LWL | Optimizing Inventory Management: Amazon’s Strategies in Rural Supply Chains

ABSTRACT

The world's largest online retailer Amazon has invested heavily in infrastructure and technology to save costs and improve operations. The business has the most efficient supply chain in the world due to cutting-edge robotics and artificial intelligence (AI) technology that improve productivity and worker safety. Advanced algorithms, route optimization technology, and mapping tools are utilized by Amazon's regional distribution centres to effectively handle deliveries in rural areas (Forbes India, 2022). Artificial intelligence (AI) technologies, machine learning, and Amazon Prime membership are some of the initiatives that personalize recommendations and enhance the purchasing experience. To get around logistical challenges in rural locations, Amazon also collaborates with regional businesses and delivery services (Marketing Scoop, n.d.). To save expenses and wait times for last-mile deliveries in remote places, Amazon has made investments in micro-fulfilment centres to reduce last-mile delivery time and costs in rural areas (Flashbox, n.d.).

 

INTRODUCTION

With the market-leading e-commerce innovations they are applying across its delivery logistics infrastructure and the technology that drives it, Amazon is raising the bar for the entire retail sector (Gorilla ROI, n.d.). Amazon global logistics for both foreign customers and Amazon sellers is a sophisticated logistics system designed to simplify and enhance the worldwide supply chain journey. As a component of Amazon's supply chain, it is made to make it easier for goods to go across international boundaries and to ensure that the shipping, customs clearance, storage, and delivery procedures run smoothly (Taylor & Francis Online, n.d.). Despite its efficiencies, inventory management presents unique challenges in rural areas. The rural population takes up the majority of the market consumption in countries like India and China, and they are the biggest source of revenues (Indian Journal of Economics and Management Research, n.d.). As they grow in population, the demand also increases along with that so do the standards of living. It should be recognized that operating in a rural market has a variety of challenges, including inadequate infrastructure and transportation that can create delays and high transportation costs that can result in poor distribution and logistics (Forbes India, 2022). The market also provides many opportunities as the urban markets get more and more saturated. Amazon's sophisticated inventory management strategies, which include automated warehouses, regional distribution centers, and predictive analytics, greatly improve the efficiency and dependability of rural supply chains and establish new benchmarks for creatively resolving logistical problems (Amazon, 2022a).

LITERATURE REVIEW

This literature review aims to talk about the complexities of inventory management strategies in the supply chain. A great deal of inventory management systems are built on broadly accepted inventory models, principles, and practices. Theoretically, these methods are still relevant in modern times. With the ABC analysis method, products are divided into three groups according to their significance in inventory management (Logiwa, n.d.). This method aims for near-perfect inventory accuracy, helps detect high-risk products, and gives managerial time top priority. It groups things according to how they move or how much they are worth frequently. It categorizes items based on their movement frequency or their monetary value. ABC analysis has been adopted largely by bigger organizations as they face fewer obstacles compared to SMEs (Nyamwanza et al., 2015). One of the most important simple models that has been created over many years for one commodity is the Economic Order Quantity (EOQ). The EOQ is a formula that lowers ordering and carrying expenses by figuring out the right order size for every inventory item. This model's ability to provide acceptable results even with significant differences in its parameters is one of its advantages (Nyamwanza et al., 2015). It also helps in cutting down costs. 

In the present global e-commerce business, it is growing at a very fast pace and is a major contributor to global economic growth. Many major companies are taking up this newfound approach to get ahead in the race. Three primary components make up the e-commerce process: First, substitute components are bought from producers and sent to distribution center warehouses. Second, the warehouse's fulfillment procedures sift, choose, and package items. Thirdly, the distribution center ships the goods to the consumer (Management Study Guide, n.d.). Since about a billion orders take place everywhere, fulfilling all these orders on time and the delivery is one of the major challenges faced by the e-commerce industry. In response to the challenges posed by increased demand, a number of new innovations and concepts—including cloud computing, IoT, GPS, and smart control systems—have been implemented to facilitate collecting data and managing operations (ScienceDirect, n.d.). Notwithstanding the benefits of all of these technologies, the ECLP, i.e., a special form of economic zone, continues to face a dynamic scheduling issue that affects self-organization, transit times, and the scheduling system. As a result, there is a deficiency in real-time information exchange within the platform, specifically between customers, suppliers, and the ECLP. Many solutions were put forward and implemented, such as a genetic algorithm-based cloud-based architecture presented as a potential online fulfillment pre-process solution (ScienceDirect, n.d.). Optimizing the fulfillment process and creating a competitive supply chain network were done using a bi-level multi-objective programming technique. 

In the case of Amazon, robots are used to carry out packages and scan them rather than people. The rural market has a ton of unrealized opportunities. It is not evolving due to certain barriers such as physical communication, which is still very expensive to most of the villagers, and lack of infrastructure makes it harder for the delivery of goods from one place to another. Low literacy also plays a big role in the coverage of the rural market as it causes communication issues (Indian Journal of Economics and Management Research, n.d.). Recruiting and retaining delivery workers in remote areas is difficult. Packages may be misplaced or damaged due to unregistered homes, badly kept roads, and inaccurate rural mapping information (Marketing Scoop, n.d.). Rural delivery economics are particularly difficult to understand; picking up a single box in a crowded metropolis will save a lot of money and labor compared to transporting it along an undeveloped road. Demand in the rural market depends on the agricultural situation as it is the main source of income. Once again, the monsoon influences agricultural difficulties. Thus, the buying capacity of rural consumers varies, and it becomes difficult to predict demand (Forbes India, 2022).

Despite extensive research on inventory management and e-commerce, there is limited research focused on Amazon’s strategies in rural areas. Technology is essential to providing a flawless client experience. Initiatives like the Amazon Prime membership, which provides fast shipping access to streaming content and special discounts, are part of Amazon's digital strategy (Amazon, 2022a). In remote areas, Amazon filled the gap created by the language barrier by implementing vernacular language support to allow browsing and purchases in regional tongues (Marketing Scoop, n.d.). There is a scarcity of data on how Amazon’s strategies provide customer satisfaction and service reliability in rural areas. Technology plays an important part in providing a flawless client experience. For example, Amazon provides Amazon Prime membership which provides fast shipping access to streaming content and special discounts, but due to digital illiteracy in rural areas, these services are not utilized by the people living in remote areas (Amazon, 2022a). This also shows that the effectiveness of the technology in rural areas is very small compared to urban cities. The sustainability and scalability of Amazon’s rural inventory strategies are also not well documented. These gaps highlight the areas where there is a need for research to improve Amazon’s logistics and inventory strategies in rural areas.

METHODOLOGY

This research paper aims to discuss Amazon’s inventory management strategies in rural areas and dives into the strategies used by Amazon and how they increase the efficiency in delivery. For the purpose of the study, a secondary, research was conducted. Data was collected from various secondary sources such as research papers, website of the company, articles, and case studies (Gorilla ROI, n.d.; Marketing Scoop, n.d.; Nyamwanza et al., 2015). Analysis will be done on the basis of the data. Analysis will be done on the basis of the data. 

    AMAZON’S INVENTORY MANAGEMENT STRATEGIES 

 Amazon is a globally recognized e-commerce giant with a substantial market capitalization. It is well-known for having a strong supply chain. In order to streamline operations and cut costs, the company has made significant investments in technology and infrastructure. The distributional system of Amazon consists of three steps: last-mile distribution, procurement, and fulfilment (Amazon Science, 2022). Amazon began as an online bookstore but has now grown into an internet-based business that specializes in cloud computing, e-commerce, digital streaming, and also offers artificial intelligence (AI) services. Now, Amazon isn’t only a retailer but also has expanded into producing movies and TV shows, fashion marketing, an auction house, and more. Due to a mix of modern information technology, large warehousing systems, multi-level inventory management, and reliable transportation, Amazon's supply chain is the most efficient in the world (Amazon, 2022b). To rise to this level, Amazon adopted the following inventory strategies which played a major part in cutting costs and making the delivery process way more efficient.

Predictive analysis: An Amazon function called "predictive analytics" looks at a particular consumer's past purchases and browsing activity to make predictions about their future behaviour. Amazon used uses AWS (Amazon Web Services) for their predictive analysis. As such, it offers you several benefits that go beyond just boosting Amazon sales. This feature looks at a particular customer's past purchases and browsing activity to make predictions about their future purchase. As such, it offers you several benefits that go beyond just boosting Amazon sales.  Predictive analytics is a tool that Amazon marketers also use to discover products that a buyer would like. They evaluate the client's present search preferences. This, way Amazon is able to get more sales without coming off as a sales person . It can assist a company in offering clients additional value even after a deal has been made.

Automated warehouses – Amazon warehouses utilize advanced robotics and AI technologies to enhance the efficiency of the deliveries and safety for the worker. Sparrow is robotic system that can smell, identify and handle end number of products in the warehouse Sparrow will do tedious work so that staff members may concentrate their time and efforts on other projects. Sequoia is a recent strategy implemented by amazon which can hold products up to 75% faster than usual when it arrives at the fulfilment centres. Both sellers and buyers gain from this as it speeds up the process of listing the item for sale on Amazon.com. It boosts operational speed and accuracy contributing to faster delivery time. Proteus is the first fully automated robot introduced by Amazon. With the help of cutting-edge safety, perception, and navigation technology created by Amazon, Proteus navigates the facilities on its own. The robot doesn't need to be kept in designated locations because it was designed to be automatically directed to complete its tasks and travel among employees. It can function in a way that enhances easy to understand secure human-technology interaction, providing a wider range of potential applications to support the staff, in lifting and moving of Go Carts. Using, sophisticated artificial intelligence (AI) and computer vision, Cardinal another robotic workcell that can rapidly and nimbly pick one box from a stack of parcels, lift it, read its label, and carefully place it in a Go Cart to be sent.

Regional Distribution  

Using the information provided, a vital component of the regional centres is creating orders with shorter, more effective routes. Amazon operates small, large, and non-sortable items; speciality clothing and footwear; small, specialty parts; return processing centres; and third-party logistics (third-party) outsourced facilities. In sortable and non sortable fulfilment centres products are packed and then shipped. Workers at sortation centres sort customer purchases according to their intended location and load them onto vehicles for quicker delivery. Orders from clients are prepared in delivery stations for last-mile delivery to consumers. Amazon uses automation and AI for faster deliver. For millions of qualifying products, free two-day shipping is offered by Amazon's Prime membership service. Customers are encouraged to shop on Amazon frequently by this deal. As an addition to its own delivery services, Amazon works with outside delivery partners such as UPS, FedEx, and neighbourhood courier services. These alliances expand the reach and capacity of delivery. They have established various micro fulfilment centres in various parts of the world which reduce delivery time, lower transportation cost and improves the customer experience. Drone delivery is one of the strategies that Amazon invented. Amazon decided to use drones as an economical and green shipping solution to cut emissions, speed up delivery, and please consumers.

                    IMPLEMENTATION IN RURAL AREAS

Technology utilization 

With the purpose of managing deliveries in rural areas, Amazon has created a comprehensive logistics system that is driven by cutting-edge algorithms, route optimization technologies, and mapping tools. Initiatives like the Amazon Prime membership, which provides fast shipping, access to special discounts, and streaming video, are part of Amazon's digital strategy. The business uses machine learning and artificial intelligence to customize suggestions and improve the buying process. If USPS is unable to directly deliver to an address, Amazon offers some inventive alternatives. Packages can be picked up at customers' convenience from Amazon Hub Counters inside partner retail establishments or post office boxes. Now Amazon is even experimenting with drones and robots on sidewalks to finish the last distance to rural households. They delivered tailored advertisements through a variety of digital platforms by analysing consumer data using artificial intelligence (AI) technologies. With this strategy, Amazon is able to satisfy their customers easily and increase the effectiveness of their advertising campaigns.

Local partnerships 

Amazon works with local companies and delivery firms to overcome logistical obstacles in rural areas. This tactic not only boosts regional economies but also expands Amazon's presence and effectiveness in places where conventional delivery networks could have trouble. In order to complement the USPS collaboration, they have also begun expanding its own rural last-mile delivery network in a few locations, complete with delivery stations and vehicles.

Micro fulfilment centres

Amazon has invested in many fulfilment centres to reduce last mile deliver time and costs in rural areas. By strategically placing, Businesses can offer same-day or next-day delivery alternatives and shorten delivery times by situating these hubs closer to the final consumer (Flashbox, n.d.). Amazon can process and fulfil orders more quickly and effectively in these centres thanks to the automation technology, which also lowers labour costs and increases output.

                                            CONCLUSION

Amazon has developed a comprehensive logistics system using advanced algorithms, route optimization, and mapping tools to manage deliveries in rural areas. The company uses machine learning and artificial intelligence to improve the buying process and offers alternative delivery options, such as Amazon Hub Counters and drones. Amazon also works with local companies and delivery firms to overcome logistical challenges in rural areas. Additionally, they have invested in micro fulfilment centres to reduce last-mile delivery time and costs, offering same-day or next-day delivery options and reducing labour costs. Other businesses and sectors aiming to improve their rural supply chain operations can learn a lot from these tactics (Bonde, 2022; Forbes India, 2022; Flashbox, n.d.; Marketing Scoop, n.d.). In areas that are harder to reach, the emphasis on technological integration and localized alternatives can act as a model for enhancing operational effectiveness and service delivery. Amazon could create decentralized unmanned logistics centres to improve its rural supply chain. These hubs would have cutting-edge features including robotics, Al-driven inventory management systems, and drone delivery capabilities. They would be positioned strategically in rural locations. This might serve as evidence of Amazon's dedication to using technology to achieve maximum consumer satisfaction.

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