The supply chain contains all the parties engaged in the process either directly or indirectly in order to satisfy the needs and the desires of the customers. All the parties like the manufacturer, distributors, and retailer are engaged to fulfill the customer’s demand.
The initial stage of the supply chain begins with the customers demand. So, to become efficient, the management of the supply chain is essential and mandatory nowadays. The management of supply chain is considered as the method of handling all the setup of the entire business happenings and the processes that containing the raw material procurement, the manufacturing and the distribution supervision of the finished products.
The management of supply chain is also referred to as the skill of management that deals with offering the accurate product and service, on the right location, at the precise time, and at the accurate price to the consumers (Meindl & Chopra, 2014) Nowadays, supply chain management becomes the backbone of the business organization. The effective supply chain management helps the organization to achieve the competitive edge in the market and ensure the long-term sustainability of the organization. With the increase in the global business aspects, the need of supply chain management also increase because damage of product in any location of supply chain result in the loss of value and affect the organization position in the world market (Mangan, Lalwani, Butcher, & Javadpour, 2011)Amazon’s has the efficient supply chain management practice.
The supply chain management allows the Amazon Corporation to have the strategic fit practice along with the company competitive strategy that is that it’s the best retailer among the choice of its customers. Through the combination of the multi-tier portfolio management, the excellent transportation service, and the highly efficient utilization of the Information Technology, and the company comprehensive network of the warehouses the company become able to achieve high customer’s satisfaction. These processes also make the company supply chain management able to support its competitive approach to gain the best position in the global market (www.Amazon.com, 2018)The company also outsource the products whose inventory cost are high in order to maintain its cost-benefit strategy.
The company keeps the frequently purchased products in its warehouses in order to give a quick and fast response to customers. The Amazon Company uses the IT in their supply chain in order to meet the requirement of customers and provide them the right product at the right time and the right price. The Amazon Corporation follows the push-pull strategy in which the portfolio is held under the push policy and the delivery of the products orders is finished under the pull strategy.
Through its multi-tier process of the supply chain the Amazon hold some inventory in its distribution center, and if the inventory is not there of some products then through its effective IT system they contact with the wholesaler to deliver the right product at the right time to the customers. The supply chain management of Amazon order is processed as first customer order the product then after completion of the payment process the accounting and the finance department inform the shipping department and then after receiving the information from the finance and accounting ship the order to the customer. This process takes very minimal time because of the efficient supply chain management IT system (Collins, 2017)What is the bullwhip effect and what do you think causes it? The bullwhip effect is present in the supply chain of the business.
If the bullwhip cannot be controlled and manage effectively, it will also destroy and reduce the revenues and sales of the business. The bullwhip effect is considered as the misrepresentation in the organization supply chain which will be occurred when the seller’s active the SC and order additional products merely based on the forecasted demand of the customers rather than the actual demand of the customers. This consequently enhances the inventory volume in the SC of the organization (Johnson, 2015). The bullwhip increases the cost of the organization and reduces its profits. The causes of the bullwhip effect include: the inadequacy between each SC link, poor communication network between all supply chain links, the free return scheme of the organization, order batching procedure of the organization, variation in prices and company reliance on past demand information (Anderson, Anderson, & Parker, 2013) How does Amazon avoid the bullwhip effect?The Amazon avoid the bullwhip effect through various ways like focusing on the consumers, through defining the correct push-pull strategy and boundaries, through efficient information technology system, effectively managing its portfolio, by break the order batches procedure, stabilizing its price, improving the forecasting accuracy and through adopting the demand-driven SCM approach. The Amazon make its supply chain mainly on customers demand and hold frequent sold inventory in their distribution center to deliver them quickly to customers. The Amazon has the efficient information technology system that allows them to share information between the all supply chain links and enable them to provide the right product to customers at the minimal time and a reasonable cost.
The Amazon also manages its portfolio effectively and break the order batches procedure that enhances the cost by this the revenue of the Amazon increase, and they become able to satisfy the demands of the customer more efficiently. The research and development team of the Amazon is also excellent they accurately forecast the demand of the customer based on the recent data and give information to the supply chain to make the mange the network efficiently. So, by all these approaches the Amazon avoid the bullwhip effect in the company supply chain (Collins, 2017)