MBA7061 Operations Management
MBA7061 Operations Management
Introduction
Operational management is a very important and crucial component for the company’s success because it ensures effective use of resources, leads to optimal productivity, and also helps in satisfying the needs of the customers. Operational management includes planning, organising, and controlling which helps in the effective delivery of products and services. Several theories and models are used by companies for effective operational management and some of them are the theory of constraints, the total quality management model, the lean manufacturing model, and others. The use of the models helps in effective operational management. It helps enhance the satisfaction of the customers, improves overall competitiveness, leads to cost efficiency, and also helps in sustainable development. Furthermore, operational management helps in risk mitigation by addressing and identification of the disruptions that are caused in the production process. Operational management is considered to be a backbone for the performance of the organisation which helps in smooth productivity.
In reference to it, the presence study highlights are discussion on the operational management system of Amazon. Being, a leading company the organisation has a huge operation cycle which it has to maintain effectively to be competitive. To study highlights the evolution of the existing operations operating within the company, the role of the operational manager, and the organisation performance compared to the industry standard. Moreover, a process chart is made which shows how the products are processed within the organisation and then reach the customers. Moreover, there is a critical discussion on process management within the company Amazon’s five aspects of the operation process. Moreover, the study also highlights the discussion on whether the company implemented lean principles or not. The sustainability within the organisation is also a focus of the study. Furthermore, there is an overall conclusion of the discussion and recommendations provided to the company so that it can overcome the issues that it is facing.
Part A
Operational performance of Amazon
Within every organisation the operations play a vital role that ensures that the supply chain management is done effectively. In the case of Amazon, the operational manager has the responsibility to Heaven effective operational management by ensuring effective coordination among the different departments within the company. According to Morgan, (2020), Amazon’s operation is advanced and it has an advanced logistic network. In this, the operational manager has the role of leveraging technology and implementing some of the common ones such as AI in the management of the warehouse. The organisation is committed to effective and continuous improvement in the adaptation of cutting-edge technology such as the use of drone delivery (Reis et al., 2020). One of the positive aspects of the company’s operation is its focus on innovation and efficiency. The use of advanced technology such as robotics and artificial intelligence has enhanced the company to have a speedy and accurate supply of products to the customer within a short time. This has contributed to improving the reputation of the organisation and it has a large customer base all over the world, which has set a high standard in its industry.
However, there is a drawback in the operation process of Amazon. According to the report by Sainato (2020), it has been found that there is an issue with worker conditions (Refer to Figure 1). The workers in the organization are dissatisfied with the working conditions such as long hours of work. Moreover, it has been found that the working condition at Amazon is not so effective and there is high pressure and target fulfilment which has caused dissatisfaction among the workers. This has led to concerns related to well-being among the workforce and has also caused a debate on labour practices within the industry. The negative aspect of the company’s operation results in a critical condition and has affected its reputation, which has caused and negative impact on both the eyes of the employees as well as the customer.
Figure 1: Worker dissatisfaction in Amazon
(Source: Sainato, 2020)
Additionally, the rapid global expansion of the company Amazon has resulted in intricate supply chain management. Although, the company has been successful in building a vast distribution network all over the world, however, the operation has led to some challenges in managing the inventory effectively and also mitigating the risk within a short period. There are some cases where there are instances of stock outs and not timely delivery which has hurt the satisfaction level of customers (Kailasam, 2022). Hence, the operational manager has the role of overcoming the issue and maintaining a balanced process so that customer satisfaction can be fulfilled and the company also maintains the standard set by the industry.
In terms of operational management, the company has achieved effective success and has also followed all the standards that are set by the industries such as reliable delivery and speedy delivery. For example, the implementation of prime subscription service offers a significant speedy delivery to customers which influences the expectations of the clients in the retail sector (Vollero et al., 2021). However, there is a strong need for ongoing improvement due to the fierce rivalry in the e-commerce sector. The firm has successfully implemented effective operational management; nonetheless, there exist concerns over sustainability practices inside the organisation, which have adversely affected the company’s market perception.
Moreover, in concern with the current operational performance the company has focused on using advanced analytics for the forecast of demand, and through the process of inventory management, it has minimised stock outs and access inventory (Kondo and Vicente, 2023). The process has led the company to be more cost-effective. For example, the use of Kiva robotics in the warehouse has helped the company to increase productivity and at the same time has reduced the margin of error for fulfilment of the order process. However, on the other hand, the company has faced a disruption in its supply change during the pandemic period (Craighead et al., 2020). In the period, there was a high demand for global suppliers and there were interconnected supply changes that caused risk as well as effectiveness and care. In the case, of Amazon, as it has a wide range of products it became challenging for it to maintain the consistency of the quality of the products which also impacted its customer service.
Therefore, it can be said that the company’s positive reputation in the market is a result of technological innovation and efficient operational management. However, challenges such as labor practices as well as sustainability have impacted the company and it needs to take effective steps to address long-term success. In terms, the operation manager should make effective strategic decisions and adapt to new changes so that the challenges can be overcome and the company Amazon maintains a good position in the industry and continues as an industry leader.
Process management of the company
Figure 2: Process Chart
(Source: Author)
The process chart of the firm Amazon is determined by the aforementioned Figure (2). Clients start their interactions with the business by perusing and choosing the items they wish to get on the app or the company’s website. The checkout phase, when shipping information and payment choices are offered, is the next step. The consumers then confirm their orders by email after that. Additionally, the procedure proceeds to wear house it where the things are and get them ready for delivery when the ID is confirmed. The items are then given to the delivery partners for delivery. After the delivery partner has delivered the packing to the clients, the business provides continuing customer support for any questions or concerns regarding returns.
In the dynamic world of e-commerce, Amazon plays a great role in providing several products to a vast number of customers. The company is well known for its operational efficiency and customer-centric approach (Gupta and Ramachandran, 2021). Till now, the organisation has effectively achieved operational excellence through its effective operation. The success of the company is closely related to its Global process and partnership with many suppliers.
Process analysis and improvement:
The Amazon operation has benefited from its advanced process analysis as well as the improved methodology that it has implemented. The company is committed to continuous improvement through the use of data-driven analysis. For example, the use of machine learning and AI has helped the organisation to enhance efficiency, and reduce error, and has also helped in real-time monitoring (Nigenda et al., 2022). The positive side, of Amazon’s approach, is its reliable delivery and effective time management which contributes to the reputation building of the company. However, on the other hand, the intense focus on efficiency has resulted in high pressure among the workers which has caused and negative impact on the overall work environment resulting in dissatisfaction among the employees.
Inventory management
Effective inventory management is very important because it helps in meeting the customer’s demand and also minimizes the cost. The Just-in-time inventory principle is used by Amazon to guarantee that there is never an overstock situation and that goods are kept in true quantities. The company has a sophisticated process for demand forecasting which allows the company to maintain a good inventory level. The utilisations of Fulfilment by Amazon (FBA) has helped the company with effective storage and distribution within a specific period (Navolykina, 2023).
However on the other hand the vastness of the inventory of the company has cost challenges which has led to issues of stock outs. For example, in the case of Amazon Prime Day, there are many orders given by customers, during this period the company faces issues with timely delivery which hurts the satisfaction level of customers (Acimovic et al., 2020).
Scheduling management
Effective scheduling is very important for companies to meet the demands of the customers promptly. Amazon’s real-time data and analysis have effectively optimise its delivery routine which has ensured quick as well as reliable deliveries. For example, Amazon Flex has allowed contractors to pick up and deliver packages based on availability which improves the flexibility of the delivery network (Hassel and Sieker, 2022). However, on the other side, the pressure on the Amazon workforce has resulted in an employee turnover rate (Refer to Figure 3). The tight schedule of the workers has impacted their health which has hurt the company’s labour practices.
Figure 3: Employee in Amazon from 2007-2022
(Source: Coppola, 2023)
Quality management
Quality management is a very important process in the operational Management process because it helps maintain customer satisfaction. Amazon in this concern has always implemented an effective quality control process to ensure that the best quality products are delivered to the customer. This states that the company has effectively implemented the use of Total Quality Management theory. The Theory emphasizes improving customer satisfaction, continuous improvement, and commitment toward quality improvement (Refer to Figure 4). The Amazon delivery of high-quality products has a connection with theory. Hence it can be stated that the company has effectively maintained customer satisfaction and also enhanced the efficiency of its operation.
Figure 4: Total Quality Management Theory.
(Source: Sotirelis and Grigoroudis, 2020)
However, on the other hand, occasional lapses in quality control have led to situations where there are incorrect items shipped or damaged goods provided to customers. These have impacted an increase in several returns causing dissatisfaction among customers. However, the company has tried to improve the issue by applying the use of AI in the process of screening all the damaged goods (Refer to Figure 5)
Figure 5: Use of AI for screening damaged goods
(Source: Dixit, 2023)
Supplier management
Amazon’s supply management has a relationship with a vast network of supplies that are distributed all over the world which has contributed to having a diverse range of products. The company has been able to have an effective range of products which has helped it to maintain a competitive pricing in the market (Warrier et al., 2021), As there are different ranges of products the customers can choose the best out of them as per their range demand. The company has effectively developed strategic partnerships with many suppliers which has helped it to be stable in the supply chain operation. The company’s supply chain management includes effective regular evaluation and coordination which helps it to enhance its efficiency regularly. However on the other hand there are many unfair practices done by suppliers, especially in the case of small businessmen. Moreover, the dominance of Amazon in the market has led to concerns about the supplier’s behaviour. The suppliers of the companies sometimes feel pressure to fulfil the demands of Amazon which hurts its profitability (Tahirkheli, 2022).
Hence it can be stated that the company Amazon has set the standards of industry in its operation process but there are some of the issues it has faced. On the positive side, the company has used effective Technology, is committed to continuous improvement, and also has enhanced effective operational excellence. However, on the other side, the challenges that are faced by the company are effective inventory management in some cases, concerns related to working in an environment of labour, disruptions by the small suppliers, and fulfilling the customer’s demand during the intense demand days. Therefore the company must take effective steps to address the challenges promptly so that it can meet the expectations of the customers and also maintain the standards that are set by the industry.
Lean operation of Amazon
Organisation implementation of lean principles
Figure 6: Lean principles
(Source: Tripathi et al., 2022)
Figure (6), above shows the objective of the lean principles. The use of the principles allows a company to provide good services to customers and also provides a good operational process lean principles have been effectively implemented by Amazon which has contributed towards the effective success of the organisation. The company is customer-centric and aligns with the use of lean principles on focusing value creation for customers (Weinstein, 2022). The company always focuses on providing speedy delivery which reflects a lean thinking process. However, the company does not focus on effective workers. The company’s intense focus on productivity has led to concerns about the well-being of warehouse employees (Gutelius and Pinto, 2023). The high-pressure work at and completion of targets has led to a rise in question about effectively balancing the lean principles and the welfare of the employees at the same time.
Amazon has effectively employed the lead principles in the effective use of advanced technology such as robotics and AI which has enhanced efficiency, minimised errors, and improved order processing (Jha et al., 2021). This means that it has effectively after mice its inventory management principles which are essential in the lean operation process. Moreover, the company follows the Just-in-time inventory model for some of its products so that it can reduce the cost and also minimise the wastage of the products (Jana, 2021). Additionally, the lean principle focuses on continuous improvement, and Amazon also is committed to innovation (Škudienė et al., 2020). The company has always focused on innovation to enhance operational efficiency continuously. The Amazon supply chain is designed in such a manner that it increases efficiency, minimise the lead time, and also reduces the unnecessary costs. The company is famous for collaboration with suppliers and includes effective technology so that the flow of goods is done on a timely basis. This has led to reduced lead time, improved supply chain cost, and increased responsiveness towards market changes, however, on the negative side certain suppliers are impacted due to any disruptions in the process.
Benefits of Lean Principles for the organisation
There are many benefits that Amazon has experienced due to the use of lean principles. The lean principle helps a company to reduce waste and eliminate the unnecessary costs that are implemented in the operational process (Chen et al., 2019). The lean principles focus on continuous efficiency. The company Amazon encourages its customers to contribute ideas for the improvement of the process and implement new technology so that the company can be competitive in the market. There are many cases where the organisation has faced criticism about a demanding work environment. How were in the year 2023, the report states that the company has incorporated the lean principle which focuses on employee well-being which has helped them to balance both their work and life effectively (Amazon, 2023). This has led to an increase in job satisfaction and potentially lowered the turnover rate of the company. Moreover, the pandemic in the last two years has impacted the global supply chain. The implementation of lean principle has improved the diversification creating better supply chain management and employing effective technology to mitigate the disruptions that are caused in the process.
Hence it can be stated that Amazon has effectively implemented various lean principles which has helped it to be dominant in the e-commerce sector. However, there are still some issues faced by the company and there is always room for improvement. The labour issues are the biggest cause that has negatively impacted the company. However, the ongoing evaluation and implementation of lean practices at Amazon is important so that it can maintain the competition in the market and address the challenges is undergoing.
Part B
Sustainable operation of Amazon
Sustainability has become a critical concern for every organisation across different industries. In the case of Amazon, the company has to maintain many sustainability measures so that it can complete the undergoing changes. However, it has been found that the company is facing many sustainability issues. Amazon has a global operation so there are concerns related to environmental impact. One of the biggest issues of the company is its carbon footprint (Refer to Figure 7). The company has faced criticism for its environmental impact (Gay et al., 2020). However, the company has set targets that it will achieve net zero carbon emissions by the year 2040 (Livermore, 2019). However, the government’s pressure on the company is that it should take immediate measures to address the carbon footprint so that the environment is protected from any damage. Furthermore, a major aspect of Amazon’s operation towards sustainable practices is ineffective logistics and the transportation network (Pourrahmani and Jaller, 2021). As known the company is committed to effective delivery services therefore there are increase in the use of carbon footprints in the case of transportation operations.
Figure 7: Amazon’s carbon footprint issues
(Source: Palmer, 2022)
However, the recent reports from 2023 state that the company was able to see a decline in its carbon footprint in the year 2022 for the first time which states that the company has taken effective measures to overcome the issue (Palmer, 2023). Moreover, the complexity of the company in the supply chain poses a sustainability challenge for the organisation (Elias et al., 2021). As the company has a vast network of suppliers and several products are sold in the platform it becomes difficult for it to meet the sustainability challenges. There are many issues such as packaging which have an impact on the environment. However, the company has taken effective steps and introduced Frustration free packaging which aims to minimise waste and reduce excess packaging (Refer to Figure 8) Moreover, the company is focusing on making private-level products so that they can be more sustainable.
Figure 8: Frustration-free packaging of Amazon
(Source: Wright, 2021)
Moreover, there are labour practices and working condition disruptions that cause sustainability challenges to the company. The company has faced issues with warehouse working conditions, the treatment of the employees, and overtime (Delfanti, 2021). The dissatisfaction among the employees has hurt the overall working environment. Hence the company should effectively implement the labour practices in the future. It has also been found that in the process of quick delivery, the company has neglected the worker’s needs and desires (Refer to Figure 9). However, in the present time, the company has committed response to the issue and has decided to pay a minimum wage of $15 per hour to the employees (Meyer and Bidwell, 2022). Moreover, it has provided safe working environment conditions so that its global operation continuous in an effective manner
Figure 9: Labour needs were neglected in Amazon
(Source: Kelly, 2022)
Moreover, as the company has a range of electronic devices it faces challenges of e wastage (Crasoveanu et al., 2023). The disposable of electronic products impacts the company’s image and presents and environmental risks to the organization. Hence it is important that in the future it should include an initiative for waste management reduction and show its concern for using recycling practices. In concern to product sustainability, Amazon has recently implemented Amazon sustainable energy which has the customer identify and purchase sustainable products (Saidani et al., 2021). However, with the vast volume of sales and products, the company still faces challenges in sustainability practices.
To answer the question of how can sustainability be integrated into the operational management practices and strategies it is important that in the case of Amazon, the company should overcome the issues faced by them. The organisation can effectively optimise its applied change by using eco-friendly transportation methods and packaging material so that the carbon emission issues can be overcome by it. Hence it can be stated that there are several sustainability issues faced by Amazon to address the challenges the company has taken many measures the implications of the sustainability issues which are beyond the concerns of the environment impact its ethical dimensions. To effectively address the issues the company must involve in Technology, implement effective ethical labour practices, and make use of more energy. Sustainable operation management is not only important for overcoming the environmental impact but it will also help Amazon for long-term success in a world where sustainability is one of the biggest concerns at present.
Part C
Conclusion
From the above discussion, it can be stated that Amazon’s operational performance has both strengths and challenges. The company has been successful in using advanced technology such as AI and robotics to effectively streamline its operations and has ensured effective supply chain management. However, on the other side, the operational success has impacted negatively on the working conditions of the employees. The employees are facing an overload of work due to the speedy delivery of products, there are high-pressure targets which are impacting their health. Moreover, the global expansion has also caused the company some challenges in managing the inventory in an affecting manner leading to situations and delays in the delivery process.
Moreover, it has been found that the lean principle has been effectively implemented by Amazon in its operation which has helped it to reduce waste, improve its efficiency, and also held it to be cost-effective. However, the issues with workforce management are still a question for the organisation. Furthermore, the sustainability efforts by the company are also not effective enough. The company has been facing carbon footprint issues and complexities in supply chain management. In the future, the company must focus on ethical labor And product sustainability so that it can an ants long-term success. Nevertheless, the company has already taken many measures towards sustainability but still immediate access to the problem is to be taken so that the environment can be protected from any hazards.
Recommendation
As it has been identified that the company Amazon has faced issues with labor practices some recommendations can help it to adopt best practices that have been implemented by other organisations. For example, the company Google has given importance to employee well-being and has provided a flexible working hours concept (Clark, 2021). The use of the technique has helped Google to promote a positive working environment and it is effectively engaged in employee feedback concerns. Similar, to Google Amazon should also implement this strategy to improve the worker’s condition. The process can help the company to reduce the turnover rate of employees which will ultimately result in the overall operational efficiency of the organisation.
Moreover, the company must focus on sustainable supply chain management. To reduce its carbon footprint the company should incorporate eco-friendly transportation options and also optimise its packaging material (Wandosell et al., 2021). It is recommended that the company should implement the use of the Triple bottom line theory. The theory takes into consideration the economic, environmental, and social factors that will help the company to reduce the goal related to carbon footprint (Refer to Figure 10).
Figure 10: Triple bottom line
(Source: Wilson, 2015)
Through the implementation of the theory, the company can faster or long-term sustainability and effective business practices. Moreover, the company should also partner with those organisation that specialised in waste reduction and effectively implements sustainability measures so that it can be successful in the future and also overcome sustainability issues.
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