Introduction
Operations management is regarded as the process of carefully producing and distributing products and services. The key objective of operations management is to enhance the efficiency and effectiveness of the process. The field of operations management is focused on planning, organizing and supervising in regards to manufacturing, production or provision of service. The study is based on Amazon which is one of the largest online retailers globally. The study provides an insight into one of the operation management practices for Amazon along with analyzing its impact on the efficiency of the organization. In addition to this, the study also evaluates the role of technology within the process of Amazon and compares with Royal Mail. Lastly, the study sheds light on the supporting function associated with the operation management practice of Amazon in order to evaluate its contribution towards organizational success.
Overview of Company
Amazon is regarded as one of the largest e-commerce globally. The company started its operations in the United States by selling books. However, with change in business process
and appropriate operations management practice, Amazon was able to expand quickly gaining global competitiveness (aboutamazon.com, 2021). The operation management
practice in Amazon includes capacity planning, production planning, supply chain management, inventory management and others. These operations management practices
have assisted Amazon to improve competencies and areas of operation ensuring better growth and development in other fields (aboutamazon.com, 2021). The operations management practice selected for Amazon is inventory management as the company relies on this practice in order to streamline the supply chain and logistics process. In a similar manner Royal mail is a service and courier which relies heavily on its inventory management. The study highlights the impact of the practice on financial and reputational performance of Amazon along with comparison with Royal mail.
Operation Management practice of Amazon
Operation management processes are mainly focused on ensuring careful management of processes related to production and distribution of services or products. According to
provided information, the process of operation management includes substantial measurements as well as analysis of internal processes for an organisation. As defined by
Ramos et al. (2018), defining optimal operational management procedures can be done through in-place expert systems. In order to accomplish this result, it is important to
understand the operational management practice of said organisation precisely. Amazon is known for maintaining strategic retailing business activities across the world. In this context, inventory management can be considered as one of the most important operation management practices that Amazon incorporates with their business activities.
Access to real-time monitoring processes along with opportunities for exploring business operations permits organizations to use strategic implementations for reducing demand
uncertainty of customers. As a worldwide retail platform, Amazon has to deal with millions of customer demands on a daily basis. Therefore, managing inventory for this company is not only subjected to business operations but also effective customer satisfaction through optimization of procedures. Regarding this, inventory management is associated with the
entire process and operations that occur due to obtaining inventory and selling it to customers. As per provided information, organizations are facing high levels of customer
requirements that include operational engagement. Hence, this can be said that inventory management is capable of generating profit for an organisation as well as making them face loss of revenue.Inventory management is related to development of product along with tracking and storing in order to meet customer demand with efficiency and effectiveness. Thus, it can be said that it is a form of investment that organisations like Amazon utilize to achieve maximum customer satisfaction. From the viewpoint of Polacco and Backes (2018), with help of advanced technology and computer integration, Amazon is capable of implementing integrated inventory management that helps the company to numerous benefits. Therefore, inventory management of Amazon bears high significance in business profitability and sustainability. Amazon’s inventory management is capable of offering clear insight about business operations based on the size of business, nature of services/products, serving industry, and selling channels. Moreover, this organisation is focused on developing machine-based inventory management that is useful in implementing integrated inventory management for ensuring better effectiveness.
Amazon considers product stock as a major business asset that can affect business operations. Issues such as excess inventory, low level of stocks, dead stocks, high storage cost can be faced by companies if inventory is managed appropriately (sell.amazon.com, 2021). Associating operation management practices with inventory management signifies its
importance in Amazon’s retail operations in the global market. Nonetheless, the organization tends to implement mitigation approaches as well which helps Amazon to overcome
the aforementioned issues within inventory management to maintain sustainability in business operations. Furthermore, Amazon’s inventory management process includes a machine learning-based inventory management system that permits this organization to forecast customer requirements while setting up an optimum level of inventory.
Analyzing the impact of operation management practice on the efficiency of the company Inventory management can be defined as the process of tracking and storing products in order to meet the demands of customers efficiently and quickly. Muller (2019) suggests that poor inventory management practices can lead to extra cost and dead stock which can impact the profitability of the company. In this regard, it has been evaluated that the corporate financial performance of Amazon has improved over the last five years due to effective operations management practice. For instance, the operating income of Amazon was $4,186 million in 2016 which increased exponentially to $22,899 million in 2019 (aboutamazon.com, 2021). Based on this information it can be said that effective management of inventory has allowed Amazon to streamline its supply chain and logistics. This in turn resulted in improved reputation performance of Amazon leading to increased customers and sellers for Amazon thereby increasing the income exponentially. management practice has widely contributed towards the efficiency of the organization in terms of streamlining the process, increasing the income, and others.
Inventory management practice forms the core of Amazon due to which Amazon has extensively invested into warehouses and other technologies. identified that Amazon has around 175 fulfillment centers with over 150 million square feet of space globally (sell.amazon.com, 2021). In addition to this, the company invested around $15 billion and launched 225 new tools which helped third-party sellers to grow. Moreover, Min et al. (2019) suggest that technology which has perceived usefulness and is easy to use
are more preferable by customers. Considering this, the inventory management tools of Amazon are user friendly which allows customers and sellers sto track the shipment easily.
This allowed Amazon to enhance their reputation amongst sellers and customers which increased their business. Additionally, the delivery time of products is also reduced due to the FBA centres of Amazon (sell.amazon.com, 2021). the supply chain management of Amazon is streamlined due to appropriate inventory management practices. Therefore, inventory management practice of Amazon played a crucial role towards increasing the efficiency of the organisation.
On the other hand, comparing the operations management practice for Amazon with Royal mail it can be said that the Royal mail uses third-party partners in order to conduct inventory management practice. Moreover, from the annual report it has been analysed that Royal Mail faced decline in operating profit. For instance, $341 million was the operating profit of Royal mail in 2019 which reduced to $217 million in 2020 (royal mail group, 2021). In this regard, it is evident that the inventory management practice of Royal Mail is inferior to that of Amazon. Furthemore, the financial performance of Royal Mail declined due to dependence on third-party partners which also impacted the reputational performance of the company. On the other hand, Amazon has its own delivery partners and does not rely on third parties. Moreover, Amazon uses tools and technologies to streamline the supply chain management thereby enhancing the inventory management practice. Therefore, it can be said that the impact of operations management performance on Amazon’s efficiency shows a positive correlation whereas with Royal Mail it shows lower efficiency. Thus, Amazon’s inventory management practice has assisted the company to enhance its financial and reputation performance. Evaluating technology embedded in the process Advancement in technology has revolutionized the operations management practice. As per the views of Gölzer and Fritzsche (2017), introduction of technologies in operations management has assisted in gaining automation and efficiency within the process. In this regard, it can be said that Amazon, as well as Royal mail, has both integrated technologies or technological components either in-house or through third party partners respectively. Amazon has embedded two key technologies within the inventory management process. One of the key technologies is the warehouse management system (WMS). As per the report, Amazon has embedded the warehouse management system within the inventory management process by allowing the sellers to manage the orders effectively (sell.amazon.com, 2021). Furthermore, the technology extends to the supply chain and fulfillment systems of Amazon 7 which is integrated within the inventory management system. In this regard, Amazon was able to streamline the supply chain process ensuring effective management of inventory along with delivery of the products in a timely manner. Moreover, customers, as well as sellers, prefer Amazon over other companies which shows increased reputational performance of the company. Dalenogare et al. (2018) suggests that use of technology to integrate different processes increases the efficiency of the operations of the organisations. In this regard, the potential use of technology has allowed Amazon to keep a track of inventory and delivery through the supply chain which ensured one day delivery through Amazon Fulfillment Centres. On the other hand, handling data of customers is a cumbersome and difficult process considering the sorting and security of the information. In this regard, it was identified that Amazon has embedded Aurora into the inventory database (aws.amazon.com, 2021). The technology has been embedded into the inventory management process through cloud service which provides achieving additional capacity through a few simple mouse clicks. The Amazon Fulfillment Technologies (AFT) team was able to integrate the WMS, IMS, warehouse processing and others through cloud service which are essential for on-time delivery of customer orders. This has allowed Amazon to gain improved operational performance by attracting more customers and sellers. Moreover, it also assisted Amazon to increase its assets from $83,402 million in 2016 to $321,195 in 2020 showing an exponential increase in financial performance (aboutamazon.com, 2021). Similarly, Royal Mail has also embedded technologies within the process in order to increase
efficiency. For instance, Royal Mail collaborated with two third-party partners, Storefeeder and Intersoft (royal mail group, 2021). Both of the companies provide inventory
management support and shipping solutions for Royal Mail. In this regard, it can be said that the Royal mail embedded technologies with the help of third-party partners within their inventory management system. This has allowed the company to enhance its inventory management and supply chain through effective integration of technologies. However, in comparison to Amazon, the embedding of technology is inferior in regards to the inventory management process. Thus, it can be said that Amazon’s operation management practice is much better than other organizations allowing the company to improve its financial and reputational performance. Supporting functions linked to the operation management practice and its impact on organizational success 200 Inventory management as a standalone process has limited impact on the efficiency and
success of the organisation. According to the words of Torres de Oliveira et al. (2020),
integration of different processes as a support helps in streamlining processes. This in turn increases the efficiency of the process which helps organisations to gain competitiveness and success within a sector. In this regard, the supporting functions linked to the inventory management practice of Amazon are warehouse management, warehouse processes,
inventory storage, inbound and outbound shipments and others (aws.amazon.com, 2021). These supporting functions help Amazon to streamline their supply chain function along with enhancing the inventory management practice. customer orders thereby improving corporate financial and reputational performance of Amazon. Thus, it assists Amazon to ensure organisational success. Recommendations 150
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