Operational management Inventory Management at Amazon

According to Heck (2009) in order to survive and remain competitive in the market delivery of the quantity of products and services at a particular time is necessary and for this it is essential for the businesses to manage and control their inventory levels so that they can fulfil the needs of the market in an efficient manner. In this regard, WHO (2008) also added that the inventory is created to fill the difference between the supply and demand times.

For example, Del manages its inventory level efficiently, by preparing all of the products or order and for this, the company stocks all of the products, on which the barcode is printed. Moreover, all of the product lines in all of its factories are rescheduled after every two hours in order to complete the orders in time. After establishing the product plan a message is further delivered to the relevant supplier logistics centres informing them about the components and the delivery dock for the product.
Charania (2014) states that when Bezos started his enterprise, he wanted the operations of the business to be hassle-free. Although he wanted to offer a wide range of books to its customers, at the same time he wanted to spend no money on the establishment of stores and warehouses while dealing with the inventory. He then realised that in order to satisfy the customer’s efficient management of inventory and in time delivery of products to the
customers are necessary, for which warehouse is necessary.

This was a tough decision for Bezos (Stone 2013) and each warehouse cost him $ 50 million and for this, the company had issued bonds of $ 2 billion. According to Levi (2008, p 386) in 1999 Amazon had added six warehouses and the total number of its warehouses was 10 and the warehouses were located in Coffeeville, Kansas, Nevada, Campbellsville, Lexington, Kentucky, Georgia, McDonough, Grand Forks and North Dakota. Levi (2008) further explained that many of those warehouses were established in states with no or very little sales tax at that time. Ten warehouses were sufficient for the company to store its inventory and allowed a company to store millions of books, toys, CD’s and hardware components and all of the inventory was very well maintained and was computerised completely.

In fact, the number of lines of the codes used by the company was the same as the numbers used by its website. Hence when a customer makes an order a series of automated events followed which made Inventory Management easier for the company.

References

Charania, N. (2014). Why Amazon Outsourced its Inventory Management?, Available online
at: http://appath.com/blog/why-amazon-outsourced-its-inventory-management/ [Accessed on
04/01/2019].

Heck, G, V. (2009). Inventory Management: Introducing A Framework To Assess
Operatio.nal Performance, Master Thesis – Systems Engineering, Policy Analysis and
Management.

Levi, S. (2008). Designing N Managing Supply 3E, Tata McGraw-Hill Education.
Stone, B. (2013). The Secrets of Bezos: How Amazon Became the Everything Store,
Available online at: http://www.bloomberg.com/bw/articles/2013-10-10/jeff-bezos-and-the-
age-of-amazon-excerpt-from-the-everything-store-by-brad-stone [Accessed on 06/01/2019].

World Health Organisation (2008). Principles and Techniques of Managing Inventory:
Training Manual, Available online at:
http://apps.who.int/medicinedocs/documents/s17396e/s17396e.pdf [Accessed on
28/12/2018].

 

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