By the time someone clicks “buy” on Amazon, its Supply Chain Optimization Technologies team has probably expected it. The team forecasts demand for everything sold by Amazon worldwide and underlies the entire Amazon retail operation. Launching their fastest service, Prime Now, Amazon now delivers household basics within hours, thanks to artificial intelligence.
With AI, computers analyze reams of data, making decisions and performing tasks that typically require human intelligence. AI is key to Amazon’s retail forecasting, writes Supply & Demand Chain Executive (Nov. 28, 2018). It is also a key to how Amazon speeds up deliveries: The team predicts exactly where items should be stocked so that they are as close as possible to the people who will buy them, an essential process with the race for same-day and even same-hour delivery. Few other retailers have ventured into these speeds, because they’re very expensive. AI is woven through every part of an Amazon purchase, from the website to the warehouses to the actual delivery. The firm calls it the “first mile,” “middle mile” and “last mile.”
In 2013, Amazon got a patent for “anticipatory shipping.” The idea was to get an order as close as possible to the customer’s address before the customer actually click “buy.” Since then, Amazon has built a massive warehousing footprint around the country, with smaller warehouses closer to city centers where Prime Now promotes super-fast delivery.
Amazon is also now rolling out new efficiency-boosting technology that eliminates the need for the handheld scanners we show in the Chapter 12 Global Profile. The new system retrofits workers’ stations with advanced cameras that can automatically scan items that workers hold in their hands. This kind of innovation is a controversial, where retail store layoffs are rampant, just as automation is reshaping the workforce.
Classroom discussion questions:
- What are the operations issues discussed in this article?
- How is AI used at Amazon?