e-Supply Chain Management
Content
Submitted By:
Group 3
NATASHA AGARWAL- B004
RAJ BROOTA- B012
EDELBERT FERNANDES- B023
SHOEB HASAN- B028
ASHMITA SENGUPTA- B054
BHUMI SHAH- B057
HARSHIT SINGHAL- B063
CONTENTS
1.
ABSTRACT........................................................................................................ 3
2.
COMPANY OVERVIEW....................................................................................... 3
3.
PROBLEM DEFINITION...................................................................................... 3
4.
NEED AND REQUIREMENT ANALYSIS................................................................4
5.
PROCESS SCENARIO........................................................................................ 4
6.
IT SOLUTION.................................................................................................... 5
7.
IMPLEMENTATION METHODOLOGY...................................................................6
7.1.
Planning and feasibility study...................................................................6
7.2.
Implementation Strategy..........................................................................7
8.
SWOT ANALYSIS............................................................................................... 7
8.1.
Strengths.................................................................................................. 7
8.2.
Weaknesses.............................................................................................. 8
8.3.
Opportunities............................................................................................ 8
8.4.
Threats...................................................................................................... 8
9.
CHALLENGES FACED........................................................................................ 8
9.1.
People....................................................................................................... 9
9.2.
Management............................................................................................. 9
9.3.
Technology................................................................................................ 9
10.
KPI AND ORGANIZATION METRIC................................................................10
11.
BUSINESS PARTNERS (SAY OUTSOURCING OR IN-HOUSE)..........................10
12.
CONCLUSION.............................................................................................. 11
13.
FUTURE SCOPE........................................................................................... 11
14.
REFERENCES.............................................................................................. 11
1. ABSTRACT
E-commerce does not just mean trading and shopping on the Internet. It
means business efficiency at all operation levels. Executives know it is
critical to effective business operations, but until now quantifiable
performance measures have been as scarce as the number of corporate
executives of China who heard of the phrase "supply chain management"
(SCM). Supply Chain Management means coordinating, scheduling and
controlling procurement, production, inventories and deliveries of products
and services to customers. The SCM is the backbone of E-commerce, a
very critical component of E-commerce. Supply Chain Efficiency means
having the right product at the right place at the right time, can save
money/reduce costs, and can enhance cash utilization.
2. COMPANY OVERVIEW
Amazon is one of the first online shopping sites launched in 1995. Since its
inception, it has been consistently ranked as one of the best retail sites on
the Internet and is regarded as the universal model for successful Internet
retailing. In March 1998, Amazon was ranked among the top 20 internet
sites in almost all the major market surveys.
Amazon owed a large part of its popularity to its excellent customer
service, which was due to its exemplary inventory management. Amazon
realized that there were a lot of players in the e-tailing industry and
therefore it needed to consolidate its position as one of the best online
shopping sites. Accordingly, it took several measures. In order to increase
its revenue, it added several new products to its site. In 1999, on an
average, it added a new product on its site once in every six weeks. It
entered into strategic alliances with several companies to increase the
range of products available on its site.
Later, it strengthened its Customer Fulfilment Network by obtaining
products directly from the distributors rather than stocking all the goods in
its warehouse. Amazon was popular among its customers for shipping the
goods within the estimated time, leading to satisfied customers, improved
market share and repeat business. By the end of 2002, Amazon had 22.3
million registered users on its site. By 2003, Amazon became the biggest
book, music and video retailer on the Internet and offered more than 4.7
million books, videos, music CDs, DVDs, computer games and other
products.
3. PROBLEM DEFINITION
Owing to Amazon’s ever expanding user base and the highly increasing
competition, the question that they needed to answer was what was being
done to set themselves apart from the competition. Although an ecommerce company, Amazon needed to undergo a change that would
allow them to stay ahead of the competition while simultaneously allowing
them to transform their supply chain into a framework that supports
communication as well as high levels of collaboration. They needed some
solution that would provide them with increased visibility in the supply
chain and hence allow them to be more responsive when necessary while
also allowing them to have quantifiable action points.
4. NEED AND REQUIREMENT ANALYSIS
Stages
As – Is
Process
Analysis
- Inflexible to Expansion
- Complex Supply Chain
- Trade-Off between
Ancillary & Core Activities
Product
Analysis
- Maintain Inventory of all
products
IT
Infrastructure
Competitive
Analysis
Strategic
Analysis
-SCM & ERP worked in silos
-Long Delivery Time
Large No. of Warehouses
Increased Shipping Costs
-Demand Supply Mismatch
5. PROCESS SCENARIO
To-Be
-Improved Shipping
-Logistics Efficiency
-Concentrate on Core
Activities
-Inventory of only popular
products
-Acted as a transshipment centre
-SCM & ERP Integration
-One-Day Delivery
-RFID Technology
-Partnerships with
Distributers/Wholesalers
-Match Demand;
Expansion
6. IT SOLUTION
1) In 2000, Amazon com made improvements in building its high quality
automated warehouses, and now today they have one of the most
efficient and sophisticated in the world. Amazon uses Oracle as there
ERP, in which Oracle built a multi-terabyte database for the company,
while SCM software was attained to control cost and improve shipping
and logistics efficiency. The SCM systems at Amazon coordinates all
supply activities of the company such as supply and distribution
network, logistic activities and inventory managemnet. It increases
process effeciency, reduces supply chain’s complexity, improving data
integration within the supply chain, and reducing costs. The ERP and
SCM are intregrated so they can interact with each other so they can
serve the customer with great efficency.
2) In early 2001, Amazon decided to outsource its inventory management
though it knew that it was a huge risk. When Amazon managed its own
inventory, it had earned the reputation of providing superior customer
service, which was its biggest strength. Now, the company wanted to
concentrate on its main activities and outsource inventory management in
order to earn more profits. Amazon did not stock every item offered on its
site, by stocking only those items that were popular and frequently
purchased. Amazon basically acted as a trans-shipment centre and ensured
that the entire process of shipping from the distributor to the customer was
done very efficiently. This is an example of Vendor Managed Inventory.
3) Certain Amazon applications can use radio-frequency identification
technology, and the online retailer will turn on the capability when it's
needed, RFID tags support real time tracking of tagged goods. The tags
are attached to products and emit signals containing detailed
information regarding what the product is, the size of the product,
where it was made, when it might perish, the product warranty etc.
They can also be used to track a product as it passes though the SCN
eg the factory floor, the warehouse, the distribution chain, the retailer
and then at point of sale.
4) Web 2.0 tools and Supply chain Application
Web 2.0
tool
Blog
RSS feed
Social
Networki
ng
Example
Amazon Blog can be used for internal and external
communication like sharing expert advice, opinions and
frequently asked questions (FAQ), gathering customer
feedback and building a loyal customer base.
To keep up-to-date the customers on the latest popular
products, Amazon offers RSS feeds for their Bestsellers, Hot
New Releases, Most Gifted, Most Wished For and Movers &
Shakers lists.
Amazon’s Social Network site presence is particularly useful
for Advertising products, providing links to company
websites, increasing brand awareness, gathering customer
feedback on advertised products.
7. IMPLEMENTATION METHODOLOGY
7.1.
Planning and Feasibility Study
1. Critical to the core business: Amazon’s warehouses were a quarter-mile
long and 200 yards wide stored millions of books. Bezos realized the
importance of managing inventory in his company.
2. Impacting major metrics: Each warehouse cost would be around $50
Million. A large number of piled up goods represented unutilized cash
which could be used elsewhere in the business
3. Scope can be clearly defined and controlled: The Scope of the
outsourcing of Inventory management system was well defined , as the
supply for cell phone was handled by Cell Star while Ingram Micro, a
whole sale distributor, handled computers and books
4. Proposed by proper people : Bezos realized the importance of
managing inventory in his company and initiated the outsourcing of
the Inventory Management System
5. Fitting the current company’s financial situation: Amazon’s profit was
mainly attributed to its ability to reduce costs in stocking and shipping
goods. They had sales record of $1.1 billion in the fourth quarter of
2001 which was a 15% increases over the sales recorded during the
same period the previous year. In 2002 Amazon recorded sales of
$3.93 billion which was 26% higher than the sales of 2001($
3.12billion).
7.2.
Implementation Strategy
Amazon implemented the SCM Software and the RFID technology
because it understood the need of the hour and decided to put into
place a solution which is scalable and can be integrated with the
other systems as well. The considerations were:
Integrated, automatic system-to-system interaction with all trading
partners
The ability to integrate those interactions seamlessly with your inhouse applications and processes to provide true end-to-end
visibility and control
Accommodation of the individual nuances of each partner's mode of
interaction.
A high-quality and reliable means of exchanging messages over the
Internet, which provides business-level guarantees of delivery and
integrity.
Intelligent management of those interactions, allowing control and
ability to change them dynamically.
The ability to adapt to change, by quickly and easily locating new
services or partners, learning their specific capabilities, and forming
a rapid "electronic bond" with them.
8. SWOT ANALYSIS
8.1.
Strengths
Customer Relationship Management (CRM) and Information
Technology (IT) support Amazon's business strategy. The company
carefully records data on customer buyer behavior. This enables
them to offer to individual specific items, or bundles of items, based
upon preferences demonstrated through purchases or items visited.
Amazon is recognizable for two main reasons. It was one of the
original dotcoms, and over the last decade it has developed a
customer base of around 30 million people. It was an early exploiter
of online technologies for e-commerce, which made it one of the first
online retailers.
Product diversification from books and CD/DVD markets has
provided additional customers in other product areas and indicates
strategic movement to grow the business through new customer
bases
8.2.
Amazon are dependent on external delivery companies to carry out the
delivery function of the interface with the customer which can lead to
uncontrollable service level problems and potential cost increases in
line with the wider transportation industry such as rising fuel and
increased vehicle taxation. If these costs are not absorbed they are
passed back to the consumer both with potential negative effects.
The company may at some point need to reconsider its strategy of
offering free shipping to customers. It is a fair strategy since one could
visit a more local retailer, and pay no costs. However the shipping costs
could be up to $500m, and such a high figure would undoubtedly erode
profits.
8.3.
Opportunities
There are also opportunities for Amazon to build collaborations with the
public sector. Example: The British Library.
The main focus of the organization can be on the core functions and
outsource ancillary activities. Also, it will help in maintaining low
inventory of products thus favorable Inventory turnover ratio.
8.4.
Weaknesses
Threats
Increasing transportation costs will directly impact delivery charges to
customers - as these costs are not absorbed into the direct business
but paid to a third party it is assumed these will be directly passed onto
the consumer which can have a negative impact to brand perception
from the consumer viewpoint.
Competition will increase due to the low barriers to entry in the market:
offline companies are coming online
9. CHALLENGES FACED
Major problems of ERP implementation were not technologically related
issues such as
technological complexity, compatibility, standardization, etc. but
mostly organization and human related issues like resistance to
change, organizational culture, incompatible business processes,
project mismanagement, top management commitment, etc.
9.1.
People
1) Ineffective communications with users: Due to changes in business
processes across an organization, there was resistance to adopting the
ERP system. ERP connects and integrates all business functions within
the organization. Therefore, it was critical that management staff be
committed, and particularly that they equip employees who are using
business functions influenced by ERP with clear channels of
communication.
2) Insufficient training of end-users: Every ERP solution has a learning
curve that prevents the system from performing from the day one.
Bank of Baroda management realised that if they are looking at
integrating the ERP system, they need to make sure to first provide the
necessary training to the employees.
9.2.
Management
1) Lack of effective project management methodology: From the
perspective of project
Management, the iron triangle can illustrate how important it is to
balance the three corners of the triangle – scope, schedule and cost.
However, in ERP implementations, both schedule and cost tend to be
underestimated, while scope is overestimated.
2) Failure to redesign business process: ERP changes the entire
organizational environment by reengineering the entire business
process; thus, after implementation, it is not easy to revise previous
processes. Therefore, ERP implementations need accurate estimation,
preparation with a holistic view, and systematic management of the
entire implementation process.
3) Time and Money: Only Few e-SCM systems can be created to work
effectively initially. The development and the implementation is not
generally a quick and simple process, but a long one based on
developing and then assessing the system. This means that the
development of eSCM system often involves a large input of time and
money, while not necessarily providing initial benefits.
9.3.
Technology
1) Conflicts between user and Suppliers: Problems that occurs relates to
problems with integrating the technology used by the various parties in
the supply chain. Quite often, one company uses a software system
that will not integrate easily with supplier technologies.
2) Issues of safety and privacy: Sharing of information and systems
between companies often create issues with management in regards to
securing company information and ensuring safety.
3) Scalability: As Amazon provides its services in various parts of the
world, the implementation of a particular ERP software may not be
possible to extend to each region.
10. KPI AND ORGANIZATION METRIC
Managing all the moving parts in your supply chain can be a logistical
nightmare unless one has access to the right KPIs and metrics. One needs
to track the current status of shipments, monitor inventory levels and
ensure that all orders you ship are completely accurate. Amazon can use
these supply chain KPIs and metrics to ensure that their operations are
always running smoothly
Inventory Turnover: The Inventory Turnover KPI measures how many
times a year your organization is able to sell its entire inventory.
Order Tracking: Order Tracking metrics monitor the status and accuracy
of orders that are being shipped to your customers.
Order Status: Order Status metrics track the real-time status of all
orders and categorizes them based on the action taken, such as
"Backordered," "On Hold," or "Shipped." This data may be presented in
many different ways since it incorporates information related to the
specific circumstances of your supply chain.
Forecast Accuracy: Forecast Accuracy involves determining the future
sales/orders in order to maintain inventory in line with sales.
11. BUSINESS PARTNERS
1) Oracle: Oracle Supply Chain Management solutions help
modernize operations across the demand, supply and product pillars
to deliver operational and innovative solutions.
2) Cell star: Cell Star was the exclusive distributor for cellphones when
Amazon decided to outsource the inventory management function .
3) Ingram micro: Ingram Micro a whole sale distributor handled the
inventory of laptops and books
12. CONCLUSION
There is a lot of interesting results from the e-Business revolution. As a
result, SCM change to e-SCM. IT is applied in the SCM and facilitates
different flows in the SCM. In our analysis we see that Amazon has
benefitted from the integration of SCM in the Enterprise systems. Amazon
has used varied approaches for its supply chain and logistic needs such as
RFID, Vendor Managed Inventory, Just-In-Time Inventory and use Web 2.0
tools like Blogs, Social Networking Sites and RSS feed to connect to its
customer.
13. FUTURE SCOPE
Amazon has evolved over time and focused on continuous improvement
to emerge as a profitable internet retailer. Therefore, their supply chain
processes and business model can serve as a template for other pure-play
internet retailers and multi-channel retailers. Amazon's model of
leveraging inventory directly from manufacturers, distributors, and
partners can be leveraged by other retailers in their supply chain
channels. It also can incorporate Web 2.0 technologies such as
collaborative tools into its system.
14. REFERENCES
http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol1No1/article_
4.pdf
http://www.slideshare.net/Lordnikhil/inventory-management-amazon
http://cdn.intechopen.com/pdfs/18521/InTechWeb_technologies_and_s
upply_chains.pdf
http://www.informationweek.com/from-scratch-amazon-keeps-supplychain-close-to-home/d/d-id/1023619
Case study on Amazon.com’s Supply Chain Management Practices, by
Sabitha Z.B
Group 3
NATASHA AGARWAL- B004
RAJ BROOTA- B012
EDELBERT FERNANDES- B023
SHOEB HASAN- B028
ASHMITA SENGUPTA- B054
BHUMI SHAH- B057
HARSHIT SINGHAL- B063
CONTENTS
1.
ABSTRACT........................................................................................................ 3
2.
COMPANY OVERVIEW....................................................................................... 3
3.
PROBLEM DEFINITION...................................................................................... 3
4.
NEED AND REQUIREMENT ANALYSIS................................................................4
5.
PROCESS SCENARIO........................................................................................ 4
6.
IT SOLUTION.................................................................................................... 5
7.
IMPLEMENTATION METHODOLOGY...................................................................6
7.1.
Planning and feasibility study...................................................................6
7.2.
Implementation Strategy..........................................................................7
8.
SWOT ANALYSIS............................................................................................... 7
8.1.
Strengths.................................................................................................. 7
8.2.
Weaknesses.............................................................................................. 8
8.3.
Opportunities............................................................................................ 8
8.4.
Threats...................................................................................................... 8
9.
CHALLENGES FACED........................................................................................ 8
9.1.
People....................................................................................................... 9
9.2.
Management............................................................................................. 9
9.3.
Technology................................................................................................ 9
10.
KPI AND ORGANIZATION METRIC................................................................10
11.
BUSINESS PARTNERS (SAY OUTSOURCING OR IN-HOUSE)..........................10
12.
CONCLUSION.............................................................................................. 11
13.
FUTURE SCOPE........................................................................................... 11
14.
REFERENCES.............................................................................................. 11
1. ABSTRACT
E-commerce does not just mean trading and shopping on the Internet. It
means business efficiency at all operation levels. Executives know it is
critical to effective business operations, but until now quantifiable
performance measures have been as scarce as the number of corporate
executives of China who heard of the phrase "supply chain management"
(SCM). Supply Chain Management means coordinating, scheduling and
controlling procurement, production, inventories and deliveries of products
and services to customers. The SCM is the backbone of E-commerce, a
very critical component of E-commerce. Supply Chain Efficiency means
having the right product at the right place at the right time, can save
money/reduce costs, and can enhance cash utilization.
2. COMPANY OVERVIEW
Amazon is one of the first online shopping sites launched in 1995. Since its
inception, it has been consistently ranked as one of the best retail sites on
the Internet and is regarded as the universal model for successful Internet
retailing. In March 1998, Amazon was ranked among the top 20 internet
sites in almost all the major market surveys.
Amazon owed a large part of its popularity to its excellent customer
service, which was due to its exemplary inventory management. Amazon
realized that there were a lot of players in the e-tailing industry and
therefore it needed to consolidate its position as one of the best online
shopping sites. Accordingly, it took several measures. In order to increase
its revenue, it added several new products to its site. In 1999, on an
average, it added a new product on its site once in every six weeks. It
entered into strategic alliances with several companies to increase the
range of products available on its site.
Later, it strengthened its Customer Fulfilment Network by obtaining
products directly from the distributors rather than stocking all the goods in
its warehouse. Amazon was popular among its customers for shipping the
goods within the estimated time, leading to satisfied customers, improved
market share and repeat business. By the end of 2002, Amazon had 22.3
million registered users on its site. By 2003, Amazon became the biggest
book, music and video retailer on the Internet and offered more than 4.7
million books, videos, music CDs, DVDs, computer games and other
products.
3. PROBLEM DEFINITION
Owing to Amazon’s ever expanding user base and the highly increasing
competition, the question that they needed to answer was what was being
done to set themselves apart from the competition. Although an ecommerce company, Amazon needed to undergo a change that would
allow them to stay ahead of the competition while simultaneously allowing
them to transform their supply chain into a framework that supports
communication as well as high levels of collaboration. They needed some
solution that would provide them with increased visibility in the supply
chain and hence allow them to be more responsive when necessary while
also allowing them to have quantifiable action points.
4. NEED AND REQUIREMENT ANALYSIS
Stages
As – Is
Process
Analysis
- Inflexible to Expansion
- Complex Supply Chain
- Trade-Off between
Ancillary & Core Activities
Product
Analysis
- Maintain Inventory of all
products
IT
Infrastructure
Competitive
Analysis
Strategic
Analysis
-SCM & ERP worked in silos
-Long Delivery Time
Large No. of Warehouses
Increased Shipping Costs
-Demand Supply Mismatch
5. PROCESS SCENARIO
To-Be
-Improved Shipping
-Logistics Efficiency
-Concentrate on Core
Activities
-Inventory of only popular
products
-Acted as a transshipment centre
-SCM & ERP Integration
-One-Day Delivery
-RFID Technology
-Partnerships with
Distributers/Wholesalers
-Match Demand;
Expansion
6. IT SOLUTION
1) In 2000, Amazon com made improvements in building its high quality
automated warehouses, and now today they have one of the most
efficient and sophisticated in the world. Amazon uses Oracle as there
ERP, in which Oracle built a multi-terabyte database for the company,
while SCM software was attained to control cost and improve shipping
and logistics efficiency. The SCM systems at Amazon coordinates all
supply activities of the company such as supply and distribution
network, logistic activities and inventory managemnet. It increases
process effeciency, reduces supply chain’s complexity, improving data
integration within the supply chain, and reducing costs. The ERP and
SCM are intregrated so they can interact with each other so they can
serve the customer with great efficency.
2) In early 2001, Amazon decided to outsource its inventory management
though it knew that it was a huge risk. When Amazon managed its own
inventory, it had earned the reputation of providing superior customer
service, which was its biggest strength. Now, the company wanted to
concentrate on its main activities and outsource inventory management in
order to earn more profits. Amazon did not stock every item offered on its
site, by stocking only those items that were popular and frequently
purchased. Amazon basically acted as a trans-shipment centre and ensured
that the entire process of shipping from the distributor to the customer was
done very efficiently. This is an example of Vendor Managed Inventory.
3) Certain Amazon applications can use radio-frequency identification
technology, and the online retailer will turn on the capability when it's
needed, RFID tags support real time tracking of tagged goods. The tags
are attached to products and emit signals containing detailed
information regarding what the product is, the size of the product,
where it was made, when it might perish, the product warranty etc.
They can also be used to track a product as it passes though the SCN
eg the factory floor, the warehouse, the distribution chain, the retailer
and then at point of sale.
4) Web 2.0 tools and Supply chain Application
Web 2.0
tool
Blog
RSS feed
Social
Networki
ng
Example
Amazon Blog can be used for internal and external
communication like sharing expert advice, opinions and
frequently asked questions (FAQ), gathering customer
feedback and building a loyal customer base.
To keep up-to-date the customers on the latest popular
products, Amazon offers RSS feeds for their Bestsellers, Hot
New Releases, Most Gifted, Most Wished For and Movers &
Shakers lists.
Amazon’s Social Network site presence is particularly useful
for Advertising products, providing links to company
websites, increasing brand awareness, gathering customer
feedback on advertised products.
7. IMPLEMENTATION METHODOLOGY
7.1.
Planning and Feasibility Study
1. Critical to the core business: Amazon’s warehouses were a quarter-mile
long and 200 yards wide stored millions of books. Bezos realized the
importance of managing inventory in his company.
2. Impacting major metrics: Each warehouse cost would be around $50
Million. A large number of piled up goods represented unutilized cash
which could be used elsewhere in the business
3. Scope can be clearly defined and controlled: The Scope of the
outsourcing of Inventory management system was well defined , as the
supply for cell phone was handled by Cell Star while Ingram Micro, a
whole sale distributor, handled computers and books
4. Proposed by proper people : Bezos realized the importance of
managing inventory in his company and initiated the outsourcing of
the Inventory Management System
5. Fitting the current company’s financial situation: Amazon’s profit was
mainly attributed to its ability to reduce costs in stocking and shipping
goods. They had sales record of $1.1 billion in the fourth quarter of
2001 which was a 15% increases over the sales recorded during the
same period the previous year. In 2002 Amazon recorded sales of
$3.93 billion which was 26% higher than the sales of 2001($
3.12billion).
7.2.
Implementation Strategy
Amazon implemented the SCM Software and the RFID technology
because it understood the need of the hour and decided to put into
place a solution which is scalable and can be integrated with the
other systems as well. The considerations were:
Integrated, automatic system-to-system interaction with all trading
partners
The ability to integrate those interactions seamlessly with your inhouse applications and processes to provide true end-to-end
visibility and control
Accommodation of the individual nuances of each partner's mode of
interaction.
A high-quality and reliable means of exchanging messages over the
Internet, which provides business-level guarantees of delivery and
integrity.
Intelligent management of those interactions, allowing control and
ability to change them dynamically.
The ability to adapt to change, by quickly and easily locating new
services or partners, learning their specific capabilities, and forming
a rapid "electronic bond" with them.
8. SWOT ANALYSIS
8.1.
Strengths
Customer Relationship Management (CRM) and Information
Technology (IT) support Amazon's business strategy. The company
carefully records data on customer buyer behavior. This enables
them to offer to individual specific items, or bundles of items, based
upon preferences demonstrated through purchases or items visited.
Amazon is recognizable for two main reasons. It was one of the
original dotcoms, and over the last decade it has developed a
customer base of around 30 million people. It was an early exploiter
of online technologies for e-commerce, which made it one of the first
online retailers.
Product diversification from books and CD/DVD markets has
provided additional customers in other product areas and indicates
strategic movement to grow the business through new customer
bases
8.2.
Amazon are dependent on external delivery companies to carry out the
delivery function of the interface with the customer which can lead to
uncontrollable service level problems and potential cost increases in
line with the wider transportation industry such as rising fuel and
increased vehicle taxation. If these costs are not absorbed they are
passed back to the consumer both with potential negative effects.
The company may at some point need to reconsider its strategy of
offering free shipping to customers. It is a fair strategy since one could
visit a more local retailer, and pay no costs. However the shipping costs
could be up to $500m, and such a high figure would undoubtedly erode
profits.
8.3.
Opportunities
There are also opportunities for Amazon to build collaborations with the
public sector. Example: The British Library.
The main focus of the organization can be on the core functions and
outsource ancillary activities. Also, it will help in maintaining low
inventory of products thus favorable Inventory turnover ratio.
8.4.
Weaknesses
Threats
Increasing transportation costs will directly impact delivery charges to
customers - as these costs are not absorbed into the direct business
but paid to a third party it is assumed these will be directly passed onto
the consumer which can have a negative impact to brand perception
from the consumer viewpoint.
Competition will increase due to the low barriers to entry in the market:
offline companies are coming online
9. CHALLENGES FACED
Major problems of ERP implementation were not technologically related
issues such as
technological complexity, compatibility, standardization, etc. but
mostly organization and human related issues like resistance to
change, organizational culture, incompatible business processes,
project mismanagement, top management commitment, etc.
9.1.
People
1) Ineffective communications with users: Due to changes in business
processes across an organization, there was resistance to adopting the
ERP system. ERP connects and integrates all business functions within
the organization. Therefore, it was critical that management staff be
committed, and particularly that they equip employees who are using
business functions influenced by ERP with clear channels of
communication.
2) Insufficient training of end-users: Every ERP solution has a learning
curve that prevents the system from performing from the day one.
Bank of Baroda management realised that if they are looking at
integrating the ERP system, they need to make sure to first provide the
necessary training to the employees.
9.2.
Management
1) Lack of effective project management methodology: From the
perspective of project
Management, the iron triangle can illustrate how important it is to
balance the three corners of the triangle – scope, schedule and cost.
However, in ERP implementations, both schedule and cost tend to be
underestimated, while scope is overestimated.
2) Failure to redesign business process: ERP changes the entire
organizational environment by reengineering the entire business
process; thus, after implementation, it is not easy to revise previous
processes. Therefore, ERP implementations need accurate estimation,
preparation with a holistic view, and systematic management of the
entire implementation process.
3) Time and Money: Only Few e-SCM systems can be created to work
effectively initially. The development and the implementation is not
generally a quick and simple process, but a long one based on
developing and then assessing the system. This means that the
development of eSCM system often involves a large input of time and
money, while not necessarily providing initial benefits.
9.3.
Technology
1) Conflicts between user and Suppliers: Problems that occurs relates to
problems with integrating the technology used by the various parties in
the supply chain. Quite often, one company uses a software system
that will not integrate easily with supplier technologies.
2) Issues of safety and privacy: Sharing of information and systems
between companies often create issues with management in regards to
securing company information and ensuring safety.
3) Scalability: As Amazon provides its services in various parts of the
world, the implementation of a particular ERP software may not be
possible to extend to each region.
10. KPI AND ORGANIZATION METRIC
Managing all the moving parts in your supply chain can be a logistical
nightmare unless one has access to the right KPIs and metrics. One needs
to track the current status of shipments, monitor inventory levels and
ensure that all orders you ship are completely accurate. Amazon can use
these supply chain KPIs and metrics to ensure that their operations are
always running smoothly
Inventory Turnover: The Inventory Turnover KPI measures how many
times a year your organization is able to sell its entire inventory.
Order Tracking: Order Tracking metrics monitor the status and accuracy
of orders that are being shipped to your customers.
Order Status: Order Status metrics track the real-time status of all
orders and categorizes them based on the action taken, such as
"Backordered," "On Hold," or "Shipped." This data may be presented in
many different ways since it incorporates information related to the
specific circumstances of your supply chain.
Forecast Accuracy: Forecast Accuracy involves determining the future
sales/orders in order to maintain inventory in line with sales.
11. BUSINESS PARTNERS
1) Oracle: Oracle Supply Chain Management solutions help
modernize operations across the demand, supply and product pillars
to deliver operational and innovative solutions.
2) Cell star: Cell Star was the exclusive distributor for cellphones when
Amazon decided to outsource the inventory management function .
3) Ingram micro: Ingram Micro a whole sale distributor handled the
inventory of laptops and books
12. CONCLUSION
There is a lot of interesting results from the e-Business revolution. As a
result, SCM change to e-SCM. IT is applied in the SCM and facilitates
different flows in the SCM. In our analysis we see that Amazon has
benefitted from the integration of SCM in the Enterprise systems. Amazon
has used varied approaches for its supply chain and logistic needs such as
RFID, Vendor Managed Inventory, Just-In-Time Inventory and use Web 2.0
tools like Blogs, Social Networking Sites and RSS feed to connect to its
customer.
13. FUTURE SCOPE
Amazon has evolved over time and focused on continuous improvement
to emerge as a profitable internet retailer. Therefore, their supply chain
processes and business model can serve as a template for other pure-play
internet retailers and multi-channel retailers. Amazon's model of
leveraging inventory directly from manufacturers, distributors, and
partners can be leveraged by other retailers in their supply chain
channels. It also can incorporate Web 2.0 technologies such as
collaborative tools into its system.
14. REFERENCES
http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol1No1/article_
4.pdf
http://www.slideshare.net/Lordnikhil/inventory-management-amazon
http://cdn.intechopen.com/pdfs/18521/InTechWeb_technologies_and_s
upply_chains.pdf
http://www.informationweek.com/from-scratch-amazon-keeps-supplychain-close-to-home/d/d-id/1023619
Case study on Amazon.com’s Supply Chain Management Practices, by
Sabitha Z.B
