storing inventory.

Manufacturing

Amazon has taken to manufacturing its own products from household products to pets to babies, and so on to lower costs to customers.

Manufacturing helps Amazon to own the whole lifecycle of products – from creating and marketing them to storage and shipment.

Amazon’s Enterprise Resource Planning

Amazon’s orders are automated, and their ERP helps fasten this process and reduces mistakes. Amazon has used Oracle for ERP needs for many years but is reducing its reliance on Oracle. On November 1, 2018 Amazon moved its data warehouse from Oracle to its own service, Redshift. By the end of 2019 Amazon will be off Oracle databases completely. (Feiner, 2018)

Amazon’s Customer Relationship Management

Amazon has its own CRM software in house that is tailored to its own requirements and needs. Amazon uses the CRM software for data collection, personal data storage, recommendations, the Kindle Marketplace, and customer support. The CRM software allows Amazon to capture customer data to use it to instantly modify a customer’s over all on-site experience. Most of the customer queries are handled by the CRM software before reaching human involvements, which has reduced the need for customer service staff and the cost associated with staffing. (Chakrawarty, 2017)

Amazon’s Database Management System and Data Warehouse

As with Amazon’s CRM and ERP their database management system and data warehouse are also inhouse. Amazon started a NoSQL movement, which is a widespread effort to build a new kind of database for “unstructured” information. The database Amazon uses is called DynamoDB, which is one of many of Amazon Web Services. DynamoDB is a set of tools offering online access to various computing resources from virtual servers to virtual storage to databases and other software. This NoSQL type of database provides a more flexible way of storing data and is specifically designed to scale across a very large number of machines. Amazon’s software is an online service in which you do not have to install software and servers on computers. (Garling, 2017)

As stated above with ERP, Amazon’s Redshift is the data warehouse that Amazon created. “Redshift is cost-effective and simple to analyze all data. Redshift delivers faster performance by using machine learning, parallel query execution and columnar storage on high-performance disk.” (AWS, 2019)

Agent-Based Technologies Currently in Use at Amazon

Amazon uses intelligent agent technology. “Thousands of activity and sales reports are automatically distributed to associates each week.” Amazon uses intelligent agents to help with customer recommendations while browsing the website and making purchases. Some other applications that intelligent agents can be used for are data filtering and analysis, workflow management, personal assistance, simulation, etc. (Collins, 2005)

E-Commerce Business Model(s) Currently in Use at Amazon

Amazon uses both B2B and B2C business models and they work together to make Amazon the retail Giant it is today. In the B2B model, Amazon provides businesses with a resource to sell directly on Amazon by setting up their own pages to list items for a fee per transaction or subscription. Amazon also gives businesses a way to accept payments from their websites from buyers who have Amazon accounts through Amazon Payments. Amazon also offers order fulfillment to these businesses by letting them give business packing and shipping to Amazon from any of their warehouses nationwide. (Charles, 2017)

In the B2C model, Amazon offers its own products in which customers can purchase directly from Amazon. Amazon also has exclusive products such as Alexa, Amazon Firestick, and Kindle e-reader. Amazon prime is a feature that Amazon has that provides customers with discounted instant video and e-books as well as free shipping for a monthly fee. (Charles, 2017)

How Amazon Could Benefit from Using SDLC

“The systems development life cycle (SDLC) is a structured step-by-step approach for developing information systems that includes seven phases: planning, analysis, design, development, testing, implementation, and maintenance.” (Hagg & Cummings, 2013, pg. 160) As discussed throughout this portfolio, Amazon’s systems were created by the organization so everything could be done inhouse. I am sure Amazon has used the SDLC through each of the systems it created. One system that comes to mind in which Amazon used SDLC for is their CRM system, which has made their customer service efficient and satisfactory.

Phases of Business Continuity Planning at Amazon

“A business continuity plan, or disaster recovery plan or contingency plan as it was known as in the past, is a step-by-step guideline defining how the organization will recover from a disaster or extended disruption of its business processes. (Hagg & Cummings, 2013, pg. 212) The six phases of a business continuity plan are: organization strategic plan, analysis, design, implementation, testing, and maintenance. Amazon has designed its own business continuity plan and partnered with NetApp, which is cloud based. A business continuity plan is never finished because it always needs to be maintained in case new threats arise or assets within an organization change. Below are the phases of a business continuity plan and what needs to be done during each phase, which relates to Amazon, and any organization for that matter. (Hagg & Cummings, 2013, pg. 213-215)

Organization Strategic Plan

• Define the importance of resources, process, systems and other organizational assets.
• Rank the importance of assets because it is nearly impossible to recover every asset within minutes of a disaster.
• Define which systems you need to get up and running as soon as possible such as customer ordering, supply chain management software, data center, etc.

Analysis

• Perform impact analysis; define which IT applications are critical and noncritical.
• Perform threat analysis; document possible threats to the organization such as disease, earthquakes, fire, flood, cyber-attack, terrorism, and utility outages. Define how to recover from such disaster.
• Perform impact scenario analysis; Consider each threat from the threat analysis and build a worst-case scenario for each.
• Build a requirement recovery document from each of the above analysis. This document should be detailed and is needed for the design phase.

Design

• Designed a formal, technical and detailed plan for recovering from disaster using the requirement recovery document.
• Decide where the backup location should be – i.e.: offsite or cloud based
• Decide where employees will work, a hot site fully equipped or a cold site that is not equipped
• Determine what the best recovery plan is based on a disaster recovery cost curve.

Implementation

• Engage in businesses that will be providing facilities, hot and/or cold sites, and implement necessary procedures for recovering from a disaster.
• Train employees in what to do in case of a disaster.
• Evaluate each IT system to ensure it is capable of recovering from a disaster.

Testing

• Execute simulated disasters and have employees execute on the disaster recovery plan to ensure the solutions meets the recovery requirements of the organization.
• If there are any deficiencies return to the design and implementation process to reconfigure and reimplement the plan.
• Test the disaster recovery plan every year, or several times a year.

Maintenance

• Always assess new threats and reevaluate IT systems and related assets.
• Continue constant monitoring, support and maintenance.

How Amazon Could Use Emerging Trends to Remain Competitive in the Future

With Amazon being on the World Wide Web the organization must use emerging trends to remain competitive in the future. Amazon has created many tech devices that you can use with Bluetooth and WIFI, and they will continue to do so in the future to remain competitive. Once upon a time Amazon made a smartphone but failed miserably. I am not sure how Amazon can compete cellphone wise with the big cellphone makers such as Apple, Samsung, etc. Amazon can try again to make a cellphone to remain competitive, but they would need to come up with something big to compete in the cellphone world. Amazon could also use RFID in their supply chain management to remain competitive. It is well known that Amazon is a customer centric company and has fast delivery. RFID can help manage inventory as to what comes into the warehouse and what leaves.

Measures Amazon Uses to Ensure Information if Protected and Free from Security Vulnerabilities

On Amazon’s website, it has its privacy policy, in which all organizations do. Amazon is all about security whether it be on Amazon.com or Amazon Web Services. Amazon collects a lot of data from customers, but they do not sell it and only share when it is appropriate i.e.: promotions, third-party service providers who fulfill orders, deliver them, etc., fraud protection, credit risk reduction, etc. Amazon also protects information during transmission by using Secure Sockets Layer (SSL) software that encrypts the information. (Amazon, 2019)

References:

1. Amazon. (2019). Amazon Privacy Notice. Retrieved from
2. AWS. (2019). Amazon Redshift – Amazon Web Services. Retrieved from
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7. Feiner, L. (2018, November 28). Amazon will be off all Oracle databases by end of 2019, says AWS chief. Retrieved from
8. Garling, C. (2017, June 03). Amazon Goes Back to the Future With ‘NoSQL’ Database. Retrieved from
9. Haag, S., & Cummings, M. (2013). Management information systems for the information age. New York, NY: McGraw-Hill Irwin.
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11. Marr, B. (2019). Amazon: Using Big Data to understand customers. Retrieved from