"We hope our custom electric vehicle helps create a sense of urgency in the industry to think big about embracing sustainable technology and solutions — whether you're a package delivery company, a logistics company, an ice cream manufacturer, or almost anyone else with vehicles on the road," said Rachey. Topics covered: logistics, freight, operations, procurement, regulation, technology, risk/resilience and more. Thus, in his work as leader of Amazon’s Third-Party Marketplace, Rossman articulated what Amazon’s Marketplace would deliver: ‘A third-party seller, in the middle of the night without talking to anyone, would be able to register, list an item, fulfill an order, and delight a customer as though Amazon the retailer had received the order.’ This simple sentence imposed a tremendous amount of integration and operations coordination between Amazon Marketplace and our sellers.’”. It means a drive for continuing to improve the customer experience. As Rossman explains: It takes foresight to lead by the numbers correctly. Discussions are not forthright. People speak out of both sides of their mouths. An agile supply chain is a supply chain that is a competitive advantage for the company driving it. Drones for home delivery are still too dangerous, as opposed to using drones for inventory management. As in all examples of genuine Agile management, life at Amazon is characterized by a pervasive customer-obsessed mindset. Aggressive for people to produce and have mastery of their domain. No other team may access or change the data except through APIs. At Amazon, senior managers are doers, not merely overseers of others. These documents are rigorously reviewed by a group of senior managers before work on the activity begins. Not so at Amazon, where senior people are often dedicated to leading new big bets.”. Many large organizations have spent decades unsuccessfully battling bureaucracy. In most big organizations, customer data—where it exists at all—is spotty and soft, while financial data is hard and ubiquitous. Agile Supply Chain is built to be highly flexible for the purpose of being able to quickly adapt to changing situations. He launched and scaled the Marketplace business, and then ran the Enterprise Services business, which provided e-commerce infrastructure for other large retailers. I consult with organizations around the world on leadership, innovation, management and business narrative. Want to share a company announcement with your peers? All Rights Reserved, This is a BETA experience. Build an agile team; Agile thinking has come from software developers. Amazon’s teams are remarkably independent and autonomous, once their planning documents are approved. This doesn’t happen at Amazon. I am currently a director of the SD Learning Consortium. The carrier also has orders in for Tesla's Class 8 truck, which has been delayed until 2021. Dec. 8, 2020 • Webinar 2pm ET Visit the Event Page. For example, it does not discuss Amazon's fulfillment centers or customer service or many of the challenges Amazon faces. This means replacing the 'policeman' with a more agile, responsive function. Here are four tips for building an agile supply chain. Read Part 2 of this article: How Amazon Tames The Budget, The Seven Things A Highly Agile CEO Does: Jeff Bezos, My book, "The Age of Agile" was published by HarperCollins in 2018 and was selected by the Financial Times as one of the best business books of 2018. Discover announcements from companies in your industry. Subscribe to Supply Chain Dive to get the must-read news & insights in your inbox. Rossman’s book offers a clear and succinct account of the Amazon mindset and offers “50 ½ ideas” to enable others to learn how to think—and act—like Amazon. As Rossman says: Writing ideas and proposals in complete narratives results in better ideas, more clarity on the ideas, and better conversation on the ideas… The initiatives will be smaller and less risky. If a problem arises, you need to be aware of it immediately.". One of the primary goals is to lower the communications overhead in organizations, including the number of meetings, coordination points, planning, testing, or releases. You could say the company is ‘aggressive.’ Aggressive for results—that is, the right types of results. Through its real-time customer metrics, each team reports in effect to the entire senior management, not just a direct boss. Everyday low prices and free delivery on eligible orders. Big-company politics tend to rule the day. Insulated from the greater organization’s bureaucracy, the Two-Pizza Teams encourage ambitious leaders, provide opportunity, and instill a sense of ownership.”, Two-Pizza Teams are organized around capabilities and services as opposed to projects. Complimentary, not competing. No Pain, No Chain – How to Optimize Your Supply Chain. This reflects Bezos’s view that communication between teams is prima facie unnecessary and even wasteful. Not so at Amazon, where real-time customer metrics are built into every aspect of the work. Amazon doesn’t call itself “Agile” though it certainly has been nimble, creating new business after new business and disrupting sector after sector. Is the Amazon supply chain the most innovative in the world? Amazon doesn’t call itself “Agile” though it certainly has been nimble, creating new business after new business and disrupting sector after sector. The hard financial numbers consistently trump any soft customer numbers, even as the CFO sadly laments: “You can’t argue with the numbers.”. The authors of Lean and Agile Value Chain Management are successful in walking that fine line, avoiding being too simplistic or, in the other extreme, going too deep in statistical mumbo jumbo. What's a supply chain leader to do? Aggressive for teams and leaders to achieve the impossible: perfection.”. The agile method is an alternative project management … Agile supply chain is of course applicable to Amazon if agile means nimble, capable of delivering the goods on time in a very short time. They act on behalf of the entire company, beyond just their own team. Amazon's Rivian order is a start, but Gopal said the more impactful move will be to electrify Amazon's Class 8 fleet. Amazon builds in customer metrics as a “forcing function” from the outset. To shed light on the enablers and enemies of agility, we examined the supply-chain … “One of the things needed for an agile supply chain is fast, electronic data, and the analytics to turn that data into decision-making information,” said White. "Luckily, the technology is there," Gopal said. Second, they adapt over time as market structures and strategies evolve. The capability to make more vehicles like Amazon's is out there, but the willingness or market cues may not be. In 2015, it topped Gartner Inc.’s Top 25 Supply Chains, beating out McDonalds and Unilever to head the field. Teams may spend weeks just thinking through the metrics. When this is pursued relentlessly over decades, as at Amazon, it leads to the creation of new businesses and new sets of customers, or what I have called, “strategic agility.” As Rossman explains: Amazon’s sophisticated logistics expertise did not come from wanting to be a supply chain company. EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation with Forbes Insights, Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader. SUN YONG JUN . Rossman’s book focuses on those parts of Amazon that build capabilities, which Rossman estimates to be around 70.000 to 90,000 employees out of the total of some 650,000 employees. Metrics covering the value that is being added to Amazon’s external customers are available to everyone in real time. Rossman explains: To create significant departure and disruption from current business practices, the teams within your company that are dedicated to creating innovation need to be separated from the teams representing the status quo. Senior managers are often put in charge of important initiatives with relatively modest staff resources. I write about Agile management, leadership, innovation & narrative. It sets the stage for all other actors on the market. (ISBN: 9781870214490) from Amazon's Book Store. The Amazon experience shows us that the single biggest opportunity for companies operating today is to completely rethink their concept of metrics. adding 1,800 electric delivery vehicles from. But in terms of substantively operating in accordance with what I have called the Three Laws of Agile—customer obsession, small teams, and functioning like a network—Rossman’s book shows that Amazon is implementing Agile management at a very high level indeed. Using Agile Supply Chain Planning to Build Resiliency in 2021 and Beyond Webinar 2pm ET • Dec 8, 2020 Preparing the Manufacturing Supply Chain for a Post … By removing middle management as a significant actor from the process with its own separate goals and priorities, Amazon largely eliminates inter-unit game-playing. Amazon had trouble finding an electric van tailored to the needs of its drivers, according to the blog post, hence the custom order. Rossman speaks from experience. The free newsletter covering the top industry headlines, Danielle Ternes/Supply Chain Dive; Photographs by Rawf8, gerenme and vitpho via Getty Images and Craig Lee / South Carolina Ports Authority"/Supply Chain Dive, Photo illustration by Danielle Ternes/Supply Chain Dive; photograph by pawel.gaul/E+ via Getty Images. In most big organizations, in the absence of customer obsession, one can easily imagine that a planning process like OP1 would quickly degenerate into a battle between units fighting for resources for “their” activities and “their” units. Your business should operate like a nuclear reactor. "It's pretty important that they electrify their fleet to have any hope of meeting their Climate Pledge," Gopal said. First, great supply chains are agile. I consult with. Large populations, inland infrastructure, ports and advantageous tax codes can bring shippers and carriers knocking, putting cities on the fast track to logistics hub status. Any discussion on Amazon’s SCM is incomplete without an analysis of its multi-tier inventory system. Guess what drives decision-making? But Gopal said the move could send an important signal to manufacturers, too. UPS is expecting, By signing up to receive our newsletter, you agree to our, Press release from CMX (ComplianceMetrix), Electric trucks are the 'inevitable future,' fleets say, Amazon buys 100K electric vans as part of net zero carbon goals, Amazon, DHL, Ikea, others join electric vehicle alliance, Mapping and charting the growth of regional parcel carriers, XPO spins off contract logistics, splits into 2 companies, What we know about Pfizer's coronavirus vaccine distribution plan, Bed Bath & Beyond works to catch up to decades of supply chain modernization in 3 years, Ocean carriers push shippers to use 20-foot containers with 40-foot in short supply, Manufacturers report 'significant delays' due to port congestion, rising coronavirus cases, How to Improve Driver Safety and Fleet Efficiency, Minimize Equipment Downtime and Deliver Help With Augmented Reality, How B2C Capabilities Enhance B2B Supply Chains. At Amazon, the external customer viewpoint is built into activities and capabilities from the outset. The 2020 Gartner Hype Cycle for Supply Chain … Electric vehicles are getting a sputtering start among other major logistics players. Creating the Agile Supply Chain: Amazon… One caveat. to its fleet in Europe this year, along with 10,000 electric delivery vehicles to its fleet in India by 2025. Emma Cosgrove Is Amazon Agile? There is thus no use of or need for share buybacks to goose the short-term stock price: Amazon has too many good new ideas that it wants to use its resources for. FedEx's ShopRunner acquisition provides access to e-commerce marketplace data, A tale of hand sanitizer: How the ethanol supply chain pivoted for COVID-19, Pitney Bowes offers same-day delivery as fast as 2 hours with gig economy last-mile partners. In fact, Amazon doesn’t start an activity or develop a capability unless and until the team has figured out how it will measure customers' response. The retailer is preparing to start construction on its second headquarter location and its partnership with Whole Foodsis set to change the food delivery game. You may opt-out by. I have practiced the lean supply chain, agile supply chain, and to some degree the fully flexible supply chain in Asia Pacific operations I am responsible for, and these theories proved working very well in … In Amazon’s case, the company has a special team called Lab126 that is focused only on creating innovation in their devices. They never say, ‘That’s not my job.’”. In the months of July, August, and September, while also doing all the pre-holiday work before the retail peak season hits, you are spending your time meeting, debating, writing, and reviewing your next year’s operating plans and ideas for scaling and innovating.”. As Rossman explains: Think about how most large companies operate. On the other hand, agile supply chain uses real-time data and updated information to forecast demands and improve overall efficiency and productivity. Europe and Asia are further ahead in this respect on the buying and selling side of EV, as stronger demand has encouraged manufacturers to make more models available, according to Gopal. Customer obsession is not just for top management, sales and marketing. The effective implementation of the Value Chain Analysis of Amazon com Inc can improve the material and product flow due to improved demand and sales forecasting. This application includes the Supply Chain transaction family with a transaction processor instance and a web front-end. The Two-Pizza Team is autonomous. CEO Jeff Bezos announced this in his 1997 letter to shareholders and Amazon has relentlessly stuck to that obsession ever since. Supply operations often struggle to keep pace, as many aren’t sufficiently agile to capture fleeting upside opportunities or to mitigate fast-moving risks. Think Like Amazon shows how Amazon created an environment with very different values and behaviors. While physical separation can be important, it’s more about independence from the legacy business and having unfiltered communication and collaboration with a company’s CEO or senior leader.”. Harnessing the power of the network effect . A very strong argument can be made that they are despite some announcements that were pie in the sky like the patent they won in January for floating warehouses that use drones for deliveries and replenishment. Anand Gopal, climate initiative program officer at the William and Flora Hewlett Foundation. At many companies, you can identify a leader’s cachet by the headcount and expense budget he or she manages. The good news is you don’t have to pick just one of these approaches to supply chain … As Rossman points out, at Amazon: Leaders are owners. This book has very clear examples which anyone can follow which illustrate the lean and agile supply chain … As Rossman explains, “One of Amazon’s secrets? Supply chain and logistics news. Enter the agile new technologies that reimagine supply chains. A huge planned global supply chain move by Amazon could disrupt product access, sharply lower Amazon's costs and accelerate product delivery to shoppers. The e-tailer's revved-up presence in the area has spurred developments that are expanding infrastructure and logistics resources. Executives have relatively modest salaries plus stock. Operation and Implementation(Chinese Edition) by QI FANG ZHONG . Rossman’s book is not intended to be a complete narrative about how Amazon operates. They think long term and don’t sacrifice long-term value for short-term results. Jeff Bezos, founder and chief executive officer of Amazon.com Inc. Photo: Andrew Harrer/Bloomberg. Amazon is adding 1,800 electric delivery vehicles from Daimler's Mercedes-Benz to its fleet in Europe this year, along with 10,000 electric delivery vehicles to its fleet in India by 2025. Seniority and titles matter more than having the right data or insight. I am also the author of the Leader's Guide to Radical Management, The Leader's Guide to Storytelling and The Secret Language of Leadership. It … The inventory management also improves as Amazon com Inc can minimise the delays by tracking activities throughout the supply chain. UPS is expecting 10,000 electric vans from British startup Arrival, with small initial deliveries starting next year in the U.S. according to Autoblog. Results suffer for the sake of harmony. They smile and nod their heads yes without agreeing. The next tier is comprised of the partner distribution centers and the wholesalers wherein whenever an ordered product is not available in its own distribution centers; Amazon … We also are committed to ensuring that partners in our supply chain are treated with fundamental dignity and … The book also says nothing about the social impact of Amazon on other businesses, communities and even society, as its extraordinary success transforms sector after sector, and life as we know it, all around the world. A lean supply chain is cost-conscious and efficient, but it won’t be able to respond to new demands quickly. Amazon Web Services (AWS) did not come from wanting to be a cloud technology company but from needing to provide a scalable infrastructure to provide a great online customer experience.”. on How Amazon is Shaking Up the e-Commerce Supply Chain. Dive Brief: Amazon is looking to hire 100,000 new part- and full-time workers in operations roles in the U.S. and Canada ahead of peak season, it announced … As a result, “customer value” wins battles that it wouldn’t win in firms run with a financially oriented mindset. Writing narratives is hard, takes a long time, and is an acquired skill for the organization. It owns and is responsible for every aspect of its systems. Once an activity is approved and funded, the work begins and the planning documents are steadily updated as more information becomes available. The book is written to help a manager borrow from Amazon’s mindset and playbook to challenge and improve the speed and effectiveness of their business. Interaction with other teams is limited, and when it does occur, it is well documented, and interfaces are clearly defined. It uses its own home-grown … Everyone is expected to be obsessed with knowing about and enhancing the impact of what they do for the customer. Meetings are layered in so much posturing and subtle deception, they are downright Shakespearean. For many years I worked at the World Bank, where I held many management positions, including director of knowledge management (1996-2000). At Amazon, Two-Pizza Teams work like semi-independent entrepreneurial hothouses. © 2020 Forbes Media LLC. They react speedily to sudden changes in demand or supply. Amazon works hard to provide a positive experience for our employees around the world. Executive compensation at Amazon is aligned with these principles. The six-page narrative is supported by another document known as the PR/FAQ, which contains an imagined future press release describing the benefits customers are getting and answers to “frequently asked questions” about how the activity was developed. Then they started saying, “The agile supply chain solutions that we provide for ourselves are things we can provide to customers as well,” and they started making those agile supply chain … … No significant new activity can be undertaken at Amazon unless and until there is an exhaustive management review of a six-page document explaining the activity as a narrative. There is also a set of metrics by which customer benefits of the activity will be measured in real time. One of the best ways to learn is by examining agile supply chain examples. Much of Amazon’s success comes down to its highly effective supply chain management. In Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader (McGrawHill Education, April 2019), John Rossman shows how Amazon has tamed bureaucracy and has become, in the process, one of the most agile firms on the planet, as well as the most valuable. Gartner’s respected Annual global Supply Chain Top 25 has seen Amazon related elevated to a Master’s category, along with Apple as well as P&G (see Supply Chain … The company can't get there without wide adoption of electric vehicles, if it wants to avoid reliance on carbon offsets, according to Anand Gopal, climate initiative program officer at the William and Flora Hewlett Foundation. As Rossman explains: It’s everyone’s job to know and have empathy and passion for the customer. The natural disasters, trade wars and global pandemic of the last several years have caused a perfect storm of upheaval in the supply chain. Alas, that is the way it is. As the first tier of the Amazon supply chain, the multi-tier inventory system rests on aggregating stock in well-placed distribution centers. Forcing functions.”, A forcing function is a set of guidelines, restrictions, requirements, or commitments that “force,” or direct, a desirable outcome without having to manage all the details of making it happen. CMX to Help Enable Integrated Quality Management and Assurance Across Inspire Brands' Supply... Is it time to take a fresh look at sharing in the automotive industry? If approved, the activity is funded and incorporated in Amazon’s annual planning process known as OP1, in which the relative merits of every activity and capability, present and future, are evaluated in terms of their contribution to value for customers. Unfortunately, the world has become much more complicated, forcing companies to develop greater skills in managing a supply base. An agile supply chain is a chain of supply that is capable of responding to changing needs in a manner that expedites delivery of ordered goods to customers. Amazon enjoys a cult following. In this world, civility is more important than being right. In general, supply chain agility is a trait that many companies look for when selecting vendors, since a retail supply chain … But what about sellers who want to expand internationally? Using Agile Supply Chain Planning to Build Resiliency in 2021 and Beyond. It uses its own home-grown vocabulary like “two-pizza teams” rather than generic Agile terminology. Located mostly near large metropolitan areas … Forcing functions are a powerful technique used at Amazon to enforce a strategy or change or to get a difficult project launched.”. If you want more about these aspects of Amazon, you will need to look elsewhere. Amazon has committed to reaching net-zero carbon production in its own operations by 2040 as part of its Climate Pledge. Electric vehicles are getting a sputtering start among other major logistics players. Make sure everyone knows it’s their job. The main benefits of an agile supply chain … … Know the details of the customer experience and what causes friction for customers. Opinions expressed by Forbes Contributors are their own. High standards and an appreciation for building this capability over time are required.". My book, "The Age of Agile" was published by HarperCollins in 2018 and was selected by the Financial Times as one of the best business books of 2018. IBM Uncovers Global Phishing Campaign Targeting the COVID-19 Vaccine Cold Chain, DSV to acquire African small parcel specialist Globeflight Worldwide, Freight Startup Transfix Said in Talks to Go Public Via SPAC, Using Agile Supply Chain Planning to Build Resiliency in 2021 and Beyond, Preparing the Manufacturing Supply Chain for a Post-2020 World, Using Transparency to Build Resilient, Risk-Averse Supply Chains, Challenge Your Business to Be Better: Make the Jump to Lydia Voice™, How EPG Can Solve 3 Top Warehouse Challenges for 2021, Choosing the Right KPIs to Improve Your Supply Chain Performance. It came from understanding that the customer experience was greatly affected by flexibility, speed, and quality of delivery. An agile supply chain can potentially give you the ability to: ... How Amazon Is Changing Supply Chain Management. CEO Bezos uses symbolic acts to reinforce customer obsession, such as the famous “empty chair: Bezos is known to leave one seat open at a conference table to inform all attendees that they should consider that seat occupied by their customer, ‘the most important person in the room.’ Ultimately, these symbolic gestures are highly calculated and often repeated messages created to reinforce Amazon’s leadership principles.”, Customer obsession at Amazon is enabled and driven by customer-driven metrics.
2020 amazon agile supply chain