The real supply chain disruptor…Amazon.com

The past few weeks, or really the past few years, have given us plenty of examples of Amazon slowly but surely cranking up their disruptive aspect when it comes to supply chains. Of course, when we think of Amazon we think of the giant of eCommerce. A company that has not physical retail channel but one that can sell us anything from a copy of the Iliad to furniture to baby’s diapers. For me Amazon is the biggest winner from the crazy dot com days of the late 1990s. The giants associated with that era – Yahoo, AOL, WebVan, eBay, Geocities, Lycos – to name a few. Yes Google was around then, but I would argue their real rise to prominence came after the bubble.

But the one name that weather that storm and is a massive player – Amazon. The reality is that Amazon is that they are not only the 800lb gorilla in eCommerce and retail but also for supply chains. Here are some areas where Amazon is a disruptive supply chain force:

  • Delivery – Anyone who watched or read about the coming of Amazon drones is probably expecting to get their copy of “50 Shades of Grey” or their latest set of Dr Dre Beat headphones dropped off by an unmanned flying machine. There is also the buzz that Amazon will look to have same day delivery, could be empowered by the rise of the drones. The eCommerce giant is also looking to conquer the enigma that is grocery delivery. Combine all these projects and you quickly realize that Amazon is bringing a whole
    Coming to your personal airspace.

    Coming to your personal airspace.

    new perspective to delivery. The reality is that they might not be able to achieve all these lofty goals…but the fact they are pushing these ideas out there and that they are driving the conversation is disruptive enough.  The fact that same day delivery is being mentioned will drive how our expectations are set as consumers. If I believe I can get fresh produce delivered to my door, do I accept getting anything that isn’t similar from the likes of Shaws, Whole Foods, Tesco, Giant Eagle, Safeway or any of the other grocery chain?

  • Warehousing – Amazon has mastered this for a long time, ever since they started selling CDs and Books via the internet. In order to fulfill these massive online catalog and to do so in a timely fashion, they have become masters of how to manage a warehouse and more importantly how to run an efficient pick and pack, inventory and distribution from geographically placed warehouses. Their acquisition of Kiva demonstrates that they see how
    The rise of the machines.

    The rise of the machines.

    robotics and the rise of the machines will disrupt how we run our warehouses. There has been some rumbling about how they drive their warehouse work force to ensure they can meet their tighter and tighter fulfillment windows. This might become more disruptive from a negative perspective. However, overall look for Amazon to change the way warehousing is approached.

  • Demand management – In the supply chain space, the holy grail is around better understanding and anticipation of what true demand is. A whole host of companies ranging from the likes of Orchestro, RSi, IRI, JDA, Steelwedge, SAP, Oracle, Kinaxis, Terra Technology to name a few, are all offering solutions that profess can better determine or predict what actual demand will be. But what about Amazon? They are already savvy when it comes to understanding what our buying habits on their web site – what else can or would we want to buy? Now comes word that Amazon has patent to provide “anticipatory delivery.” They are looking to better anticipate our demand! Wow. They will be able to put inventory on trucks before we even a)know we want the product b)order the product…talk about getting ahead of the demand curve. This goes beyond what some are tagging as demand sensing and moves into true demand anticipation. Again, will they be able to pull this off? Who cares. The fact they are speaking of being able to do so will create a disruptive mental wave that will have consumers wondering…”hey why can’t you anticipate what I want!”
  • Mobility – The Kindle is a quiet mobile supply chain device. How? It allows Amazon to place mobile ordering kiosks in consumers hands. Giving Amazon another point where they can check on demand and buying patterns. Add to this the Amazon app that is available on iOS or Android and you have a mobile powerhouse. One that allows the company to get as close
    A cash register and inventory system in your pocket!

    A cash register and inventory system in your pocket!

    as you can when it comes to POS information. With the app one could argue that Amazon have found a way to get into the four walls of the brick and mortar stores. Consumers have been trained to use the app as a mobile cash register and inventory system. Your daughter wants the latest American Girl doll? Scan a bar code or snap a picture and see what Amazon has…and if you want click “Buy Now” with your Prime account and boom, it gets delivered to your door.

So Amazon is the quiet supply chain disruptor. Whether or not they can pull off some of the projects they are tackling is inconsequential (well maybe not that inconsequential…). The fact that Amazon is driving the discussion around some of these hot button topics means all players within the supply chain cannot ignore some of the game changers that are on the table.

Amazon at the end of the is all about pushing more inventory through their system. But in doing so they are creating some mega changes when it comes  to how supply chains think about and tackle a host of issues. Next time you get a box from Amazon remember – they are shaking up the supply chains as we know them.

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Filed under Retail, Supply Chain, Technology

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