Keith P. answered • 12/01/20
Experienced Operations and Supply Chain Executive
The interface between the push based and pull based stages of the supply chain is sometimes called the push/pull boundary. The boundaries vary from company to company based upon their supply chain strategies.
In Amazon’s case, they outsource inventory management since over 50% of Amazon’s sales are from 3rd Party sellers and in-source logistics in order to have direct control over when orders are delivered to customers. Their delivery options are a strategic differentiator and a major critical success factor.
In support of the delivery options, depending on the product, Amazon order fulfillment either taps into:
· its 3rd party supplier network, following a pull strategy to fill orders, or
· its vast network of warehouses that are sized and placed near cities and main metropolitan areas using a push strategy to stock the warehouses.
§ Amazon relies on regional forecasts by product class to manage warehouse stock levels.
§ The warehouses are organized into five storage areas or zones, which group products within the region based on customer order patterns.
o Its library prime storage stores books and magazines.
o Next, its pallet prime storage stores full-case products that have very high demand.
o Next, case flow prime storage stores high-demand products picked in less-than-case quantities.
o Its reserve storage accommodates irregularly shaped and low-demand products.
o Finally, its random storage area stores smaller, moderate-demand items.
Two processes involved in the pull strategy are order management and last mile delivery.
Two processes involved in the push strategy are forecasting and inventory management.
1. RICK LEBLANC, How Amazon Is Changing Supply Chain Management, Updated November 14, 2020, https://www.thebalancesmb.com/how-amazon-is-changing-supply-chain-management-4155324 (accessed December 1,2020).
