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Amazon Case work and its EDS system
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Presented by: FARHAN
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1995—19981995—1998ESTABLISHING AMAZON.COMESTABLISHING AMAZON.COM
Hold modest inventories and rely on wholesalers and publishers.Both wholesalers and publishers have their good points to Amazon.
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1995
1996~1997
1997
1998
1995—1998Establishing Amazon.com
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Remain the “e-tailing” leader
“Get Big Fast” strategy
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Focus on “operational excellence”Streamlining US Distribution Centers’ ProcessesInventory CostsDelivery ProcessesOther Company Initiatives to Gain Profitability
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Amazon.com in Europe
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Challenge in Europe
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Challenge in Europe
Challenge in Europe
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Postal service
Hard to decrease the shipping costs1. Cost-cutting.2. Restructuring effort to reach profitability.3. Unify the marketing and branding functions.
Challenge in Europe
EDI(Electronic Data Interchange)
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Did Amazon need three independent distribution centers in UK , Germany ,and France or build a European Distribution Network(EDN)?
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EDN = European Distribution NetworkDecentralized modelPossible benefit of EDN
Expand product selection through other DCs. Facilitate global sourcing at the global network.
Reduce the risk of relying on a single DC. Improve customers’ experience.
Expand into other countries from current DCs.
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Assessing the EDN Opportunity
Marsten Gate
BadHersfeld
Orleans
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Internal impactredesign its transportation process
stuff retraininginfrastructure cost ….and other
Educate customer to associate a different shipping price to the delivery service level chosen.
Implement “postal injection”, seek better terms from a pan-European carrier.
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If Amazon want expand to other European country, should Amazon consider a new location for a new DC?
Impact of the implementation of the EDN
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Procurement department would be able to centralized its purchase and extract higher volume discounts from suppliers.
Required a better coordination among departments and a clear HR plan.
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Option1: link different sites to a single European distribution center.
Option2: keep the three DCs to fulfill orders from other country side.
Option3: keep two DCs, one serving north and other serving south.
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Three approaches…Continue with its current strategy of holding inventory in all three DCs.Selectively share inventory among European sites.Three DCs’ inventories physically mixed based on demand patterns and inventory and transportation cost.
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Design the EDN
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Streamlining US Distribution Centers’ Processes
Six Sigma & DMAICsimulate holiday season conditions
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Inventory CostsImprove inventory management to decrease
carrying costsRefined the software used to forecast
customer demandEstablished buying rules
Integrated its suppliers’ management systems
Implemented a set of “cascading” buying rules
Avoid holding inventorywholesalers ” drop ship” ordersPartnering with other companies
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Focus on “operational excellence”
Delivery Processes•To reduce shipping costs, they developed a method called “postal injection” or “zone-
skipping”•postal injection eliminated processing steps
and travel distances
Other Company Initiatives to Gain Profitability
•30% across-the-board discount•Free shipping
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Focus on “operational excellence”
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