The Evolution of Amazon's Logistics Operations in Europe: Business Processes

So that brings in this concept of density. If we take a step back and look at the economics of supply chain and the economics of logistics operations, what other concepts, aside from density, have proved central to you operating in your role, throughout your career?

You’re right. Density is very specific for last mile. One key concept of the Amazon operation is, back in 2005, 2006, where we entered into lean manufacturing thinking, in our operation. It was very rare for a distributor to go into the lean manufacturing process. The concept was the following: operation is really tactical. When you deliver millions of orders every year, sometimes hundreds of millions and, sometimes, millions every day, in certain times of the year, the quality of what you deliver, has to be absolutely replicable and scalable. There was no other way for the company to move in a more tactical way of managing our operation.

It was in two parts. Firstly, standardizing our processes. Our operations, all over the world, have been standardized and even if you could take a picture and compare, one to one, all the different processes in the world, they are very close to each other, putting aside, sometimes, the constraints of the law in different countries, which may change the way that someone could do something. But the operation, the process itself, is the same for the same kind of product, everywhere in the world. That was one of the elements that helped the company to scale. Every time we opened a fulfilment center, we didn’t have to reinvent the wheel. We just took the recipe book of, how do we open a fulfilment center for a particular product, and we just opened it. That has been one of the key elements, which helped Amazon to scale.

The second part of the lean aspect is also rethinking about everything you do, to make sure that there is value in it, for the process and for the end customer. If not, you challenge this process. So, on top of standardizing, on one hand, what you are also trying to do is to really think through your process and innovate into it. Try to think about doing it differently and better. It’s what you when you do Kaizen, for example, in this lean principle. You start to optimize the process, eliminate everything which is not required and doesn’t add a value, which usually involves taking costs out of the process. When you get it, you implement everywhere in the world and you restandardize and you shift up your operation. That was one of the key elements, which made Amazon successful. It was not only technology. Technology came into it, obviously, meaning that when you do that, when you run Kaizen, when you try to improve a process, of course you try to improve technology and innovation, what Amazon have been doing over time, and you shift up your process.

But it’s not only that. You must manage the process, very strictly, every single day of the year, with a very strong operational management. That’s also one of the key elements of Amazon – being obsessed by detail, being obsessed by defect, and working through them, all the time, in every single operation or center in the world.