To accommodate these smaller customer bases they can setup marketing and sales offices for special countries. Here they can construct specific websites and archives catering to local and national demand. Desired title scan, and then be sourced from the nearby DC. While Amazon is at present live in the EU markets of Germany, France and Great Britain, they should consider expanding to a wider targeted audience by introducing the perception of a 'marketplace'. The marketplace is defined as a cluster of different countries with a sole catalog and served by a sole DC. The current DC in France could also expand into a bunch containing Belgium, France and Luxembourg. Germany could turn out to be a cluster that actually contains Austria, Switzerland and Germany itself. The British installation could include all of Ireland and Great Britain. In adding together the above mentioned clusters, Amazon Company can further introduce several DCs for additional bunches with Italy catering to Southeast European terror-tries like Greece, Hungary and Bulgaria. Poland catering to the Ukraine, Czech Republic & Belarus and Sweden running the Scandinavian countries like Finland, Norway and etc. Thus all-encompassing the whole European Union. Setting up Amazon.com as a focus on point for third-party marketing activities involving a variety of private dealers, would also be a suggestion worth considering. It will actually facilitate third-party sellers to present their goods alongside Amazon’s offerings. These will consequence in increased viewership of the site as well result in enhanced customer data base.
At the current moment, Amazon has autonomous units working independently for each of the 3 Countries i.e. France, United Kingdom and Germany. The business, however envisions operational explanation and cost savings by enhancing infrastructure and services across the entire Europe. They have an alternative to either go in for highly centralized system or may be decentralized one. There is though a variety of strategies that the company can consider adopting as per their overall distribution network configuration:
- Single European distribution network (EDN) and Centralized Distribution network with the single central DC.
- Keeping up to date DCs and the adaptation of transshipment under a single centralized management system.
- Separate all DCs and decentralized management for the South and North Europe respectively. Discussed below are the pros and cons of each of these strategies in order to acquire the best possible solutions.
Single European distribution network (EDN) -Centralized Distribution network with a central DC: Possible Advantages
- Reduction in whole inventory costs.
- Reduction in demand dissimilarity across the supply chain management of the account of a sole central DC.
- Reduction in total cost of multi-item orders on general account of order pooling.
- Improvement in demand-supply mismatching issues.
- Improvement of the Bullwhip effect because of boost in information sharing.
- Relatively easier integration of the supply chain management system.
- No difficulty in implementation.
Disadvantages:
- Boost in lead times to customers and thus decrease in Service Levels.
- Greater than before distance of customers and suppliers to the central DC resulting in a boost in inbound and outbound transportation cost.
- The loose elasticity by not being able to meet diversifying needs of a diversified customer base in the entire Europe.
- Usually requires new investment in total for setting up relatively new infrastructure.
Keeping up to date DCs and adopting transshipment under a single centralized management system:
Possible Advantages
- Reduction in overall demand unpredictability across the entire supply chain due to effective pooling.
- Decline in total inventory and some associated costs.
- Improvement of demand-supply mismatch issues.
- Improvement of the Bullwhip effect.
- No need for a new infrastructure.
- Flexibility due to load balancing across entirely separate DCs.
- Somehow reduces risk of relying on a sole DC.
- Relieve of expansion issues in other countries.
Disadvantages:
- Combined supply greater than that of an individual DC.
- Higher difficulty in coordination and need for refined IT tools.
- Boost in lead times to customers in some rare cases
Based on all the advantages and disadvantages of the above strategies, one can easily conclude that maintaining the DC’s in each of these three target countries in combination with an integrated inventory or supply management system and almost having just a single supply chain actually allows us to collect the possible advantages of the location. Lead time pooling leaking considerable boost in space between customer and supplier actually combined with an insignificant decrease in overall service levels (lead times to customers).
Amazon will be able to simultaneously develop the profitable advantages mentioned on top to the fullest, reduce inventory to a great degree and reduce overall transportation costs radically. Thus, it would be suitable that Amazon puts into practice a Centralized management system all along with the three existing DC’s and a general integrated IT interface................................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
Kim Park (B): Liabilities
The Millennium Challenge Corporation and Ghana
Leo Burnett Co. Ltd.: Virtual Team Management
Accounting for Indirect Costs
Analytics in Empirical/Archival Financial Accounting Research
Continuous Hubbing
Hyflux Ltd: Progressive Project Financing
Sally Jameson–1999
Tackling Poor Performance, Extreme Inequality, Public Complaisance: Brazil’s Education Minister Forges a New Role for the Ministry (Sequel)
Exchange Rates: Definitions and the Real Exchange Rate
