Its hard to talk about efficient supply chains without talking about Amazon. Amazon in not just an online retailer but a sophisticated Supply chain system, allowing fast delivery through an advanced logistical network. Most customers of Amazon do not realize the massive infrastructure created for high service levels but this supply chain network is the fundamental reason for Amazon’s success.
CEO Jeff Bezos, has continued to allow large investments in new distribution centers to strengthen Amazon’s Logistical capabilities while forgoing short term profits. Amazon’s Plant, Property and Equipment rose from $4.4 Billion in 2011, to $7 Billion in 20012, and $10.9 Billion in 2013 This long term strategy is paying off. Amazon’s Revenue has increased from $48 Billion in 2011, to $61 Billion in 2012, and $74 Billion in 2013.
The video below show’s Amazon’s largest distribution center
Amazon Supply Chain investment has helped their brand in several ways.
- Building Trust- In amazon’s early years they noticed that many customers doubted the services
- Faster Process- Customers enjoy less hassles and an easy shopping experience
- Increasing Sales- Using purchasing analytics, Amazon found a way to suggest products
- Amazon Prime- Paid subscription for Amazon’s customers that waved shipping costs.
Another Organization to consider how a supply chain can effect branding is Zara.
Zara is a clothing retailer that deliveries trendy clothing through an efficient supply chain network. While the company is built on using technology to share information across the company, i.e. digital order forms transmitted via handheld devices, Zara does not take full advantage of the many possibilities available to help improve its business. Like Amazon, Zara has used their supply chain to establish their brand. As a Supply Chain Consultant I truly envy their process of providing new lines of clothing for their customers on a frequent basis.
They use the information gathered in each store to optimize their production. They match demand with production to optimize inventory levels of each product. Without this process their brand of being a trendy clothing store with a constantly rotating selection of fashion products could not be possible.
They are often described as an information age retailer. The information age, commonly called the computer age, is characterized by the ability of individuals to transfer large volumes of information quickly and easily. This digital revolution shifts traditional industry structure into a structure that heavily incorporates the collection and analysis of information.
Below is a video of Zara’s supply chain
An information age organization adopts the use of technology to streamline how particular responsibilities were formerly completed. For example, computers can be used to automatically process data, allowing analysts focus solely on relevant analyses. Companies can also take advantage of the latest technologies to perform work on massive scales that save time by sharing and utilizing data. Communication within the organization is more diversified, as information flows fluidly across all levels of the organization. This helps in decentralizing the firm, as more people have access to important information that helps with decision making. Information age organizations take full advantage of available technology to continuously improve upon existing processes, including but not limited to manufacturing and information sharing.
Author: Peter Klausz
Consultant at Operation Consulting Group