How Amazon Supply Chain Work?

How Amazon Supply Chain Work

As the e-commerce industry continues to grow and prosper, the demand for Amazon business is also growing. Many online merchants choose to sell their products on the Amazon platform, and it is also the best choice for new business start-ups. Before doing so, it is important to have a good understanding of Amazon to better advance your business. In this article, I will explore Amazon’s supply chain and how it works, as well as provide you with strategies to develop Amazon’s supply chain. By learning about Amazon’s supply chain, you can learn from its e-commerce operation strategies and tips to better choose or promote your own business.

What is Amazon Supply Chain?

Amazon Supply Chain provides a complete closed-loop business process for merchants. Merchants simply inform their needs and Amazon takes care of multiple things such as product storage, product management and pricing, logistics, and delivery. Therefore, merchants can have more time and energy to focus on increasing their online store sales.

What is Amazon Supply Chain

Here are two of the more common options that Amazon offers merchants.

1. FBA

Amazon provides logistics and storage services. Sellers ship the products they want to sell from their suppliers to Amazon’s operational warehouse centers. After Amazon takes the goods into the warehouse, it will pick, pack and ship the goods to the customers who buy the products according to the sellers’ orders. This is a great option for merchants who do not support logistics delivery, especially when delivering small items.

2. FBM

A third-party company that provides storage and delivery of goods. Sellers can choose to store, pack and ship their products themselves. When it is not convenient for them to perform this operation, they can choose to hire a third-party company to provide this service for them. Third-party companies have good storage warehouses and professional logistics teams, which can better guarantee the advancement of business.

3. Two main elements of the Amazon Supply Chain

Two main elements of the Amazon Supply Chain

Two key factors for the success of Amazon’s supply chain.

  • Amazon Operation Centers

Amazon has a large number of operations centers and an extensive logistics network, which allows it to distribute orders and dispatch goods to customers in a timely manner. Globally, Amazon has more than 500 warehouses and will add more in order to meet the growing demand for its products and strengthen the operations of its fulfillment centers.

  • Amazon Delivery Fleet

Amazon’s professional delivery fleet is an important factor in the success of its business. Considering the different shipping distances, Amazon will choose the most efficient shipping method and deliver packages to customers with the fastest delivery speed. At the same time, Amazon has a wide range of transportation partners to help it meet its logistics needs. Today, Amazon is working to expand the delivery of its logistics network.

How does Amazon Supply Chain Work?

1. Amazon Supply Chain Diagram

How does Amazon Supply Chain Work

2. Amazon Supply Chain Operation Process

How does Amazon Supply Chain Work
  • Receiving Products

Merchants ship their products to Amazon’s operations centers and receive them by means of a forklift or by choosing to unload them manually. This process creates a freight separation. Currently, a large portion of the products sold on Amazon is from merchant inventory.

  • Storage Of Goods

The computer automatically sorts the stored products according to their different sizes, regardless of the type of product, and the products are randomly assigned to yellow-tiered bins. The data for each product is stored in the computer.

  • Picking Orders

After receiving an order, a robot in the warehouse sends the order information to the staff at the picking station. An automated packing line will read the order information and retrieve the items to place the products into tote bags.

  • Quality Assurance

Technical assurance is an important aspect of Amazon’s supply chain operations. To reduce the occurrence of errors, robots and employees work in tandem to ensure that order information matches items perfectly. Throughout the process, the robots make fine adjustments in real time.

  • Packing Orders

Before sending it to the packing station, the electronic information system will recommend the right size packing box for employees by scanning the product. Products supplied by a third party do not need to be packed again but will be dispatched directly to the customer, which also gives Amazon to reduce part of the packaging costs.

Key Elements Of Amazon’s Supply Chain Strategy

Key Elements Of Amazon's Supply Chain Strategy
  • Vast Warehouse And Distribution Network

Amazon’s widely distributed warehouses and operation centers can save some shipping time. After receiving a customer’s order, the nearest warehouse is selected according to the destination to arrange for shipment. By continuously expanding warehouse coverage, Amazon has strong inventory control and distribution, making the picking, packing, and shipping process more efficient, thus reducing shipping costs and improving shipping efficiency.

  • Diverse Delivery Fleet

Amazon has a large delivery fleet with its own brand of trailers and trucks with more carrying space. And Amazon cooperates with several logistics service companies to choose the most effective transportation method to deliver products according to different transportation distances and needs. Amazon also employs a fleet of professional aircraft to provide customers with two-day or same-day delivery of goods. Today, Amazon is exploring the delivery of packages via drones, which will greatly increase the speed of delivery.

  • The Unification Of Manual And Automation

Amazon uses evolving technology to grow its business. By using a portion of robots to speed up the workflow and also reduce the physical work of employees. This not only streamlines the workflow but also reduces manual errors. Employees also have more time and energy to carry out other tasks. The unification of manual labor and automation not only improves safety but also increases efficiency.

Conclusion

Amazon, the giant of the e-commerce industry, has been innovating at an incredible rate, leaving many competitors in the dust. By learning about Amazon’s supply chain, you can learn a lot of strategies and techniques for e-commerce operations. At the same time, you can encourage yourself to keep moving closer to it. I hope that after reading this article, you can better develop and expand your own e-commerce business. If you are looking for a reliable e-commerce partner, you can contact us for more information.

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