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Transport and logistics 7: Internet shopping

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How does a company ensure happy customers?

This unit looks at warehousing and logistics, and how our orders get from A to Z. It uses the context of Amazon: a company that most students will be familiar with.

There are over one hundred million items on the Amazon UK website. If you can imagine it, Amazon sells it.

Warehouses and local distribution centres are located around the UK, as shown below.

Students could be asked to find and locate these on a map:

UK corporate offices

  • Slough, Berkshire
  • Holborn, London

Development Centres

  • Edinburgh, Scotland
  • London, England

Fulfilment Centres

  • Rugeley, Staffordshire
  • Hemel Hempstead, England
  • Marston Gate, Milton Keynes
  • Doncaster, South Yorkshire
  • Peterborough, Cambridgeshire
  • Swansea, Wales
  • Dunfermline, Scotland
  • Gourock, Scotland

Here are some facts about the Swansea warehouse, for example:

  • 800,000 square feet
  • The same floor area as 11 football pitches
  • Quarter of a mile from end to end
  • On ‘Cyber Monday’ in 2013, 450,000 items were picked and packed in this warehouse.

In the month before Christmas, there is a dramatic increase in the rate at which goods are ordered, as consumers delay purchases in the hope that a bargain might appear. The growth of Black Friday and Cyber Monday as days when consumer spending is promoted and reported in the news has been a feature of the news media. Cyber Monday refers to the first two Mondays in December each year, when online orders peak. This is driven by the growth in options for delivery with a range of couriers offering guaranteed delivery in time for Christmas, although in 2014, one of these: City Link closed down over the festive period. This is a reminder of the importance of logistics in the preparation of items for dispatch, followed by efficient delivery. Customer confidence is vital.

In 2014, the promotion of ‘Black Friday’ reached new levels, and there was hysteria in some locations, leading to injury. In the USA, there have even been deaths in customer stampedes. On one day in November 2014, over 5 million orders were received – 64 per second: http://www.bbc.co.uk/news/business-30260103

The fulfillment centres that Amazon uses are distribution warehouses. Warehousing has changed over the years. JIT or ‘just in time’ ordering means that there has been a reduction in the amount of stock that needs to be kept in the buildings themselves. Bar codes and QR codes for tracking also allow automated ‘picking’ systems to support the people (‘associates’) who organise each order by hand.

Packaging has also changed, with the design and material aimed at reducing wastage, although there are still stories of people receiving items in over-sized boxes.

There was a slight controversy in 2015, when many customers discovered they had been signed up for the Amazon Prime delivery service without being told as clearly as they would perhaps have liked that there was a fee involved.

Amazon has also moved into the streaming video market, with its Amazon Fire Stick, and has various tablet versions of its Kindle reader.

Fun fact: 80,000 workers are taken on temporarily over the Christmas period to fulfil orders in Amazon warehouses in the USA.

Starter

Amazon logo

Look at the Amazon logo below. You may have seen it many times before, but there are some hidden messages inside it. Can you work out what they are?

The arrow in the logo connects A and Z. Amazon sells everything from A-Z is the implication, but the parcels have also travelled from A-Z.

The arrow which connects the letters A and Z is also in the shape of a smile, suggesting happy customers.

How does the company ensure that customers are kept happy, and get their correct item promptly?

The term that is used for this process is ‘fulfilment’FedEx logo

Look at the FedEx logo next – can you see the ‘hidden’ arrow? Now try ‘not’ to see it again.

Main activity

It’s a month before Christmas and Miss K is looking at ordering some gifts. She wants to print out special newsletters to go along with the gifts to let people know what she’s been up to all year. She prints the first one, and the ink cartridge on her printer runs out.

She loads up the Amazon website on her computer, and chooses a replacement ink cartridge. As an Amazon Prime member, she knows it will arrive the next day.

  • What are the alternative ways that Miss K could obtain an ink cartridge within the next 24 hours?
  • What are the pros and cons of these alternative methods compared to ordering via Amazon?
  • What ‘geographical’ factors could influence Miss K’s decision to use this particular method of ordering her ink cartridge?

When she presses SUBMIT ORDER a chain of people start to be involved in the whole process. In order for Miss K to get her ink cartridge on time, these processes and people have to work correctly.

Download: Amazon Order (PPT)

Print the slides out as handouts: 2 per page, and use this as a card sort activity where the students are asked to sequence the cards to show the stages involved and people involved, or to group them into the different stages of the order e.g. website, fulfilment centre, courier or delivery service.

Later slides in the presentation include images of some of the people involved, which could be used as central points to position the cards around during this activity.

  • How could these systems be affected by ‘spikes’ in demand e.g Black Friday or Cyber Monday?
  • How do the companies try to plan for these busy periods?

Discuss the various jobs that are produced by this method of ordering items, which is used every day by up to 5 million people, and the ‘traditional’ method, which was visiting a shop, perhaps on the High Street. Consider the questions above, with respect to the logistical decisions that are made, including recruitment of temporary staff.

Amazon has recently introduced a system called Amazon Locker, or Amazon Collect+ or Amazon Pass my Parcel, where the products are delivered to a physical location that people can visit and pick up their item. Many Post Offices are part of this network. How does this change things?

a) Amazon Dash button – was featured around 1 April, but is apparently not an April Fool’s joke: http://www.newyorker.com/culture/culture-desk/the-horror-of-amazons-new-dash-button

b) Amazon Prime Now In some American cities, deliveries are made within the hour. This service costs an extra $7.99. This article uncovers one of the methods used for this delivery: the subway – http://time.com/3882434/amazon-prime-subway/ – this article also has a video showing the delivery of a teddy bear which is worth watching.

Plenary

Three discussions could take place here.

Discussion 1

The growth in home delivery means an increase in vehicles on the roads, meaning more traffic congestion and air pollution in cities, along with lots of waste from packaging.

Is shopping in the High Street more sustainable than using home deliveries?

Discussion 2Drone

Drones (or UAVs) are also predicted as a delivery system to be used in the future.

How realistic do you think this future scenario is?

Discuss the possible benefits and problems associated with the use of drones in this way. There are plenty of recent news stories which could be referenced here.

Discussion 3

Is online shopping killing the High Street?

Reference could be made here to the current plans to try to save the High Street: 100 Ways to Help the High Street | Resources | High Street Task Force (highstreetstaskforce.org.uk)

Further reading and references

A number of short videos could be used here to show students what goes on inside these warehouses.

Robots are used in Amazon warehouses:

http://www.bbc.co.uk/news/business-30260103 – a story about Black Friday 2014 which saw record numbers of order.

 

Other lessons in this series:

Transport and logistics: Introduction

Lesson one: Supply chain

Lesson two: Road haulage

Lesson three: Railways

Lesson four: City bikes

Lesson five: Buses and coaches

Lesson six: Shipping containers

Lesson eight: Humanitarian relief

Glossary

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