Amazon tightens supply chain

With more Americans shopping online, internet retailers like Amazon have become exceedingly popular ways for consumers to get the lowest prices possible and research products before they make a purchase. In the past, the only drawback for some was the length of time their Amazon purchase took to arrive. However, the company is stepping up its game and making big changes to its supply chain in order to get consumers their merchandise in a more timely fashion.

A more concise supply chain
In an effort to increase customer satisfaction and tighten its supply chain, Amazon is developing a plan to construct new warehouses and implement new distribution networks to ensure products are delivered quickly. With new warehouses, the company will be able store merchandise in locations closer to its customers and be certain packages are shipped as quickly as possible.

While Amazon may once have been content to construct its warehouses in areas where land and operating costs were inexpensive, that is no longer the case, and the cost savings may not be making up for consumer frustration. The company can no longer build its storage facilities in remote corners and assume customers will be satisfied with shipping that takes three, four or even five days. Customers are increasingly demanding purchases almost immediately, so having distribution centers closer to more highly populated areas may be more expensive, but it could also result in much faster package arrival times, leading to increased consumer loyalty.

Bringing distribution centers closer to consumers won't just cut down on shipping time. It also can limit potential supply chain disruptions and ensure that most customers receive the products they ordered on time, even if a natural disaster, terrorist attack or unplanned system outages disrupt the supply chain.

Plans in motion
However, Amazon is still working out kinks in its plan to bring warehouses closer to purchasers. The company, which has thus far tried to avoid paying sales tax in states which it doesn't have a physical presence, may find constructing these warehouses in order to shorten its supply chain could be a bit of an investment. The company is trying to avoid paying this tax by asking states in which it plans to open warehouses for deferrals of tax enforcement in return for bringing jobs to the state. It remains to be seen whether the company will succeed, but its plans for a shortened and more concise supply chain may help it win over once hesitant consumers.