Amazon Optimizes Warehouse Space

Amazon Optimizes Warehouse Space

December 22, 2019

As the holiday buying season is underway, Amazon is revising its warehousing system.

As we previously shared, in an effort to cut Prime shipping time from two days to one day the company invested heavily in 2nd quarter 2019 to improve transportation and warehousing. Part of the warehousing problem relates to independent merchants that are using Amazon for fulfillment.  Over half of Amazon sales are from these independent merchants.

Amazon has raised the fees charged to these independent merchants to encourage a reduction in inventory, trying to keep slow-moving items out of their distribution centers.  Because many of these merchants are concerned about the fees, Amazon may not have enough inventory on-hand with holiday sales looming.

Thus, Amazon is implementing Amazon Storage and Replenishment.  Merchants can now store products to replenish Amazon’s distribution centers from nearby warehouses.  The hope is to allow merchants a cheaper storage option in order to keep inventory low in Amazon’s distribution center, but yet not run-out of merchandise that might result in lost sales.


Video Spotlight: Amazon is making one-day shipping the new standard for Prime members


This post is based on the Bloomberg article, Amazon Tests Cheap Warehouses to Make Continue reading

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Warehousing Trend: Use Trailers

Warehousing Trend: Use Trailers

February 26, 2019

Trailers seem to be the next trend in warehousing. It costs 50% less than brick-and-mortar to use trailers as storage space.  The issue is that trailers are only able to help with pallet inventory.

They’re not feasible for some businesses. E-commerce operations require larger brick-and-mortar footprints for picking operations.

Trailers do offer several benefits:  temporary storage to expand capacity, mobile operations as trailers can support inventory surges wherever needed, and utility in reverse logistics.

This post is based on the Supply Chain Dive article, Are trailers the next big warehousing trend?, by Gary Wollenhaupt, February 12, 2019. Image source: Prasit photo/Getty Images.

Discussion Questions:

1. How could a company determine the optimum number of trailers to own?

Guidance: Review the capacity cushion concept; this question can help to stimulate discussion about capacity cushion planning.  Students should recognize that the trailers are supplementary to brick-and-mortar operations.  Trailers could represent storage capacity cushion for a company.

2. What are the limitations to using trailers for reverse logistics?

Guidance: Possible limitations could include lack of space for a trailer at a retail location such as a mall, items that may require special handling for safety, Continue reading

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