and some of its competitorsit actually stocks products Bezos describes how they

And some of its competitorsit actually stocks

This preview shows page 35 - 37 out of 38 pages.

and some of its competitors—it actually stocks products. Bezos describes how they have improved: “Years ago, I drove the Amazon packages to the post office every evening in the back of my Chevy Blazer. My vision extended so far that I dreamed we might one day get a forklift. Fast-forward to today and we have 96 fulfillment centers.” So Amazon must manage the flow of products from its 15 million-plus suppliers to its U.S. and international fulfillment centers with the flow of customer orders from the fulfillment centers to individuals' homes or offices.The process begins with the suppliers. Amazon collaborates with its suppliers to increase efficiencies andimprove inventory turnover. For example, Amazon uses software to forecast purchasing patterns by region, which allows it to give its suppliers better information about delivery dates and volumes. After the products arrive at the fulfillment center they are scanned and placed on shelves in what often appear to be haphazard locations. That is, books may be on the same shelf next to toys and kitchen utensils. Dave Clark, vice president of worldwide operations and customer service at Amazon, explains: “If you look at how these items fit in the bin, they are optimized to utilize the available space, we have computers and algorithms that tell people the areas of the building that have the most space to put the product that's coming in at that time.” Clark observes that one of its 1-million-square-foot fulfillment
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centers (the size of more than 20 football fields) represents a “physical manifestation of earth's biggest selection.”At the same time, Amazon has been improving the part of the process that sorts the products into the individual orders. Once an order is placed in the computer system, sophisticated software generates a map of the location of each product and a “pick ambassador” walks the aisles to select the products. Each item is scanned as it is selected so that inventory levels and locations are always up-to-date. Packersensure that all items are included in the box before it is taped and labeled. The boxes then travel along a conveyor belt and are diverted into groups based on the delivery location. A network of trucks and regional postal hubs then conclude the process with delivery of the order. Amazon actually uses more trucks than planes!The success of Amazon's logistics and supply chain management activities may be most evident during the year-end holiday shopping season. Amazon received orders for 36.8 million items on Cyber Monday (the Monday following Thanksgiving), including orders for Xbox and PlayStation gaming consoles that reached more than 1,000 units per minute. During the entire holiday season Amazon shipped orders to 185 countries. Well over 99 percent of the orders were shipped and delivered on time.Page 432CONTINUOUS IMPROVEMENT AT AMAZONIn a recent letter to Amazon shareholders Bezos reported that Amazon employees are “always asking how do we make this better?” He also described the Amazon Kaizen program (named for the Japanese
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