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Supply Chain Management: Takeaways From Jeff Bezos's 7 Amazon Supply Chain Lessons

Michael Wilson | Jul 8, 2014

While Amazon may have started as a small operation in the garage, the company has exploded on the ecommerce scene, making revolutionary innovations to many aspects of supply chain ...

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While Amazon may have started as a small operation in the garage, the company has exploded on the ecommerce scene, making revolutionary innovations to many aspects of supply chain management. With millions of transactions to manage and over 130 million stock keeping units to move, they’ve had to find ways to streamline logistics and maintain high levels of customer service. Company CEO Jeff Bezos was recently named one of the best in the world by Forbes Magazine, and he’s sharing his insights on how Amazon continues to improve upon supply chain operations.

1. See things from your customer’s perspective.

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The customer is king at Amazon, and they back up this motto with action. In meetings with internal staff, Bezos makes a point of leaving one open chair next to him that represents the customer. This strategy serves as a reminder to his team to keep in mind the user who can’t be there to offer input. The empty chair has become recognized as a symbol of the customer centric focus that Amazon prides its reputation upon, from providing high quality merchandise to supply chain management.

2. Don’t let the competition sidetrack your goals.

Of course, you want to stay current with the activities and successes of your competition, but this shouldn’t be an overriding consideration that can distract you from business at hand. Many businesses measure their success by beating out the competition, but Amazon avoids making such comparisons. Instead, review what they do, but stay focused on customer needs.

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3. Always keep an eye on your metrics.

The keys to your success are found by crunching the numbers to figure out what’s working. Performance measurement is the best way to tweak your business operations and marketing approach, enabling you to improve upon the good and abandon the bad. At Amazon, executive monitor over 500 key performance indicators, 80 percent of which are customer-related.

4. Wow them with outstanding customer service.

It’s the little things at Amazon that generate high levels of customer satisfaction, including longer hours and quality packing materials. Efficient supply chain management covers additional costs of custom packaging, which drives sales. The bonus is that the investment in boxes, which boldly feature the Amazon logo, serves as a marketing opportunity for a reasonable cost.

5. Plan for the short term with a view to the future.

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Bezos stresses the importance of long term sustainability, such as investment in information technologies. The expenditure may not show short term gain or high ROI, but these gains result in a product that delivers. The company’s investment in Kindle technology is an example of planting the seeds for future growth: Bezos found it more important to spend more to offer a product that people love.

6. Learn to think outside the box.

No matter how much you prepare, there are always contingencies that destroy your best-laid plans. Bezos believes that not only do you need a Plan B, but strategize for Plans, C, D and E as well. This may take you outside your comfort zone, but you certainly won’t be shocked by the unexpected. Budgets fall through, product shortfalls may occur, or you're hit with a supply chain gap, but thinking outside the box will ensure you're prepared for unforeseen circumstances.

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7. Teamwork is key.

Amazon owes its huge successes to maintaining a team that delivers results, which may not always mean a large group. In fact, Bezos has a rule of thumb when developing teams: if it takes more than two pizzas to feed the group, it's too large. Smaller numbers mean efficiency, ensuring the job gets done.

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Image Source: Amazon

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