Amazon: Supply Chain and Quality Management Strategies for Success Case Study

How Amazon Uses SCM and Quality Management to Lead the E-Commerce Market

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Introduction

The report highlights the organisation's quality and supply chain management effectiveness. These are considered the critical factors within the business that helps in the generation of significance within the operational activities. In the e-commerce business, quality management and supply chain management play an influential role in cost-effectiveness and the generation of sustainability in the long run. Operational activities highlight the importance of e-commerce business in the global market. Quality management in the current scenario highlights the implementation of influential factors generated towards quality control and quality improvement simultaneously (Gajewska et al., 2020). Amazon Inc. is operating in the global market by effectively utilising technology based on which they have effectively gained the clients' views. Effective service generation is facilitated by applying TQM within the specific industry, which also helps generate the brand image for Amazon Inc.

The application of quality management helps engage the stakeholders' views towards the business, contributing to generating revenue and their engagement simultaneously. SCM's importance in e-commerce is essential in ensuring the effective delivery of goods and services in the market where Amazon Inc is operating. Effective SCM helps in meeting the demands of the market. Based on the views of Gajewska et al. 2020, the production factors of Amazon Inc have been improved to significant levels after the implementation of technological sources. SCM supports the organisation's views by reducing excess inventory and lowering the storage cost. Effective warehouse management in the current scenario plays an important role. Efficiency within the business system is highlighted by applying SCM strategies generated by Amazon Inc through technology in prominent factors.

Task 1

Quality Management

• Quality Management Theory: The quality management of Amazon Inc. highlights the integration of quality factors that helps in the generation of business value within the competitive market (Gajewska et al., 2020). Performance, features, reliability and durability highlight the characteristics of quality management within Amazon Inc. Performance is related to the generation of productivity through earning higher profit margins within the market they are operating. Features of the organisation are associated with the generation of operations through the use of technology (Shaheen, 2022). Reliability helps highlight the needs of people that are met through the activities carried out by Amazon Inc. in the specified market. Durability is related to their satisfaction through effective services in the operating market. It effectively meets the needs of the people within the organisation in the long run. The quality management system in Amazon Inc. is critical as it highlights the sales revenue and helps lower costs within the competitive market. Amazon Inc. uses histograms and flow charts to highlight the quality management system within the organisation. The application of business analytics helps in data collection in an effective way that helps in decision-making in the long run (Shaheen, 2022).

Quality Characteristics

• Total Quality Management: TQM is a management framework that helps highlight the long-term success of Amazon Inc (Zamri et al., 2020). It helps generate unparallel customer services by applying effective technology strategies. > QC > QA > TQM emphasises the organisation's effectiveness through carrying out testing. Amazon Inc. regularly updates applications and user interfaces to improve the customer experience. Based on the analysis of Luthra et al. (2020), the specification is high as it provides a wide variety of options to the clients in the market. Amazon Inc. uses control charts to improve the quality of the organisation. Specification highlights the integration of technology that helps in the generation of effective management within the organisation.
• GAP Theory: GAP model is used by Amazon Inc. to highlight customer satisfaction along with highlighting the areas of improvement that will help in increased customer feeling in the long run. Amazon Inc. provides reliability to its customers by operating on the online platform. As per the views of Luthra et al. (2020), through diversification, they have aimed at improving the entertainment factors of the customers. As per the views of Khalid and Naumova (2021), they have developed their payment services, yet further improvement is required in app processing. Reports state that the processing time of the application is slow on some devices.

Figure 1: GAP Theory

• Quality Costs: The application of the PAF model highlights the quality costs of Amazon Inc. Appraisal costs are used by Amazon Inc. for carrying out app testing and services audits and highlighting the calibre of the products and services produced by them in the market (Baran and Korkusuz Polat, 2022). Prevention cost used by Amazon Inc. highlights review carried out in favour of the new product. As per the views of Baran and Korkusuz Polat (2022), it helps in the generation of supplier surveys and the integration of quality planning. Education and training services provided by Amazon Inc. are required for long-term development. Internal failure costs highlight the re-inspection, material reviews and downgrades. It also involves scrap at the same time. External failure cost of Amazon Inc. include customer complaints, returns generated by the customers and warranty claims.
• Six Sigma: Applying the DMAIC model, the definition relates to planning for app development, the measure refers to the collection of data, and analyse relates to data analysis collected based on which further actions will be carried out. Improvements in applications, such as bug fixes and effective control, are highlighted. As per Baran and Korkusuz Polat (2022), control is considered as the grip over the process that helps in highlighting the project benefits.
• Sandcone model: Through the application of the model, Amazon Inc. looks for further improvement in the global market. It helps in highlighting the cost factors and generation flexibility within the business process at the same time. As per Baran and Korkusuz Polat (2022), it defines speed that helps in reaching the views of the customers at the earliest within the market system. Quality relates to the integration of improvement factors that are required for long-term customer retention.

Supply Chain Management

• SCM theory introduction: Supply chain management is considered a cross-functional approach that manages the movement of raw materials towards the organisation (Sodhi and Tang, 2021). Based on influential factors of the organisational process, the raw materials are converted into finished goods. It highlights the internal capability of the organisation in the competitive market that enables them to reach the views of the customers in the early market scenario (Sodhi and Tang, 2021).
• Analysis of Supply Chain Stages: Demand management relates to the need for any product or service within the market (Sodhi and Tang, 2021). Through data analytics, Amazon Inc aims to highlight the demand based on which the supply management is implemented. The need for smartphones in the market, as highlighted by Amazon Inc, will directly increase the supply of smartphones within the market by the organisation. Strategic sourcing by Amazon Inc. helps in the selection of the best supplier in the market based on quality and pricing. The distribution within the market highlights the ability of the organisation to reach higher views of people within the market forces. Procurement relates to acquiring the materials to be integrated into the manufacturing system. Amazon Inc has its own brand of electronic and other goods that requires the integration of raw materials and manufacturing processes. The demand for the same is high in the market as well.
• Disruptions in the Supply Chain: Pandemic scenario highlighted the rise of COVID-19 that caused enormous challenges within the supply chain system of Amazon Inc. in the global market. Based on the views of Esper et al. (2020), it relates to the ineffectiveness of the organisation in reaching the views and demands of the customers in the market. Based on the analysis, the need for Amazon products in the market was increasing, which highlighted the lack of supply on the other hand. The brand image and value of Amazon Inc during the period was degrading at a rapid rate as the dissatisfaction rate in the minds of the customer was increasing. Political views in the UK, such as BREXIT, led to the generation of enormous challenges for Amazon Inc. in the global market. The supply chain management lost its control after the pandemic scenario within the market.
• Four supply chain networks: As per the views of Ampe-N’DA et al. (2020), the virtual supply chain highlights the informational presentation in the form of data visualisation related to the physical supply chain network of Amazon Inc. It helps in improving performance along with improving the status within the system. Ampe-N’DA et al. (2020) highlighted that vertical integration highlights the degree to which an organisation owns the upstream suppliers and downstream buyers. It helps in the generation of control in various stages of the supply chain. The collaborative supply chain is considered as two independent firms relying on the same supply chain in the generation of effective manufacturing services in the global market (Ampe-N’DA et al., 2020). A contractual supply chain hights an agreement between the supplier and the organisation on various issues, such as pricing and volume discounts (Ge et al., 2019). Amazon Inc. highlights a virtual supply chain system through the use of technology that helps in the integration of effectiveness in delivering quality services in the market.
• Lean vs Agile: Agile supply chain highlights cost-cutting by the generation of higher volumes of products within the market with very low variability (Ge et al., 2019). On the other hand, an agile supply chain highlights the market demands in a smaller and customisable batch of items. Amazon Inc. initiates Lean logistics based on factors of digitalisation and the application of AI. Through innovative strategies, the Amazon fulfillment process is carried out in an effective way that is related to the views of the clients within the system.

Figure 2: Agile vs Lean Supply Chain

• De-coupling point: De-coupling point is considered the boundary between MTO and MTS. MTO highlights make to order, and MTS highlights make to stock. It is considered to be a safety factor in the case of Amazon Inc. as it generates safety buffers that help in covering unexpected situations within the market. Material de-coupling point in the aspect of Amazon Ins. Based on the views of Ge et al. (2019) highlights the point of the supply chain of the materials that highlight the meet of push and pull.
• Selecting the supplier: Through intensive research and analysis, Amazon Inc has selected the best supplier on the market that helps in the generation of international operations in the long run. The qualification of the supplier should be effective in meeting the increasing demands in an aspect of the organisation in the market (Min, Zacharia and Smith, 2019). Through measurement criteria, the effectiveness of the supplier within the specified market can be measured in an effective way. Through the generation of information, supplier selection can be carried out based on price effectiveness and quality. Supplier management and pricing play an important role in sustaining the competitive market, considering the factors of the E-commerce industry (Min, Zacharia and Smith, 2019).
• Bullwhip effect: Small fluctuations in demand within the retail level can generate higher fluctuations in demand of the wholesaler and manufacturer at suppliers’ levels (Min, Zacharia and Smith, 2019). During a pandemic, the demand for the products in view of the customer increased at a rapid rate, increasing the needs of the retailers within the market at large. It generated huge pressure within the SCM of Amazon Inc. in the global market.

Task 2

• Sustainability within the operational activities: The future is sustainable in nature that strives to protect the views of the environment in every factor (Mikalef et al., 2020). Amazon Inc. has failed to generate the application of Green methods. They generate huge gaps with that of the customers in the market. The issues in changing the expectation of the customer based on environmental factors has been identified (Mikalef et al., 2020). Amazon Inc. further tries to integrate the sources of methods while spreading awareness about the same in the market through the help of the marketing department. They have visualised that effective marketing services through the spread of awareness are considered as the point that helps in connecting the two sources in an effective way. The needs of the customers fluctuate in nature. The marketers should analyse the needs and generate the same views of the operational team that enables them to meet the demands of the customers in the market in the required way.
• Issues in pricing strategies: The cost-effectiveness of Amazon has been missing in recent times, which has led to the generation of a huge gap with that of the clients in the market. The marketing team has determined the need for effectiveness within the business based on pricing that will be favourable in customer engagement in the long run (Shrestha and Karki, 2020). The application of a promotional mix has helped in the attraction of a huge customer base. Various vouchers, gift cards and online payment system has helped in reducing the pain points of the customers and generate a feeling of satisfaction in the minds of the customers. Based on the views of Shrestha and Karki (2020) it has helped in better customer engagement as price plays an important role in highlighting the brand image of the organisation. The price effectiveness of Amazon Inc generated by the promotional mix of the organisation is effective in attracting a huge customer base after the pandemic scenario in the global market.

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Conclusion

Based on the above analysis, a study was carried out on the aspect of Amazon Inc in the global market that highlighted their effectiveness within the supply chain management process and quality management. It was effective in the generation of favourable outcomes within the business. The integration of effective factors into the operational activities plays an important role as it determines the sustainability of the organisation in the competitive market. Through the application of innovative strategies through the use of technology and the selection of effective suppliers, they have been able to meet the views of the customers through the generation of effective services provided in their views within the market they are operating.

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