Nowadays it’s rare to hear about someone who did not shop or order a product online. I remember my first time I decided to buy a book from Amazon since year 2000 and I felt that I’m not going to receive the book and the money I paid is gone as I didn’t shop online before. The second step after placing the order is the invoice; there were multiple options for shipment based on duration and the higher the duration (number of days from placing the order to delivery) the cheapest it costs. As a result, Amazon allows me to adjust my invoice based on my preferences and urgency on receiving my order; I place my choice as the most urgent as I remember it was three days. Next day my friend told me that I can track the shipment then I login to Amazon and look for tracking shipment, it was showing that my order has left the U.S. and it’s in London ready for shipment to Bahrain. At last I got my book after three days as I requested and I was happy and surprised at the same time.
How Can Amazon or any online shopping portal handle customer orders shipment? Do they do it by them self or do they outsource it to other company?
When I receive my order it was packed in FedEx box then I realized that Amazon is outsourcing the function of online tracking,
handling delivery and customs clearance.
We have learned from our first session that Operations Management has ten critical decisions and one of them is supply chain management. It is obvious that Amazon supply chain manager find outsourcing logistics is advantageous in improving delivery reliability and speed.
As Amazon is focusing in its core business, the concept of outsourcing supply chain is now entrenched as best practice in most sectors. Whether the business is shipping within Asia or across the globe, FedEx is in the business of providing integrated supply chain solutions to customers. The many benefits of an efficient supply chain will help contribute to the business most important goal – improvement of bottom-line profits.
Benefits that can be achieved by working with FedEx include:
- Visibility of inventory flowing through the company supply chain
- Reduction of unnecessarily high inventory levels
- Enhanced customer service by meeting tight deadlines and complex requirements
- Reduced warehousing costs
Is FedEx more efficient in handling shipment, delivery and custom clearance than if Amazon did it by itself? Is Amazon driving down cost by having FedEx as a partner ?
Watch the amazing video about FedEx http://www.youtube.com/watch?v=Cdm2t952jYg
For more information about FedEx please visit www.FedEx.com
5 thoughts on “Peace of Mind”
Interesting blog about Fedex and its added benefits, actually from my point of view I would agree that Amazon are better off out sourcing Fedex in terms of the efficiency and cost effectiveness; because usually such popular carrier would offer special rates for different zones to company like Amazon, to attract more committed strong customers who will last for a very long time! Further, if Amazon wanted to that they will need to increase their company size tremendously and purchase aircrafts, hire more staff, purchase new software…..and the list goes on!
FedEx is definitely a great courier company. They are very reliable and always meet their promised delivery times. I think Amazon did a great choice by outsourcing their deliveries. Trying to do all the deliveries themselves would mean that they would need to create whole new department that would specialize in that, which would certainly increase their costs. Also by choosing a reliable courier such as FedEx, Amazon can be reassured that their products will be delivered successfully without any mishaps.
Outsourcing and global businesses always go together. Amazon.com is a great business online, without a proper courier company, Amazon become a website full of images and text. I agree with Dana that they did a great choice by outsourcing with FedEx. Customers also need a good tracking system of items, which makes product line management extremely important for Amazon to maintain the loyalty of their distanced customers.
It was funny to read about your initial hesitation to order online for the first time; I did not feel the same way but was similarly amazed the first time I tracked a package online. It was so precise! As for the question about whether Amazon is better off using Fedex or shipping itself, I think the answer is undeniably Fedex. Fedex has an outstanding reputation and the logistics already in place; they are expert at what they do. It would cost an extraordinary amount of money and time for Amazon to develop a similar distribution program, and they probably would not be as good as Fedex.
Outsourcing can be a great advantage for a company; however in my opinion it can lead to consequences for a country in general. For instance, I recall reading in a article once that employers are getting frustrated because they are not able to find more employees with particular skill sets. The author points says the managers are pushing off jobs abroad and hiring foreign workers. If companies don’t invest in their employees or the community in which they operate, then how can they expect to find employees that meet there expectations?
References: “Employees need a ‘can-do’ Attitude – but so do Businesses”