Memo Essay

381 WordsNov 3, 20092 Pages
INTEROFFICE MEMORANDUM TO: TOM TAYLOR, DIRECTOR OF SUPPLY CHAIN OPERATIONS, AMAZON.COM FROM: CONSULTANT SUBJECT: PROCUREMENT STRATEGY RESPONSIBLE FOR EARLY SUCCESS IN US & EUROPE DATE: 11/3/2009 INTRODUCTION Amazon.com was established in 1995 with a mission to ‘use internet to transform book buying into the fastest and most enjoyable shopping experience possible’. This memo discusses the procurement and fulfillment strategies that led to Amazon.com’s initial success in United States and Europe. AMAZON.COM’S PROCUREMENT PROCESS Amazon.com initially started out as a pure online book retailer with a selection of 1 million titles. Quickly Amazon.com increased its selection to 2.5 million titles. Yet, it stocked only around 2000 titles in its own warehouse. The rest of the titles were sourced on an as-needed basis only after receipt of a customer order. Depending upon the nature of the customer order Amazon would either place an order with a distributor or a wholesaler. Once Amazon received the necessary titles at its warehouse, Amazon’s employees would pick and pack the order and ship it to the customer. IMPROVEMENT’S TO THE PROCUREMENT PROCESS Efforts were made to continuously improve their software that would determine the best possible method to procure items. Transportation cost, time to deliver to customers and cost of dealing with multi item orders dictated Amazon’s decision of each DC handling a full array of items. Each DC was equipped with pick-to-light systems to help workers pick the right items. Metrics were put in place to measure worker performance. OPTIMIZING CUSTOMER FULFILLMENT NETWORK Distribution centers were strategically located on both coasts to meet local demand as soon as possible. Six Sigma DMAIC methods were adopted to supervise temporary employees to ensure correctness of pick and pack

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