What is Amazon’s role in the modern supply chain industry?


This month we spoke with Dr. James A. Tompkins, CEO of consulting firm Tompkins International. He has been published extensively, contributing to or writing 30 books not to mention hundreds of magazine articles, and spoken at practically every major supply chain event and conference during his 35 years as a consultant.


NextGen Supply Chain: When it comes to the supply chain, there is disagreement as to Amazon’s role. Some see the company as a disruptor while others see it as having a highly adaptable approach to the supply chain as it is being disrupted by many different forces. Where do you come down on this one?

Tompkins: Just as Sam Walton did long ago and Jack Ma is currently, Jeff Bezos is disrupting the supply chain in a major way. In fact, Amazon has done a fantastic job of making supply chain a competitive differentiator. It’s often mindboggling what they’ve done.

Just think of two innovative ideas that are now considered standard—Prime and two-day delivery. But Amazon is not so much disrupting its competitors as it is disrupting itself. And this is happening at a time when the cycle of innovation is accelerating across the supply chain. That makes Amazon a formidable force.

NextGen Supply Chain: That said, Amazon continues to morph as a company. Almost daily.

Tompkins: That’s for sure. The company may have started as just a bookseller but what are they today? Are they a retailer? A marketplace? A private label? A shipping company? A delivery company? A cloud company? The answer, of course, is that Amazon is all of those and more. I didn’t even mention a grocer or a pharma distributor. These and all its other manifestations are how Amazon is constantly disrupting itself.

NextGen Supply Chain: In one regard, Amazon is a bit unstable given all the different companies it wants to be. Is that good?

Tompkins: That all depends. Something people have to realize up front is that only Amazon is Amazon. In other words, the tendency is for companies to want to emulate what Amazon is and how it operates.

Unfortunately, it is so big and successful that its game is inherently different than any other company. You can’t emulate what Amazon does. So you shouldn’t try. However, there are some things Amazon is doing these days that are a little naïve. And these affect their partners as well as customers.

NextGen Supply Chain: On the surface, that’s a little hard to imagine given its ability to offer increasing price transparency, choice and options. Tell us a little more what you’re seeing here, Jim.

Tompkins: Those are all capabilities that benefit the consumer. And Amazon has done many great things here. But collaboration is not a strong suit. And that effects how Amazon treats its supply chain partners.

Just look at Amazon’s delivery capabilities. Amazon is very good at building out a delivery ecosystem on its own. But that ecosystem is not built on peaks. Amazon expects USPS and others to handle its peaks. Otherwise, Amazon will handle deliveries.

The question is will delivery partners want to pick up the crumbs from Amazon. Or will they expect more over time?  It goes to the heart of a partnership. Right now, Amazon is a strong partner only as long as your business accommodates its paradigm. Will supply chain partners want to work with Amazon long term? That remains to be seen.

NextGen Supply Chain: That said, does that attitude toward supply chain partners seep into how it approaches customers.

Tompkins: Absolutely. People know Amazon should interface with customers differently than it does. When was the last time you spoke to a person about your order? Never. That’s not an option with Amazon for handling your exceptions to their system. It can be very frustrating to customers. They are people not computers, but Amazon does not entirely recognize that.

If Amazon had its way, I believe, you would have your Amazon orders delivered once a week on a preset day. That would certainly simplify the delivery part of Amazon’s business. It most prefers one size fits all.

Similarly, the Web site handles all products the same. Do you really buy apparel the same way you buy groceries? Of course not, but this is another instance of one size fits all for Amazon.

NextGen Supply Chain: Taking that to its next logical step, does Amazon have much to learn when it comes to brick and mortar?

Tompkins: I generally think Alibaba is a more advanced e-commerce company than Amazon. And that is especially true when it comes to brick and mortar. Alibaba understands brick and mortar is an experience. This video makes that clear

Amazon needs to learn what experiential is. And as this video shows, that ability will not impinge on rapid order fulfillment. Alibaba is still able to deliver in 30 minutes. That customer-centric and process-centric paradigm is what Amazon needs to learn. And it wouldn’t hurt if it was more partner-centric either.

Gary Forger is special projects editor for Supply Chain Management Review. He can be reached at grforger@gmail.com.