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EXECUTIVE SUMMARY
Alibaba and Amazon supply chain are to achieve their key performance indicators (KPI) of
quality, time, cost and innovation. In task one, supply chain strategies, theories and tools are
used to analyse and promote these KPI while taking into consideration the nature of a
different business model adopted by both companies.

Amazon adopted a business to customer (B2C) model as such; lean management, Total
Quality Management, Six Sigma, Pull strategy and Collaboration approaches are critically
analysed to establish an effective and efficient supply chain model in Amazon.

In contrast, Alibaba uses a different business strategy, focusing on business to business (B2B)
model, as such lean and agile, TQM, supplier development and Green Supply Collaboration
management (GSCM) strategies were critically evaluated to help in creating and enhancing its
supply chain model.

Task one summaries the critical evaluation of the supply strategies used to aid in both
companies business models. It also compares on the different approaches to promote a top
quality, responsive, fast, efficient and environmentally friendly supply chain.

Task two provides five themes of a Global Supply Chain Management Conference that
address strategic and technological developments and issues to increase organizations
competiveness. Current and future trends have been researched due to benefits and its
relations to global supply chains. The theories and approaches from academic sources are
underpinned by examples of current business issues.

TASK 1: ALIBABA AND AMAZON SUPPLY CHAIN

Introduction

Alibaba is a Chinese electronic commerce company that provides sales service from business
to business. The founder of Alibabas, Jack Ma, uses business strategies to connect Western
businesses with Chinese manufacturers. On the other hand, Amazon is an American electronic
commerce company headquartered in Seattle, Washington. On Amazon.com, you will find

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thousands of products that you can buy directly from third party businesses. Amazon is also in
the business of stocking items and selling products directly to consumers (B2C). Alibaba and
Amazon were analysed in term of the KPI of quality, cost, time and innovation and green. The
choice to analyse is because businesses adopting electronic commerce business model will
always be in demand and is required in the current world.

The Current Issues, Challenges and Expected Future of Alibaba and Amazon
The growth in online shopping has created a current challenge for Amazon on its quality
physical distribution services provided by retailers, including both multi-channels and pure
players as well as logistic services providers. (Yuan et all, 2011). The development of
electronic commerce in the B2C market has an impact on the downstream supply chain. There
is disintermediation within the supply chain and retailers are no longer are the only interface
with consumers. Every stage in the supply chain adds costs in the form of handling, shipping,
profits and transaction costs (Delfmann et al., 2002). Therefore, one of the biggest challenges
with Amazon is to maintain and guarantee product quality throughout the supply chain. Time?
Green?
As for Alibaba, its main concern should be the complexity and challenges to exchange of
information between firms underlying supply chain coordination. For firms to coordinate their
supply chain operations, they need to be aware of their trading partners activities. For
example, research has identified a positive connection between information exchange and the
adoption of best practices, the mitigation of the bullwhip effect, and the improvement in
overall firm performance (Tobin E et al, 2010). Therefore, high responsiveness and flexibility
is needed within Alibaba for it to be efficient and effective (Kaipia, Dukovska-Popovska &
Loikkanen, 2013).

Quality
Since amazon run on a B2C business model, customer relationship is the core value to the

profit of the companies. In the context of Amazon, Lean can be applied to maximise the

customer satisfaction while simultaneously eliminate waste (Esain et al., 2012).

by adopting the various tools within the lean management concept. Incorporated with the JIT

philosophy, it simply mean getting the right quantity of goods at the right place and at the

right time. (Reid & Sanders, 2007) One of the key principal is the Pull system, Kanban.

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Rather than producing as much as possible, Amazon could produce its products based on

customers demand. The information of the customers demand flows through the supply

chain, from the Point of Sales (POS) system down to the manufacturer. Ultimately reduces

overproduction, inventory and working capital. Another principal of lean is to produce goods

in small lots, focusing on producing one single piece at a time which minimises work in

progress, process interruption, lead and waiting time while improving quality and flexibility.

Quality in Amazons product could also be improved through inspection via lean

management. Defects from previous processes in production are fixed before continuing

down the production line. In term of cost reduction, JIT can help to minimise costs through

ensuring good quality in production and decrease in surplus stock being produced. (Hill &

Hill, 2012)

Lean and Just-in-time (JIT)

The concept of lean mainly comes from manufacturing, and the TOYOTA Production System.

The lean concept in general may be a western interpretation of the Japanese production

philosophy, as practiced by Toyota (Bertelsen and Koskela, 2003). Lean is a philosophy about

delivering value from the customers perspective by aims to eliminate of the redundant waste

and continuously improve the work processes. For example, the waiting time required to be

called up to see the doctors in a hospital is deemed to be redundant in the eye of a patient

within the supply chain process. Others examples of waste are the overproduction,

Transportation, Inventory, Excessive Motion, over processing, Defective Product and Poor

Skilled Utilisation. In the context of Amazon, Lean can be applied to increase the customer

satisfaction by adopting the various tools within the lean management concept. Incorporated

with the JIT philosophy, it simply mean getting the right quantity of goods at the right place

and at the right time. (Reid & Sanders, 2007) One of the key principal is the Pull system,

Kanban. Rather than producing as much as possible, Amazon could produce its products

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based on customers demand. The information of the customers demonad flows through the

supply chain, from the Point of Sales (POS) system down to the manufacturer. Ultimately

reduces overproduction, inventory and working capital. Another principal of lean is to

produce goods in small lots, focusing on producing one single piece at a time which

minimises work in progress, process interruption, lead and waiting time while improving

quality and flexibility. Quality in Amazons product could also be improved through

inspection via lean management. Defects from previous processes in production are fixed

before continuing down the production line. In term of cost reduction, JIT can help to

minimise costs through ensuring good quality in production and decrease in surplus stock

being produced. (Hill & Hill, 2012). Even though wastes are eliminated in Lean Management,

it does not complement green principals. Lean philosophy does not focus on reducing energy,

water and transportation cost. Instead lean emphasize on the production of small lots, which

would result in more transportation needed to deliver the goods between the manufacturers,

retailer and customer. The transportation of the goods, would result in more emission of

carbon dioxide as compared to production of bigger lots which would cause more air

pollution.

Sustainability
In the current society, the concerned of environmental practice has shown a significant

increase in expectation from the consumer. (Golicic et al., 2010; Mollenkopf et al., 2010) and

the increase pressure from the competitor, sustainability issue has caught the attention from

more researcher and practitioners, in the field of electronic ccomerce. Sustainability defines

by the Brundtland Commission (World Commission on Environment and Development, 1987,

p. 8): development that meets the needs of the present without compromising the ability of

future generations to meet their needs. Per the Triple Bottom Line approach, sustainability

must consider three components: natural environment, society, and economic performance.

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(Tumino et al, 2015). For Amazon, they can adopt the methodology of Sustainability to

improve both operations and strategic growth while at the same time gaining a sustained

competitive advantage, and delivering sustainable values to the broader society (Hart and

Milstein, 2003; Porter and Kramer, 2006). To achieve sustainability, Amazon should start with

identify the area that affect impact in B2C ecommerce. The main areas in e-commerce

logistics operations that contribute to generating effects associated with sustainability were

identified: transportation planning and management, warehousing, packaging, and distribution

network design. (Tumino et al, 2015). Transportation is generally believed to have the greatest

impact on sustainability. (Edwards et al., 2010; Weber et al., 2010). Therefore, a good

practice like increase in high-population density and usage of low-carbon emission vehicle

could help in lowering the emission of CO2. (Hesse, 2002; Hossain, 2002; Siikavirta et al.,

2003; Rotem-Mindali and Salomon, 2007). Looking at warehousing, Amazon should have

large warehouses which lead to a reduction in total average inventory levels, and therefore

reduced emissions and environmental impacts (Sui and Rejeski, 2002). Thirdly, redesigned of

packing could be a Green practice for Amazon by using cardboard instead of plastic

materials for their products. A notable exception occurs when physical products (e.g. books)

are replaced by digital downloads: in this event, Amazon has a positive impact on the

environment. Finally, Amazon should foster localization as part of their supply chain to

eliminate the needs to send their products from the main factory to the end user with leads to

the reduction of transportation and time saving.

Total Quality Management Six Sigma

TQM could be applied to Alibaba to improve on it quality management, Cost reduction and

increase in its customer satisfaction. TQM is a set of quality management practices

throughout the organization. While incorporate with Six Sigma which define as a business

discipline that improve quality and problem solving methodology. (Yahia Zare Mehrjerdi,

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2013). The implementation of Six Sigma to Alibaba enabled the organization to achieve

performance levels that externally are invaluable to customers and internally can reduce costs.

By adopting Six Sigma, Alibaba should follow six sigma quality of 3.4 defect per million

opportunities. Utilizing the six Sigma project approach DMAIC will help Alibaba to meet the

requirements for quality improvement. Defining the problem and customer requirements is

critical for Alibaba to understand the quality of its product. Then measure through observation

and data collection to gain a more understanding of the problem. Next analyse the data to

understand the roots cause or causes of the problem. Once determine the key factors to the

roots cause, Alibaba could develop and select solution to improve on it product. Finally

control plan to be develop to improve the process management and moving forward to deliver

high quality product to their customer.

Lean and Agile

Alibaba deal with business rather than customer directly, it leaves the collection of data to be

volatile. Alibaba should also adopt lean and agile concept in it supply chain management. Per

Christopher (2000) defines agility as achieving a rapid response on a global scale to

constantly changing markets. The rapid response needs to cover changes in demand for both

volume and variety. Agility is achieved by having flexibility in it supply chain process. Alibaba could gain

flexibility through postponing a standard platform and component and module are final assembled when the

demand for volume and variety are known. The standardized components and modules enable

minimum stock keeping of finished products while at the same time the late assembly makes

mass customization possible with short lead times. Buffer capacity is maintained to satisfy the

fluctuation of demand.

Collaboration and ERP

Alibaba should adopt the Supply Chain Collaboration with their supplier to increase on the

quality of their products and improve in the time required to deliver the goods to the end user.

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In return quality and time improve will give an impact of the total cost reduction for Alibaba.

(McIvor et al., 2003; McCarthy and Golicic, 2002; Matchette and Seikel,

2004). Supply chain collaboration encourage manufacturing, supplier and retailer to initial
collaboration. In the context of Alibaba, since it run on a platform for businesses linking up

with customer, Alibaba could adopt supply chain management practices such as vendor

management Inventory (VMI), efficient consumer response (ECR), continuous

replenishment(CR) and electronic data interchange (EDI) like the ERP system to improve in

its collaboration with other businesses (Subramanian, 2011). The outcome of the

implementation could help Alibaba to reduce the bullwhip effect from the customer demand

due to the a more accurate forecasting are shared among all their business partner.

1. Usha Ramanathan Angappa Gunasekaran Nachiappan Subramanian,

(2011),"Supply chain collaboration performance metrics: a conceptual
framework", Benchmarking: An International Journal, Vol. 18 Iss 6 pp.
856 - 872

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