9 of Amazon's Supply Chain Strategies You Should Copy

Posted by George Muha on Dec 2, 2015 10:09:54 AM

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This week news broke out about Amazon's new and improved delivery drone.  This new version flies up to 400 feet, can go in a 15 mile radius and will deliver products right in your backyard within hours of ordering.  Granted, the likely hood this being a reality any time soon is slim mostly because of a ton of regulatory hurdles.  But it shows Amazon's ingenuity and ability to keep pushing the limits.  

According to Gartner's Supply Chain Top 25, Amazon has the 3rd best run operation in the world. There also has been a ton of research that links a direct correlation between companies who achieve a high level of operational excellence and greater profit margins along with more market share.

As a supply chain consultant, I see first hand the great gains companies benefit from when they adopt and implement operational improvements. Unfortunately, or fortunately if you're using your supply chain as a competitive advantage, only about 15% of companies out there actually have a supply chain strategy.

Considering Amazon is the gold standard on this topic, I thought it would be enlightening to share some of the key things they are doing with their supply chain.  And perhaps give you some ideas that your company can mimic.

9 Amazon Supply Chain Strategies You Should Copy

1. The Use of Analytics of Buying History to Market to Individual Customers.

When you shop on Amazon, you don’t even have to surf their site because the company is flashing similar products you have purchased and items that you have searched for in the past. There is no Jedi mind trick here, they are simply using analytics of your past purchasing and browsing behavior to sway your buying habits.
TRICK YOU CAN USE: You don’t need a sophisticated algorithm to accomplish the same thing Amazon is doing. Even if all of your customers purchase via phone, simply have your customer service reps at the ready with past order history to try to drive similar kinds of purchases. If a customer continuously buys items within a certain price point, recommend items that cost around that same amount. Common sense? Yes, but not common practice.

2. Call the Service Desk and You Might Get the CEO

Every executive at Amazon is required to spend some time fielding customer service calls…including CEO Jeff Bezos. Amazon does this to make certain everyone in the company is committed to listening to, understanding, and acting on the needs of each customer. I've looked under the hood of about 50 companies a year for the last 15 years and very rarely do I see executives roll up their sleeves and get into the trenches of their own businesses. If one thing on this list is mimicked, it should be this one.
TRICK YOU CAN USE: Get your scaredie-cat CEO and his immediate sphere of influence and throw headsets on them. Fielding customer complaints will be good for them and everyone else at your company.

3. Putting Cool Names To Different Parts of Your Company to Drive Value

With trendy names like Pike Street, Pinzon, Strathwood, Kindle, Dash, etc…Amazon has us chomping at the bit with what they are coming out with next. Truth be told, many of these brands are simply Amazon private labeling different products. By associating slick brands to these services or products and creating a PR campaign around them comes across as new and fresh and makes customers feel they want in.
TRICK YOU CAN USE: You can have a lot of fun with this. For starters, put a name to deliveries on your own truck, like "Your Company Name Same Day" and write a white paper about your new same day delivery service.

4. Schedule a Free Tour of Your Facility.

Any customer can request a tour of Amazon’s fulfillment centers to see how efficient they are. If you want to develop a better relationship with your customers and suppliers, invite them to your facility and show them how you do things.
TRICK YOU CAN USE: Put a day on the calendar once every quarter for and block out time for a tour of your entire facility and some of the new things you are doing, and invite every single customer and vendor. A dividend that may come from this are collaboration opportunities. When a vendor or customer looks under the hood of your operation, they might suggest things that help them and give you more profits (like shipping one big shipment a week instead of smaller shipments every day or shipping product without packaging to save them time when receiving your product).

5. Brand Packaging

We all know when we receive a brown box with a smile on it that it comes from Amazon. Brand recognition is huge and putting your company logo on your boxes is a great way to stay on your customers minds.
TRICK YOU CAN USE: Packaging material is a very competitive business. You can have your company name and logo put on your boxes for a very nominal fee. It's well worth the extra pennies.

6. Honor the First Sale Your Company Ever Made

The first book Amazon.com ever sold was from Bezos' garage in July 1995. The book was Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. This has been mentioned scores of times when people talk or write about the history of Amazon and is a big part of the whole "feel good" story they want everyone to know.
TRICK YOU CAN USE: Highlight the first sale of your company on your website or with a plaque in your lobby to show how hard you work and how far you've come. Everyone loves to know people's humble beginnings.

7. Sell Something Odd

My 12 year old son brought to my attention that you can literally buy unicorn meat on Amazon. I don’t know what the hell was in it, but we almost bought it for the gross factor alone. The point is my son and I spent two days telling everyone of his friends and their dad's about the unicorn meat they can buy on Amazon (if they felt so inclined) and kept Amazon's name in our every day conversation.
TRICK YOU CAN USE: You can cross the line here if you get too raunchy. The key is to show your customers that you have a sense of humor. But take a small chance and throw something in your product line that get's people talking...even if it sheaves them out.

8. Market Something You are Good at to Diversify Your Offering

Through the evolution of Amazon’s E-commerce platform, the company came up with the wildly popular Amazon Web Services offering. Every company has different things that they are good at; things that have value to others. The point here is to put a dollar figure on it and market it to potential customers.
TRICK YOU CAN USE: Let’s say you have a kick butt customer service department that people always praise you about. Then perhaps you could package it up and sell customer service training courses. Or perhaps you are located on the outskirts of a major city and have mastered the art of delivering within that particular city. Then there's another service offering that you could market.

9. Invent Something Insanely Impossible for PR Reasons.

Amazon nailed it when they announced their delivery helicopter drones on 60 Minutes last year. Of course there are many factors that make it impossible; cost, safety, national security, practicality, etc. But it was a cool idea and was and still brings them a lot of attention. That’s as a hard one to top, but put an innovative goal out there that tells your customers you are always trying to get better and might be a little nuts...in a fun way.
TRICK YOU CAN USE: Again, you can get creative here. Perhaps you tell your customers that it's your company's is going to have the first insert your product here on the planet Mars. Hey, I actually like that idea. Feel free to use it if you like it.

Summary

There is more and more research putting an exclamation point on the fact that there is a huge competitive advantage for companies who execute a supply chain strategy. Amazon's supply chain innovations make them tops in the world. Since they are continuously reported about, why not try to adopt some of them and see how they work at your firm?

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Topics: Logistics Innovations, Drone delivery, Amazon's Supply Chain, KDL Logisitcs

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