As portrayed in our latest Supply Chain Matters update related to the ongoing Global COVID-19 Coronavirus Impact on Global and Industry Supply Chains, supply chain management teams across the globe continue conducting detailed analysis and mitigation actions to buffer the impacts of this virus on ongoing business operations.

In in effort to provide our readers with important reference information, we want to call attention to a recently published New York Times report, Clicking Buy on Amazon? It’s Trying to Prevent Caveat. (Paid subscription or complimentary metered viewing)

While the title of this report is misleading, the content provides interesting pointers as to how Amazon is marshalling its supply chain planning capabilities in efforts to get ahead of the virus outbreak. Amazon Prime

This report depicts information gleamed from emails and consultants as to how the online retailer has now initiated larger and more frequent orders for China sourced products to augment existing inventories in the United States, targeting specific products that account for upwards of 60 percent of online sales. As reader’s are aware, with half of online products provided by third-party merchants, the online retailer is reportedly initiating actions in this area as-well.

It would appear that Amazon is laser-focused on buffering any impacts to the online retailer’s annual Prime Day shopping holiday that occurs in early July. Reportedly, third-party merchants are being contacted with outreach emails to inquire what steps each seller is taking to mitigate potential supply disruption.

The report indicates that the online retailers supply planning algorithms have been changed to plan for six to eight weeks of inventory coverage compared to the usual two to three weeks. In some cases, Amazon has reportedly made supplemental exception buys, in lieu of automated replenishment purchases.

We are providing reference to this Times report not only because it may help readers to understand how one company with advanced planning technology has already sprung into short and longer-term tactical response, but also how that response may impact others who may be dealing with similar China based suppliers.

The notions of the supply chain bullwhip effect are always evident at times of extraordinary disruptions or events. The question is often how much distortion enters the overall end-to-end demand and supply network.

How the leveraging of advanced planning technology will help to either mitigate bullwhip, or actually manage such an action to consciously augment safety stocks as a tenet of supply network mitigation has been tested in previous disruptive events of this kind.

We recommend readers have a look at this report and make your own observations.

 

Bob Ferrari

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