How Amazon Improved Its Supply Chain Post-COVID

During the COVID-19 Pandemic, many companies were brought to a forced realization pertaining to the fragility of their supply chains, causing companies to rethink their logistics and operations. Amazon, for example, faced unprecedented challenges during this period, and now has a boastful supply chain after making significant improvements around automation, logistic infrastructure, diversified sourcing, and greater sustainability. 

Amazon's integration with automation post-COVID is quite noteworthy. Labor shortages and social distancing requirements during the pandemic disrupted manual operations, forcing Amazon to accelerate its investment in robotics and artificial intelligence (AI) thus reducing dependency on human labor. According to McKinsey & Company, the adoption of automation in supply chains surged during the pandemic, with companies like Amazon enhancing automated systems for sorting, packaging, and transporting goods within warehouses, improving efficiency, reducing errors, and allowing the handling of larger volumes of orders with greater speed and accuracy.

To cope with the surge in online shopping during and after the pandemic, Amazon significantly expanded its logistics infrastructure by increasing the number of distribution points. The company invested heavily in building new fulfillment centers, sortation centers, and delivery stations, particularly in locations closer to major urban areas which has allowed them to shorten delivery times and reduce strain on its supply chain. They’ve also introduced new innovations– micro-fulfillment centers within cities and uber-like delivery services allowing anyone to become a driver– enabling faster same-day or next-day deliveries. 

A study by Supply Chain Dive reported that Amazon's logistics network expanded by 50% during the pandemic, enabling the company to better manage increased demand.

The pandemic highlighted the risks associated with over-reliance on a single source or region for supplies. To mitigate these risks, Amazon diversified its sourcing strategies post-COVID by building relationships with a broader range of suppliers across different geographies, reducing its dependency on any one region, such as China. According to the Institute for Supply Management, over 75% of companies faced supply chain disruptions during the pandemic, prompting them to diversify their sourcing strategies. By increasing focus on local sourcing to reduce lead times and avoid potential disruptions in global supply chains Amazon can continue to meet customer needs even in the face of global supply chain disruptions.

Post-COVID, Amazon has also placed a greater emphasis on sustainability within its supply chain. The pandemic underscored the importance of resilience, not just in terms of operational efficiency but also in terms of environmental impact. Amazon has committed to achieving net-zero carbon emissions by 2040, and its supply chain improvements are a key part of this initiative. According to Amazon's 2021 Sustainability Report, the company has increased its use of renewable energy, invested in more sustainable packaging solutions, and expanded its fleet of electric delivery vehicles.

The COVID-19 pandemic challenged Amazon in unprecedented ways, but it also served as a catalyst for innovation and improvement within its supply chain. By increasing automation, expanding its logistics infrastructure, diversifying its sourcing strategies, and emphasizing sustainability, Amazon has strengthened its supply chain resilience and set new standards for the industry. These improvements have not only helped Amazon navigate the post-pandemic landscape but also prepared the company for future growth and challenges in the evolving world of e-commerce.

Sources

• McKinsey & Company. (2021). "How COVID-19 has pushed companies over the technology tipping point—and transformed business forever."

• Supply Chain Dive. (2021). "Amazon’s supply chain expansion sets a high bar for the industry."

• Bloomberg. (2021). "Amazon’s Delivery Fleet Grows as It Races to Catch Up With Pandemic-Era Demand."

• Institute for Supply Management. (2021). "The Impact of COVID-19 on Global Supply Chains."

• Amazon. (2021). "Sustainability Report."