Supply Chain Matters highlights a series of recent Amazon focused developments that likely have interweaving themes relative to changing business strategies.
The news cycle focused on retail platform and web infrastructure services provider Amazon has accelerated these past few weeks. Let’s focus on some of the highlights.
Operations Realignment
Following an acknowledgement by CEO Andy Jassy that the retail platform provider may have overexpanded capacity needs related to supporting online commerce logistics and customer fulfilment needs and restoring operational profitability levels, a series of swift realignment actions are now underway.
The online retailer is shuttering, postponing or cancelling plans for a variety of logistics sortation, customer fulfillment or other facilities across the U.S.
Reporting by global business broadcasting network CNBC, citing data provided by parcel supply chain specialist consulting firm MWPVL International, indicates that 44 facilities have either been closed or canceled, while the opening of 25 other planned sites have now been delayed. The report includes a geographic map of all the facilities included in this realignment as well as a pictorial view of the geographies that will be impacted. One theme that appears evident is continuing to move forward with planned larger break-bulk logistics facilities for both middle-mile and last-mile distribution needs along with larger distribution fulfillment center footprints.
According to the report, affected employees are being offered employment alternatives and it is unclear as to how many will be subject to layoff. Reportedly, at least two facilities have already incurred worker layoffs at facilities in Maryland.
CNBC indicates that in the second quarter, the company reduced its headcount by 99,000 workers, to now stand as 1.5 million workers.
Jassy has recently indicated that the company will slow overall hiring levels. At the same time, Amazon has embarked on acquisitions focused on broader business services opportunities that include the growing healthcare services area. That includes a recently announced $3.9 billion deal to acquire 1Life Healthcare, operators of 25 One Medical primary care clinics across the U.S.
Another Warehouse Robotics Acquisition
Last week included the announced acquisition of warehouse robotics firm Cloostermans-Huwaert NV, a Belgium based tech provider whose technology supports the automated movement and stacking of heavy pallets or totes within warehouse facilities.
Reportedly, Amazon has been deploying Cloostermans robots within its facilities since 2019. With this move, the technology will now be adsorbed into Amazon’s Robotics division, similar to the 2012 acquisition of Kiva Systems.
In a published blog posting, Amazon’s Vice President of Global Robotics indicated that the company has deployed more than 520,000 robots among its various warehouses since the Kiva acquisition, including the first fully autonomous robot which is not restricted to areas within a warehouse.
Senior Management Change
Earlier this week, global business broadcast network CNBC reported, citing an internal Amazon communication, reported that Heather MacDougall, Amazon’s workplace safety chief and member of the company’s executive team, will depart the company on October 7th. A company spokesperson confirmed the departure.
The report indicates that MacDougall led efforts for health and safety needs of the company’s workforce during crucial periods of the pandemic in 2020. Prior to Amazon, the executive held a role as the head of OSHRC, a U.S. government agency charged with reviewing health and safety disputes between employers and the U.S. Labor Department.
Reportedly, Becky Gansert, Vice President of Global Specialty Fulfillment, will replace MacDougall.
Amazon to Raise Pay and Benefits for Drivers
The company announced earlier this week plans to raise compensation and benefits for the online retailer’s delivery partners. Reportedly, $450 million in wage increases and other benefits are being aimed for delivery drivers employed by members of Amazon’s Delivery Service Partners network, a grouping of independent entrepreneurs that formed local last-mile delivery services.
Additionally, a new academic program termed Next Mile, aims to provide drivers employed by participating DSPs with up to $5,250 per year to access more than 1,700 academic programs, including bachelor’s and associate degrees, skill certifications, and high school completion courses. The announcement further indicates that More than 70 percent of DSP drivers have indicated that retirement savings is a critical benefit of interest. The company will reportedly provide DSPs an estimated $60 million in the first year to help offset the costs for contracted last mile businesses that match employee contributions to their teams’ retirement savings and reimburse 100 percent of the administrative costs through a leading provider of retirement savings benefits.
In its reporting on this announcement, The Wall Street Journal indicated that the company had rolled out similar benefits to warehouse workers in order to retain workers and fend-off labor union organizing efforts. The announcement also comes prior to the recruitment of supplemental workers needed to support the upcoming holiday surge fulfillment period.
The Teamsters labor union in the U.S., along with other labor unions, has specifically targeted Amazon for membership recruiting efforts.
National Labor Relations Board Recommends Union Vote Be Upheld
Earlier this month, a hearing officer with the U.S. Labor Relations Board (NLRB) ruled that Amazon had not adequately proven that the labor union election results held in April at the company’s JFK8 customer fulfillment facility in Statin Island, New York, was inappropriately influenced by a labor union. In essence the ruling declared that Amazon’s objections “should be overruled in their entirety” and the company had not met its burden of proof to overturn the results of this election. The online platform provider’s argument was that labor union organizers threatened employees into voting in favor of unionization.
A subsequent labor union election held at a nearby Statin Island Amazon facility was rejected by facility workers who voted.
The ruling came after elongated testimony involving attorneys representing the Amazon Labor Union and the company itself. Amazon responded to the news in indicating strong disagreement and intentions for an additional appeal.
The NLRB ruling now moves to a regional director hearing officer located in Arizona, where the case now moves based on Amazon’s appeal. Reportedly, if the regional director upholds the original ruling, Amazon may seek an added NLRB review in Washington DC. Efforts of this nature usually drag on for months which precludes a labor union from initiating formal labor contract negotiations. Amazon has the financial resources to elongate such efforts.
Since the JFK8 successful vote, the ALU has since managed to garner worker interest for a unionization election at an Albany New York facility, the fourth Amazon facility this year. That election is yet to be scheduled by the NLRB.
Results of a second do-over election at Amazon’s Bessemer Alabama facility held in March remains in dispute with reportedly 875 workers at the facility voting for joining a union and 993 voting against. Quite a number of ballots have been disputed as to eligibility and an NLRB hearing has yet to be scheduled.
Additional Thoughts
The above highlights were included in this blog posting, not so much because of chronology, but of interweaving themes.
Amazon’s actions always have a strategy context with clear business, operational and workforce goals in mind. Have a second read, and perhaps many of our readers can sense what these actions imply.
We will elaborate in blog commentary later this year.
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