Amazon is by far one of the most successful companies of all time. Innovation, supply chain excellence, vision and risk-taking are all vital elements of its astounding success. While these vital elements underpin Amazon’s competitive advantage, they are also the critical cogs of its Robust Business Model.

Amazon joins the ranks of the top 20 Supply Chains, which include the likes of Mc Donald’s, Nestle, BMW, and Unilever.

Most businesses today struggle to maintain fiscal viability and relevance in the Modern Global Market.  The root causes of these issues often stem from a clash of the following critical Supply Chain Variables:

  1. Poor Toxic Culture
  2. Inability to execute good Business Strategies
  3. Flawed Processes
  4. Flawed or outdated Technology and Equipment
  5. Inability to attract and retain top-tier Talent
  6. Inefficient Logistics and Business Metrics

The Next Level Purchasing Body of Knowledge underpins, integrates and enhances the essential components of Supply Chain Management in simple how to do steps. This cutting-edge BOK is designed by practitioners for practitioners.

The chronic business issues mentioned above are a function of unnecessary complexity, lack of systems thinking acumen, silo thinking, poor strategy, poor strategic alignment, outsourcing critical supply chain functions to the wrong partners and so on.

The leadership at Amazon has demonstrated a great ability to manage these issues as well as to understand and implement responses to the political, sustainability, financial, demographic, ecological and competitive trends that affect its industry and supply chain capacity.

The Amazon Way to World Class Supply Chain Operations:

Dynamic Culture: Amazon is known for a culture that is open to innovation, candor, risk-taking, and carefully managed for diversity and change management. These characteristics make it agile and able to rapidly deploy thought leadership and other vital assets to shifts in market pressures. Employee traits such as collaboration, open-mindedness and willingness to disrupt and challenge conventional thinking are highly praised and rewarded. Social Responsibility is a major dimension in Amazon’s Business Strategy. These facts give Amazon an unfair Supply Chain Advantage.

Execution of good Business Strategies: Amazon’s culture of openness to change, agility, risk-taking and innovation, enables it to execute its strategic initiatives with lethal precision.

Three essential dimensions drive Amazon’s strategy:

  1. Leveraging and enhancing its Core Competencies through Continuous Improvement. Amazon has made warehousing and logistics, two critical disciplines, its Core Competency. The dramatic reduction on reliance on 3PL companies such as FedEx and UPS has enabled it to reduce cost, reduce touch points, reduce complexity and increase the speed of delivery
  2. Leveraging the Acquisition of other companies to neutralize critical deficiencies. A few years ago, Amazon purchased Kiva Robots and has deployed several thousand robots to leverage speed and accuracy. This action has resulted in a dramatic cost reduction in its warehouse operations. The acquisition of Whole Foods has enabled Amazon to smash formidable barriers to a profitable entry into the grocery industry.
  3. Including customer feedback via, Voice of the Customer Data Collection in key strategic decisions and designing products and services to meet those requirements.

Simple Robust Process: Amazon possesses simple processes that are highly error proofed. Efficiency, Speed and Flow, are the forefront of Amazon’s Process Design and Auditing Doctrine. The mindset of Amazon’s leadership concerning processes, is that they exist for one purpose, to deliver Exceptional Value. All process mechanisms are underpinned by LEAN Principles, which mandates an unwavering fight against process waste caused by excessive transportation, motion, inventories, waiting (for products and information, over processing, over production, and defects. Workstations are simple, ergonomic, visually controlled, and designed to reduce process waste.

Easy to use Technology and Robust Equipment Maintenance: Amazon has assured that its technology and error proofing mechanisms are easy to learn and use. Special care is taken to guarantee near zero equipment failure, high availability and uptime. This is done by leveraging Total Productive Maintenance (TPM) and Overall Equipment Effectiveness (OEE) both principles from LEAN Methodology. Amazon is soon expected to be a driving force in the use of drone delivery and Artificial intelligence.

Top Tier Talent: Amazon’s culture continues to make it a magnet for top tier talent. The HR Function is highly strategic and sophisticated. Robust retention, rewards and recognition programs are in place. Year after year Amazon continues to be an awesome place to work. High morale and exceptional human capital supported by robust processes and technology makes the company a formidable competitor and conqueror of market share. Some may argue that the company needs to do a lot more to retain employees.

Logistics Excellence and Business Metrics: Amazon has mastered the science of creating logistics networks that are slim trim and efficient. The company leverages a few key metrics and assures that data is available in many cases in real-time. The company drives and measures the success of its business strategy by utilizing the Balanced Score Card Methodology. Its metrics are selected from four key areas, namely Financial, Process/Quality, Employee and Customer. Special care is taken to select balancing metrics. For example, Delivery Lead Time is measured in conjunction with Picking Accuracy.

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David Millington

David Millington M.Sc.QSM, NPDP, CL6σBB, SPPSM, SPSM3®, CM® Director of Education (Next Level Purchasing Association) A Certified Strategic Planning Professional, David Millington brings over 15 years experience in the Strategy Execution, Product / Service Development, Organizational and Supply Chain Excellence Arenas. He is a Certified Supply Chain Professional, Certified New Product Development Professional, Certified Strategic Planning Professional, and a Certified Lean Six Sigma Black Belt. David holds a master’s degree in Quality Systems Management, from The National Graduate School of Quality Management, Falmouth MA, USA. This equips him with mastery of vast bodies of knowledge and best practices. David Millington brings hands-on experience at VP, Director, and Manager Levels, guiding and facilitating the development of strategic and tactical solutions to intricate organizational, product, and service challenges.

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