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Brief description of the dive:
- Amazon is overhauling its inbound fulfillment processes for inventory entering its logistics network, Chief Executive Andy Jassy said on a third-quarter earnings call Thursday.
- The e-commerce giant has “made hundreds of changes to” its inbound logistics network in the U.S. and opened more than 15 buildings focused on the inbound process, according to Jassy.
- “Although we are still relatively early in this new architecture, we have already improved our ability to distribute inventory across our fulfillment centers by 25% per year, allowing us to have more of the items we need at the fulfillment centers closest to us to the customer, so we can compile shipments and ship to customers even faster,” Jassi said.
Dive Insight:
In February, Amazon’s CEO highlighted more efficient inbound fulfillment processes as an area of focus for 2024. The changes underway build on the company’s shift to a regional network model and aim to further improve inventory placement , to speed up deliveries and reduce transport costs.
While Amazon executives are optimistic about the positive impact of the overhaul, third-party sellers face challenges during the transformation. Inbound capacity constraints at West Coast locations result in longer vendor inventory processing times. In response, Amazon reroutes shipments and offers lower placement fees for products destined for the Eastern US
The company appears committed to the changes, with CFO Brian Olsavsky saying on Thursday’s call that Amazon continues to invest in its inbound network.
Amazon is also investing in other aspects of its supply chain to further strengthen fulfillment operations. For example, the company is increasing its use of robotics to improve delivery speed and employee safety. It recently opened a fulfillment center in Shreveport, La., that uses robots to streamline the warehousing, picking, packing and shipping processes, according to Jassy.
“While we believe we have more extensive automation and robotics than other retail competitors, it is still too early to know how much automation we expect in our fulfillment network,” Jassi said.