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MODULE 5 Assignment: Maximizing Operational Efficiency

OPM 6090-Technology and Operations Management

Nexford University

Dr. Evelyn C. Paschal / Dr. Jess Schwartz

Author Note

Ahmet Alper Metin

I have no known conflict of interest to disclose.

Correspondence concerning this article should be addressed to Ahmet Alper Metin.

Email: [email protected]
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Introduction

In this assignment, I will analyze current operational process of Amazon Fulfilment

Centers and identify opportunities for maximizing efficiency through value analysis.

Jeff Bezos found Amazon in 1994. The company business model is e-commerce mainly

and listed in US stock markets.

Step 1: Analysis of Current Operations

To make a value analysis and create alternatives, it is vital to examine and understanding

current operations of targeted business. Amazon is a successful e-commerce company and its

operations backbone is fulfillment centers, where sellers and buyers are contacted and logistics

are done. It is a complex process, so I will divide to steps to make a comprehensive analysis (1).

1.1.Receiving and storing inventory:

In Amazon’s business models, sellers first ship their products to Amazon’s fulfillment

centers where products scanned, inspected and stored until the receiving order and

delivering it to the customer.

1.2.Inventory Management:

Amazon’s inventory management continuously monitors stock levels. Sellers are

informed when stock levels dropped to the pre-defined thresholds to be sure for ready to

fast delivery. In addition, this management systems analysis demands of customers to

optimize warehouse placement to increase operational efficiency.

1.3. Picking Process:

After receiving an order, picking process is started, workers use handheld devices to
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locate the item in the warehouse and collecting them.

1.4. Packing Process:

Packaging process is for avoiding transit damages to the products.

1.5.Shipping Process:

In this stage, packed products are labeled and sorted according to its destinations and

delivered to logistic network.

1.6.Returns Processing:

In case a customer returns a product, Amazon handles the returns process and items are

inspected for refund and if meets required quality standards will be restocked and

available for next sale.

Step 2: Identification of Areas for Value Analysis

2.1. Analysis orders and creating customer’s insights

As detailed in Amazon’s current process, keeping inventory in Amazon’s centers is open

to improvements as creating new working models such as arbitrage as direct shipment from

supplier to customer may combined with Amazon’s quality inspection in source.

2.2. Picking process and possible improvements:

Picking process includes human factor to scan and collect items as required orders,

instead of human based system, it could be completely automated such as moving shelves (Kiva

robots) and similar systems will reduce human involvement, errors and returns.
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2.3. Packing process:

Current Amazon is adding second layer of packaging top of the original packing of the

product. This is adding cost of material and workmanship to process, also in any case packages

are recyclable but not %100 percent is achieving. For this reason re-usable packaging systems

could be create value both commercially and ecologically (2). As an alternative, will be using

eco-friendly plastic containers which will be used for transportation and final destination will be

collected by Amazon and re-used again.

2.4. Return Procedures:

One of the advantage of e-commerce to customers are return purchases easily and

sometimes it causes a burden to the companies with additional workmanship and delivery costs.

In current conditions, Amazon is making return inspections in its warehouses and involving

quality control of the product, which may cause future problems and costs to Amazon’s. In

addition, it requires hiring skilled workers for these kind of return inspections. In this segment

alternative to create value could be return products will delivered back to the manufacturers and

manufacturers will be responsible for accepting return, making quality checks of returned

product and even repackaging of the product for enable to resell (3).

Step 3: Development of Value Analysis Recommendations

First step will be the information step. We will assemble a value analysis team with pre-

defined responsibilities and will actually work and be involved in existing working environment,

system to examine, and understanding it. In this step, team will collect and study about project

data, costs, schedules, risks, budgets and non-monetary issues.

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Second step will be analyzing functions. In our case and as explained above all

improvement functions are primary functions of e-commerce business. In this step, responsible

team will also identifies secondary functions if applicable.

Next step will be creative step to create alternative ways to existing system in defined

improvement areas.

After creative step, alternatives will be evaluated according to possibilities, potential

costs, risk-reward profile. According to these analysis decisions will be done to proceed with

which alternatives.

Fifth step will be development steps, written statements will be delivered to project teams

including any possible negative factors. It is crucial to identifying potential costs and cost

savings for stakeholders.

Last step will be presentation step; the idea of improvements will be sold to stakeholders

and management of the company (4).

KPI’s during this application will be time for completion of order cycle, accuracy,

customer satisfaction rates, cost per sale, employee satisfaction.

Step 4: Consideration of Challenges and Solutions

Possible challenges could be listed as; supplier resistance due to increasing their part of

fulfillment cycle, first investment to re-usable packaging materials, employee resistance to

change and technological limitations such as tracking returns to the suppliers and matching their

answer for refunding process.

Main mitigation strategy of Amazon will be monitor, analyze process in real time, and

give immediate response to problems when they are in early stages. By this way problems will

not occur continuously and repeated themselves which will result overwork and difficult to
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manage situations.

Regarding to technological limitations, Amazon one of the biggest e-commerce tech

supplier and if required tailor made systems will be modified by internal IT teams.

Budget concerns for re-usable packaging could be funded by green investment loans

which will aims reducing plastic, cartoon usage, and reduce carbon signature. After creation of

initial budget, mid stage and continuous budget will be financed from resources, which will be

free after stopping single use packages.

Step 5: Recommendations for Continuous Improvement

Monitoring will be the KPI for implementing improvements and need to be done

correctly to be aware if new implementations gives desired results or create new problematic

areas needs to be solved.

Regular audits for the customers is the major factor to evaluate status. As a result main

source of income is end users which are using Amazon’s services. Also after customers,

suppliers satisfactions also needs to be monitored and need to be kept in high levels to avoid

them to slip other platforms.

Second channel will be fulfillment and order completion cycles, in problematic order

cycles will be red flagged and take in evaluation as case studies to establish continuous learning

to keep competitive advantage and creating additional value in present economic conditions.

Also employees satisfaction and adaptations are key factor to reach success, as in

Hawthorne Works, some level of monitoring of employee performance is required to keep high

efficiency and avoid profit loss. In addition, it is required to include employee’s first-degree

findings and ideas to identify problems and create solutions will add value to the improvement

efforts.
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Step 6: Conclusion

Present economic conditions force companies to continuously improve themselves and learn

from mistakes to establish continuously learning. Due to harsh competition and globalizations,

companies needs to create additional values for themselves and their customers. Efficiency is

become the key parameter to keep competitive advantage and become a marketing advantage

which indicates companies how efficiently using limited resources of world.

References

(1) Singh Akash 2024 Oct. https://www.sellermate.ai/post/what-type-of-business-is-amazon-

warehouse-operations

(2) Whiting Geoff 2025 Jan https://redstagfulfillment.com/amazon-pick-and-pack-fee-

explained/

(3) https://www.amazon.com/gp/help/customer/display.html?nodeId=GKM69DUUYKQWK

WX7

(4) https://www.projectengineer.net/the-6-steps-of-a-value-analysis/