My Amazon Guy Amazon Accelerate Logistics Key Note Summary Takeaways from Devesh Mishra WW Supply Chain, Amazon News #80
What's going with Amazon operations ahead of Q4? Today, we attended a virtual presentation by Amazon’s head of worldwide supply chain Devesh Mishra, who is a 15-year Amazon veteran, and provided perspective and information on how Amazon is managing operations ahead of the Q4 peak season, new investments in supply chains and operations, and support of FBA/3P sellers. Key highlights are included below.
· Key highlights from Amazon's keynote presentation/VP of WW Supply Chain Devesh Mishra. Bottom line, Amazon is working quickly to better handle the expected unprecedented seasonal demand in Q4, using advanced data/machine learning capabilities, as well as rapid new investments in infrastructure. We note these investments will weigh on margins and cash flow a bit in Q3/Q4, but should help the company adapt to changing supply/demand dynamics longer term. Per the keynote...
o Never seen as much disruption to worldwide supply chains as in last few months. This Q4 will be very different than any other he’s seen, and global supply remains uncertain, with lead times from shipment creation to delivery more than doubling.
o FC are backed up. Inbound volumes are higher than demand ahead of the holidays. However, due to process changes, they are now seeing improvements in receive times and delivery speeds. Amazon is piloting new incremental storage facilities upstream from FCs to add capacity and manage inventory flows.
o Data, data, data. Company is using feedback from customers and sellers, as well as AI/Machine learning, to make real-time changes to the supply chain. Specifically, machine learning is adapting Amazon’s inventory forecasting model, modifying for changing demand patterns, and local mobility data to adjust inventory. Amazon already predicts product-level demand for essentially any product worldwide. As such, they know what inventory to stock, and where to place that inventory close to customers.
o Amazon is adding 33 new FCs this year, and will have 35 million cubic feet of new capacity for holiday 2020, along with the additional employees.
o Amazon will also have 80 cargo planes in the fleet by next year. Amazon also purchased 20k delivery vehicles for the Delivery Service Partner program, and has 100k electric delivery vehicles on order.
o Amazon is expanding X-border logistics and transportation — to enable more sellers to sell globally; in addition, Amazon is managing the end-to-end supply chain from manufacturers through to end-customers. As such, 3P sellers can now book, manage, track, and pay for ocean and air cargo services directly from Amazon from China to U.S. and Europe.
o Introducing a new program, Amazon Inventory Manager — Amazon creates and manages shipping plans and inventory management on behalf of sellers, which in turn makes this inventory eligible for Prime 1-day or same day shipping.
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