Amazon’s fulfillment network shift exceeds expectations
Amazon’s shift to a regional fulfillment network exceeded the company’s expectations, making “more impact than we optimistically expected,” President and CEO Andrew Jassy said during a Q3 earnings call.
The benefits come in many forms, including higher stock levels and improved connectivity between different facilities and delivery stations, resulting in shorter delivery routes and faster delivery speeds, the CEO told analysts.
"The first substantial rearchitecture centered on the regionalization change. We obviously like the results but don’t think we fully realize all the benefits yet and we continue to make steady improvements in fine-tuning the placement algorithms to enable even more in-region fulfillment and to further increase consolidation into fewer shipments.” - Andrew Jassy (Amazon, President and CEO)
Amazon has continued to slow down its fulfillment spend and reduce fulfillment complexity and cost, and is focusing on other ways to streamline its operations and boost delivery speed for Prime members.
The push includes optimizing inventory stock levels in the company’s regional network using placement algorithms, which is helping drive cost cuts, the CEO said. Jassy also noted that Amazon shifted many of its fulfillment and sortation center connections to instead be more direct connections between fulfillment centers and delivery stations, which is “easier to do when you have more local in-stock in a region.”
This for Nucleus is just another of the many examples of the benefits and profitability that are the result of supply chain optimization.