How Amazon is Making its Supply Chain “COVID-proof”

COVID-19 has affected various industries in ways that they would never have foreseen. As the economic fallout continues, very few companies have been “immune” to the pandemic’s effect on their bottom line. Driven by smart technology and digital innovation, global organization Amazon has built a reputation as a company that is shaping how many industries do business. With a tendency to do big things, it should come as no surprise that the online giant, recently shared that they will be reinvesting $4bn of their profits on minimizing health risks along the supply chain so they can protect their workers and consumers.

The crisis has accelerated Amazon’s supply chain transformation putting the company in an excellent position to not only take on COVID-19 but also to develop the world’s first vaccinated supply chain. Amazon Founder and CEO Jeff Bezos told NYmag.com that he wants to make sure that anything that goes through their supply chain is not only not interrupted but is virus-free. A tall order, sure, but Bezos is not a man who thinks small. He is a man who has the luxury to think long term because he has the capital and control of his entire supply chain. Bezos is a man who is determined to not only have a resilient and robust supply chain within these trying times but to have what some experts are calling an ‘Amazon supply chain.’

Lessons We Can Learn From Amazon’s “Inoculated” Supply Chain

The first thing companies need to accept is that these aren’t normal circumstances, and therefore, companies must show their ability to adapt even if they make a few missteps along the way. Taking bold leaps towards a long-term vision, The Telegraph writer Harry de Quetteville believes that what separates Amazon from the rest is that “they control the three critical aspects of its supply chain. These include the choice of goods coming to its warehouses, the warehouses themselves, and, finally, delivery”. In the UK, they rarely rely on third parties; instead, they rely on Amazon Logistics, their private delivery firm.

As the landscape continues to change, the e-commerce giant has been in the news about the safety conditions of its warehouses. The raised concerns come down to the difficulty of social distancing. In response to this, Amazon has been focusing on modifying the efficiency of its warehouses. The company has upped the ante and spent $800m (£655m) on developing and implementing game-changing solutions like “regular testing of all Amazonians, including those showing no symptoms.”

To “do the right thing,” Amazon decided to suspend non-essential items coming into their warehouses. Essential items are products like household goods and medical supplies. The new development was not well received by Amazon’s third-party sellers who weren’t able to ship non-essential items using Fulfillment by Amazon. For them, it was a change that made their existing supply chain issues worse. 

In response Kate Scarpa, an Amazon spokeswoman told CNBC in a statement: “We understand the impact that COVID-19 has had on many of our selling partners and are working hard to help them during this difficult time, including waiving certain fees, pausing loan repayments, providing regular updates and guidance via direct communication channels, and relaxing our policies around shipping-related performance metrics to mitigate the impact on their account health.” 

Setting The Tone for the Future

Amazon is predicted to emerge from the crisis even stronger than before while setting the tone for the future. Held to a higher standard due to their size, the company that reportedly employs around 750,000 people has recognized that these are times of customer retention. So in response, they implemented a strategy that begins with the end of their supply chain: the people buying the goods. Doing so has allowed Amazon to give their customers confidence in the products they sell and deliver through Amazon. 

Taking on the opportunity to reinvent its supply chain, “the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” said Bezos, in a statement. Relentless in their ability to execute effectively, the question now is a near-virus-free supply chain possible? Well, maybe, but one thing we do know is that when Bezos commits to something, he goes big. 

Moving forward, some might argue that Amazon has not managed this crisis correctly, but you cannot deny that their end goal, to return to optimum efficiency by inoculating its entire supply chain, is a bold move. Bezos’ innovative spirit to be a “good social citizen” has driven him to cleverly use the crisis as a teachable moment, giving Amazon the space to adapt through new investments in infrastructure across the supply chain.

Digitize your supply chain for survival post-COVID-19

Written by Muchaneta Kapfunde

Share on facebook
Share
Share on twitter
Share
Share on linkedin
Share

More to explore

Explore our recent articles and get industry insights