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Amazon’s supply chain model is one of the world’s largest, most effective, and state-of-the-art supply chain operations. Moreover, technological innovations have been adopted over the years to streamline processes and improve efficiency.
With more than 130 million stock-keeping units to manage and millions of transactions to control, Amazon processes have made it seem possible for smaller eCommerce businesses to learn from their strategies and implement them.
All in all, Amazon has completely revolutionized many aspects of supply chain management. There are many lessons that can be learned to help improve your manufacturing and supply chain operations.
1. Good Inventory Management Is Key
Arguably, the most critical and challenging role that inventory plays in supply chains is to balance demand and supply. Amazon’s strategic approach to inventory management can teach both big and small businesses many lessons to improve their performance.
Anyone in the supply chain industry knows that there are various factors influencing inventory management, and each strategy to organize a warehouse can be different from the other.
To achieve rapid delivery Amazon addressed its warehouse logistics and numerous factors affecting inventory management strategy.
To effectively manage the flows in the supply chain, your business needs to manage upstream supplier exchanges and downstream customer demands. Therefore, building an essential equilibrium of fulfilling customers’ orders and managing a sufficient supply of materials and goods is necessary. This balance is the key to building a better inventory management system.
2. Always Improving Warehousing Operations to Remove Bottlenecks and Automate Redundant Steps
Warehousing is one of the critical parts of the Amazon supply chain. Within these fulfillment centers, Amazon stores inventory so that there are always products ready to meet demand anywhere in the world.
Amazon is constantly improving its warehousing operations and automating them. With a vast network of warehouses, Amazon ships orders to customers efficiently and quickly, and that too at minimum expense.
Workers and pick-and-pack robots find products immediately and start getting them ready for dispatch.
In addition to these warehouses, Amazon runs a network of partner wholesalers and distribution centers. If an order cannot be fulfilled from its distribution centers, Amazon can easily depend on its partners to fulfill instead.
Learning from Amazon
While you may not have the budget or the need for multiple warehouses or fulfillment centers, you can still streamline your warehousing or other storage by improving your warehouse operations and automating the redundant tasks. Here are the best lessons from Amazon:
1. Using Barcodes:
Using barcode labels on products exponentially improves productivity in your warehouse. Each time an inventory item is picked up, it will be scanned directly into your order management system (OMS). It automatically updates inventory levels, thereby improving accuracy. It also helps managers get a real-time view of the quantities on hand and the inventory in stock.
2. ABC Analysis:
Do an ABC analysis on your warehouse. It assists in classifying your inventory to find the best place for each item in your warehouse. * Group A - Most essential items, i.e., best sellers, most used. * Group B - Less important items * Group C -Rarely used items, seasonal items not in season. It optimizes picks in your warehouse. With the change in demand, you may find that Group C has become Group A. So, you need to be prepared with a plan to reshuffle the inventory at that time of year.
3. Training:
The essential learning among these is employee training. If you do not adequately train your employees about the new warehouse processes, you will be in the same position where you started. So, it is really important to always educate your employees about standard operating procedures.
3. Managing Orders with Excellent Visibility
Amazon’s take on the emerging consumers’ digital preferences has made it rule the industry. Amazon has managed everything so well from handling increased buy-online-pick-up-in-store behaviors and unusually high demand spikes for certain goods.
If you face the same considerable delivery delays from clogged pipelines, submerged carrier services, forced closures, and reduced available work staff, your inventory management needs good visibility.
Start with identifying the primary pain point that would most benefit from increased visibility. Figure out the most critical issue, then go even deeper, root out the particular process, technology, and other solutions that ensure the best ROI for your business.
To obtain accurate visibility, you’ll have to collaborate with your vendors. Start talking with those vendors whose responsibility influences your bottom line the most. Approach them for collaboration and mutually beneficial gain. By starting working this way, you will fall into the ‘win-win situation.
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