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Structuring Inbound

Philippe Hemard
Former VP, Amazon Logistics Europe

Learning outcomes

  • How Amazon organize inbound logistics for both first and fulfilled by Amazon inventory
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Executive Bio

Philippe Hemard

Former VP, Amazon Logistics Europe

Philippe has spent over 25 years developing end-to-end logistics systems from vendors to customers, including 18 years at Amazon.com. He joined Amazon in France in 2000 as Distribution Centre General Manager, moving to Amazon.co.uk (Scotland) in 2004, to support business growth within the UK. Philippe then took up several senior leadership positions in European Operations at Amazon EU Headquarters in Luxembourg, culminating in the role of VP Amazon Logistics Europe from 2015-18. Before joining Amazon, Philippe worked for Danzas (now DHL) in France. Throughout his career he has worked on network modelling, procurement and buying processes, inventory management, fulfillment management, and transportation network management. Since March 2018 Philippe has run his own consultancy business, holds several board positions and teaches Supply Chain Management and Global Logistics Strategy at university. Read more

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Interview Transcript

Taking a step back and looking, specifically, at inbound and how inbound was structured, originally, with only the first-party inventory. How did you look at organizing that process?

Not particularly differently from how it is today. The process of the inbound has always been structured the same way. There is a purchase order and you receive this purchase order in whatever country they are in. The classical one is that an Amazon order gives you the time to be delivered and the address to be delivered to, with a purchase order. You fulfil the order; for most of Amazon, you still organize most of the transportation. Over time, that has moved a lot, in the US, for example. We took a lot of ownership of the inbound so we came and picked up from suppliers but, nowadays, it’s a balance. It’s happening in Europe, as well but, in Europe, the tendency is still, you deliver to the fulfilment center, to the address you have been given. When the product arrives, we reconcile and scan every single item against the purchase order and put it in the inventory.

Before that, you have to make an appointment for your truck, for your delivery and you deliver, we reconcile against the purchase order. We take everything we have ordered and we reject things that have not been ordered. Ultimately, we pay the invoice and the product is stored in the fulfilment center. That has not changed. It has always been like that. The way that we store the product has slightly changed, over time. Also, the way that the scanning takes place, there are some processes that have been developed with vendors, where we had good accuracy on delivery, for example. It was called a license plate receive. When the vendor already has a good level of logistical optimization, they are able to tell you that, in a box, they put the items, they are able to deliver the box with a license plate number and they are able to give you, by EDI, what the contents of each box is. That enables you to start scanning only one box and automatically receive the inventory that is in the box. This means that the vendor has a very good level of accuracy, as well.

We have vendors, like that, where we have had a long-term connection with them and they have very strong logistics, as well. They are able to provide those numbers, which help a lot, with putting them in the inventory, in our fulfilment center, by streamlining the process and avoiding having to scan every single item.

They have always been scanned once and you need to also think about the fact that it is very rare for Amazon to receive 20 pallets of the same product. There are some products where we do receive them like that, but the reality of Amazon is that of the very large catalogue, where have we have very few items per SKU, which means that you always receive a few pieces of each product. It’s rare that boxes are full of the same product.

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