Logistics Management and its Importance
Amazon.com INC which is doing business with the name of Amazon is an American electronic commerce and cloud computing enterprise set up by Jeff Bezos in 1994 and situated in Seattle, Washington. Amazon was initially known for selling books through their website but as time progressed they started to sell e-books via its kindle e-reader which helped it to gain much popularity. Besides selling books Amazon has developed a customer service, inventory and shipping empire that allows the website of the company to offer everything to the customer ranging from clothes, furniture, janitorial supplies, fast moving consumer goods, electronics, household items and various other digital content such as movies, music and application. Another arm of the company called the Amazon Web Services is a multi-billion dollar subsidiary of the company which offers cloud positioned applications to bulk of enterprises all over the globe that also includes bureaucracy institutions and education academies. Amazon is the biggest internet vendor worldwide in context of earnings and merchandise funding and it is second biggest company worldwide in context of overall transactions after Alibaba. The main basics based upon which Amazon has received such growth and development is its focus on long term customer loyalty and short term profits along with diversification of their business by expanding into various new businesses (Britannica.com 2017).
Logistics management is defined as the practise of decisively administering the acquirement, displacement and repository of supplies, segments and finished reserve through the enterprise and its commercial channel in such a way that the ongoing and forthcoming profitableness of the company are enlarged through the cost adequate attainment of the orders (Fernie and Sparks 2014).
Logistics Management is described as the component of the supply chain administration which is utilised to achieve the consumer requirements through the process of outlining, governing and execution of the compelling displacement and repository of related data, equipments and services right from the place of its origin to its destination (Singh, Sandhu, Metri and Kaur 2018). The process of logistics management helps business organizations to enhance customer satisfaction and reduce the expenses of the company. This process of logistics management begins with the process of procurement of raw materials and ends with the delivery of the products to its destination (Prajogo, Oke and Olhager 2016).
Effective logistics management can help Amazon to become more competitive in the market and therefore it can act as a major origin of competing dominance for the company. The source of competitive advantage of Amazon is based around the 3C’s which are customers, competition and company. As the source of competitive advantage for a business organization is its ability to differentiate itself in the minds of their customers and to operate at a lower cost in order to generate more profit (Mangan and Lalwani 2016). Effective logistics management can help Amazon to be more competitive in the market as by focusing on logistics management the company can network the market place, the delivery chain, the assembling systems and the acquirement process which will help in servicing the customers of the company in a better way yet at a lower cost. Effective logistics management can also help Amazon to become more competitive in the market as they can focus more on the quality of product by effective procurement, manufacturing and distribution of the product which will help the customers to differentiate the products of Amazon with other similar products (Mellat-Parast and E. Spillan 2014.)
Role of Logistics Management in Amazon’s Competitiveness
Amazon can become more competitive or can boost ambitious leverage when it operates various critically paramount actions of the company such as designing, generating and retailing, distributing and aiding its products and services more reasonably or in a superior way than their rivals. Effective logistics management can help Amazon become more competitive as it involves reducing various expenses of the company regarding procurement and transportation of raw materials and also finished products to the market such as expenses on freight. Effective Logistics management can also help Amazon enhance the visibility of their entire supply chain which makes it easier to control and manage and implement any new changes in the supply chain of the company. It even builds competitiveness by improving the warehouse inventory management of Amazon and thereby reducing the amount of wastage of products by maintaining a proper inventory in the warehouse of the company and storing the products according to their nature. Further, effective logistics management is also aimed towards making Amazon more competitive in nature as it helps in linking every business units of the company which are related to the procurement, production and delivery of the product and therefore it becomes helpful in measuring the efforts put forward by Amazon so that prompt actions can be taken when necessary and even changes can be implemented which will in turn help them become more competitive and quick. The below figure helps in understanding the logistics and competitive advantage based on the two vectors of strategic direction.
Fig: Logistic and Competitive Advantage Matrix
(Source: Differentiateyourbusiness.co.uk 2017)
E-business or electronic business is described as the procedure of carrying out commercial processes on the Internet which includes ordering and trading of product, servicing consumers, stocks and services, administering the manufacturing regulation process, disposing of cashes, allocation of data and information and joining together with several business associates and more.
E-commerce or electronic commerce is described as the procedure of ordering and trading of goods and services or the transpose of capitals and data over an electronic chain such as the Internet. The business transpose in e-commerce can be B2B, B2C, C2C or C2B in nature (Chaffey 2015).
Amazon is an example of both e-commerce and e-business as nearly all the business activities of Amazon are conducted through the internet which includes the selling of its various products and services through the internet, processing payments and sharing of data and information.
E-Commerce and E-Business
E-commerce and E-business share a relation among them as e-commerce is considered as a subset of the e-business as it is only concerned with the ordering and trading of products by using the internet whereas e-business is concerned with servicing customers and collaborating with business partners along with buying and selling of products. E-commerce is also considered as a subset of the e-business process as e-commerce is primarily concerned with the organization’s customers while e-business is concerned with increasing the connectivity of the organization not only to its customers but also with its business partners, organizational suppliers and employees (Strauss 2016).
Fig: Relationship between e-business and e-commerce
(Source: Narimanhb.com 2017)
There are several innovations and development which are seen in the field of e-commerce which has improved the scope of e- commerce and also helped in improving the service quality of the e-commerce business organizations. The newness in the area of e-commerce is as follows:
Drone Delivery- It is considered as one of the major modifications in the area of e-commerce as it is aimed towards reducing of the delivery times of the product and it also ensures systematic and efficient distribution of the products to the consumers with the assistance of drone technology.
Fig: Drone Delivery
(Source: Amazon.com 2017)
Droid Delivery- It is also considered as an improvement in the area of e-commerce as it involves the delivery of products to the customers with the help of robots in order to ensure systematic and timely distribution of products to the customers with minimum scope of human involvement.
Fig: Droid Delivery
(Source: Telegraph.co.uk 2017)
Involvement of big data in the retail sector- The involvement of big data in the retail field will also ensure that the delivery system is organized in nature as big data will help in the parcel volume prediction which will ensure quick determination of the volume and cost of shipment than usual (Falk and Hagsten 2015).
Sophisticated automation- Sophisticated automaton is also considered as a development in e commerce as sophisticated automation in the form of advanced machines and robots are being utilized in the supply chain management of various organizations in order to eliminate chances of human error and to systematically control the entire supply chain process.(Kumar and Vijayalakshmi 2016).
Innovations and Developments in E-Commerce
The recent innovations and development in the e-commerce sector could benefit Amazon in multiple ways as the recent innovations are targeted towards the increase of efficiency of the e- commerce organizations. Firstly by adopting these innovations Amazon could improve its supply chain management process which will help the company in the better procurement, production and delivery of products. Secondly by adopting these measures Amazon will be able to improve their delivery system which will help in increasing customer satisfaction and customer loyalty and lastly adopting these measures will help Amazon to differentiate itself from its other competitors and gain popularity among their customers (Shaikh, Rafiq and Iyer2014).
Best Practices are defined as those methods or techniques which have been generally accepted as superior to various other alternatives in place as it has the ability to produce results which are superior in nature than other alternatives.
There are various practices and measures adopted by Amazon which can be considered as best practices as it have yielded fruitful results for the company and have helped the company to accomplish its objectives and goals. One of the best measures adopted by Amazon is emphasizing platforms which serve its own customers in the best and quickest possible ways rather than developing a tightly designed ecosystem with various interlocking applications and services (Fastcompany.com 2017). Another best measure adopted by Amazon is the continuous effort of the company to experiment into adjacent areas and later develop them into their own franchises. Furthermore best practice adopted by Amazon is its transformation into physical stores along with online stores and the other measure adopted by the company is the introduction of “Prime”, the rapidly proliferating membership program of the company. The best example of the best measure adopted by the company is its ever evolving logistics strength of the company in order to cope up with the demands of the customers (Miraz, Habib and Saleheen 2016).
There are several benefits associated with the best measures of Amazon which have helped the company to cope up with the demands of their customers and enhance their shopping experience. The main benefit which is associated with the best measure of the company regarding emphasizing on platforms which serve their own customer is the increase in the loyalty of the customers and being the first choice of the customers. The benefit which is associated with experimentation of the company by investing into various sectors has helped in the diversification of the business of the company and increase in the customer base of the company. Whereas the main benefit which is associated with the focus on setting up physical stores of Amazon will help in enhancing the customer experience while the other benefit which is associated with the continuous development of the logistics infrastructure of the company have helped them to become more competitive in nature and also improved the development of the quality of product.
References:
Amazon.com., 2017. Prime air. Available at- https://www.amazon.com/Amazon-Prime-Air/b?node=8037720011 Accessed as on 16/12/2017
Britannica.com., 2017. Amazon. Available at-https://www.britannica.com/topic/Amazoncom Accessed as on 16/12/2017
Chaffey, D., 2015. Digital business and E-commerce management. Pearson Education Limited.
Differentiateyourbusiness.co.uk., 2017. Logistics management. https://www.differentiateyourbusiness.co.uk/using-value-chain-analysis-to-create-competitive-advantage Accessed as on 16/12/2017
Falk, M. and Hagsten, E., 2015. E-commerce trends and impacts across Europe. International Journal of Production Economics, 170, pp.357-369.
Fastcompany.com., 2017. Innovative companies. Available at- https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-of-2017 Accessed as on 16/12/2017
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Kumar, V.S. and Vijayalakshmi, N., 2016. Emerging Trends in E-Commerce. ITIHAS-The Journal of Indian Management, 6(2).
Mangan, J. and Lalwani, C., 2016. Global logistics and supply chain management. John Wiley & Sons.
Mellat-Parast, M. and E. Spillan, J., 2014. Logistics and supply chain process integration as a source of competitive advantage: An empirical analysis. The International Journal of Logistics Management, 25(2), pp.289-314.
Miraz, M.H., Habib, M. and Saleheen, F., 2016. ICT-Based Business Initiatives for Women: An Outline of Best Practices in E-Commerce/E-Retailing Ventures.
Narimanhb.com., 2017. ecommerce and e business. Available at- https://narimanhb.com/tag/relationship-between-e-commerce-and-e-business/Accessed as on 16/12/2017
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply logistics integration, supply performance, lean processes and competitive performance. International Journal of Operations & Production Management, 36(2), pp.220-238.
Shaikh, A., Rafiq, M. and Iyer, R.K., 2014.Exploring e-Business Trends with Supply Chain Management Perspective. International Journal of e-Education, e-Business, e-Management and e-Learning, 4(3), p.211.
Singh, R., Sandhu, H.S., Metri, B.A. and Kaur, R., 2018. Supply Chain Management Practices, Competitive Advantage and Organizational Performance: A Confirmatory Factor Model. In Operations and Service Management: Concepts, Methodologies, Tools, and Applications (pp. 1181-1207). IGI Global.
Strauss, J., 2016. E-marketing. Routledge.
Telegraph.co.uk., 2017. Delivery droids. Available at- https://www.telegraph.co.uk/news/2016/04/26/delivery-droids-coming-to-london-pavements-as-soon-as-next-month/Accessed as on 16/12/2017
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