Amazon – Page 2 – The OM Blog by Heizer, Render, & Munson

OM in the News: The Danger of Working in an Amazon Warehouse

Nearly half of Amazon’s employees in the U.S. have reported sustaining injuries at the company’s famously fast-paced warehouses, with some workers reporting they have to take unpaid time off from their jobs to recover, reports CBS News (Oct. 25, 2023).

A new study found that 41% of the e-commerce giant’s workers have gotten hurt on the job. Of those employees, 69% had to take unpaid time off to recover from pain or exhaustion in the past month. Amazon workers’ self-reported injury rate is nearly six times higher than what some previous reports.

The survey data in the study of 1,400 current Amazon workers indicate that how Amazon designs its processes — including extensive monitoring and the rapid pace of work — are contributing to a considerable physical and mental health toll, including injuries, burnout and exhaustion. Amazon uses an electronic system to track its warehouse workers’ productivity, using specialized software, handheld scanning devices and other tools to track the time it takes employees to complete their duties.

According to the survey, that system contributes to the pressure some workers feel to work faster, making them more likely to suffer injuries or experience burnout. Previously collected data has also shown that the rate of injuries at Amazon’s warehouses is higher than industry averages. In 2022, one Occupational Safety and Health Administration (OSHA) study found that there were 6.6 serious injuries for every 100 Amazon workers. That number is more than double the injury rate at all non-Amazon warehouses, which reported 3.2 serious injuries for every 100 workers. It means workers there sustained more than 34,000 serious injuries that year.

“This is not a ‘study’ — it’s a survey done on social media by groups with an ulterior motive,” said an Amazon spokesperson. The study does note that Amazon has taken measures to prioritize the safety of its workers. Still, many workers suffer injuries anyway, with those who struggle to keep up with the company’s fast pace of operations more likely to be hurt on the job.

California passed a bill regulating the use of production quotas in warehouse distribution centers, and Washington state has issued Amazon multiple citations for unsafe working conditions, including the company’s “very high pace of work.”

Classroom discussion questions:

Chapter 10 discusses job design, ergonomics, and work measurement. (See pages 411-413). What tools could Amazon employ to make its warehouse jobs safer?
Why do workers sustain such high rates at Amazon facilities?

OM in the News: Amazon Integrates Drones for Faster Delivery

Amazon’s plan for drones operating out of the same buildings as traditional delivery vans shows its ambition to have the technology become a regular part of its day-to-day fulfillment operations, writes Supply Chain Dive (Oct. 20, 2023). “The integration aims to help Amazon streamline the retail experience, create a safer and more sustainable delivery model, and deliver products more quickly,” the company said.

An Amazon drone takes flight. Prime Air drones will start deploying at same-day delivery sites rather than standalone facilities

Meanwhile, the plan for new drone delivery locations in the U.S. and abroad expand Amazon’s efforts to scale the emerging transportation method. Amazon has been using drones for nearly a year to deliver packages weighing up to five pounds in one hour or less. In College Station, Texas, Amazon drones have delivered hundreds of household items since 2022.

Amazon noted it eventually wants its drones to fly thousands of times and deliver millions of packages annually for customers. However, the rollout for its drone program has been slow, complicated by reported safety challenges and limited delivery activity in addition to industry-wide hurdles to mass adoption. “We are working closely with national regulators and international regulators, and communities in the EU, Italy, the UK, and the U.S., to develop this program,” Amazon said. “We have committed the necessary time and resources to build a safe and scalable service.”

Amazon has the opportunity to scale up its drone delivery coverage quickly by stationing them at same-day delivery sites. The company plans to double the number of these smaller facilities, which are stationed near metro areas and use a streamlined fulfillment process, in the coming years. “Think of products that fit the size and weight capabilities of the drone — like cold medicines and batteries — we place them close to customers at these sites, which enables us to deliver them at our fastest speeds, and now it makes sense to make deliveries even faster via drones,” Amazon said.

Amazon plans to lean on its MK30 drone to make the deliveries, replacing its existing drones by the end of 2024. The new design can fly twice as far as previous Prime Air drone models, expanding the company’s drone delivery range.

Classroom discussion questions:

What are the advantages of drone deliveries?
Limitations?

OM in the News: What is “Supply Chain by Amazon”?

Supply Chain by Amazon is poised to be a major draw for third-party sellers looking to simplify their logistics — if they can place enough trust in the e-commerce giant, writes Supply Chain Dive (Oct. 16, 2023). The end-to-end suite of services, just launched, is billed as a one-stop shop for sellers’ supply chain needs, helping them avoid juggling multiple logistics providers. Amazon can pick up inventory from manufacturing facilities, ship cross border, store and replenish inventory and deliver to customers, among other services.

Few companies have Amazon’s robust supply chain network and logistics capabilities

Few companies can rival Amazon’s robust supply chain network and logistics capabilities, but it will take more than infrastructure for sellers to fully embrace Supply Chain by Amazon. A key for its success is to ensure sellers are comfortable enough to willingly cede more management of their supply chain to Amazon. One concern Amazon may need to assuage is how it handles data from its users.

Amazon has long faced scrutiny of how it handles seller data, and the recent lawsuit from the Federal Trade Commission also raises issues with the company’s practices. The FTC says that the company corners sellers into using its services and has “failed to adequately protect sellers’ commercially sensitive data, exposing this data to theft and appropriation.”

Sellers still have reasons to lean on Amazon’s expanding supply chain offerings. The fear of giving the company more control is decelerating among brands, as companies face difficulties raising capital and improving their own supply chain efficiencies in an uncertain economic environment.

The suite of services presents a high upside for smaller companies, as it helps them more easily comply with international trade rules and regulations. For large sellers, it may not work as an all-encompassing solution, but it can complement their existing arrangements with traditional freight forwarders and carriers.

One potential gap for Supply Chain by Amazon is its fit with mid-sized sellers, as these businesses would want help in their sourcing from countries beyond China. The cross-border transportation component of the service currently allows sellers to ship cargo only from mainland China and Hong Kong. Amazon has plans to grow its number of origin points and making more products eligible for the service.

Classroom discussion questions:

1.What is the supply chain service that Amazon is offering?

2. What are the advantages and disadvantages of joining Supply Chain by Amazon?

Guest Post: Using Data Analytics to Optimize Operations Management

Charlie Render is CEO of Render Analytics, a Florida-based data analytics consulting firm. He can be reached at https://www.renderanalytics.net/

Harnessing the power of data has emerged as a critical OM strategy for gaining competitive edge. Data-related technologies are being employed to elevate supply chain logistics, manufacturing efficiency, and overall operations.

Data analytics, the topic of Module G in your text, involves the systematic exploration of datasets to glean meaningful decision making insights. In the OM/SCM context, it encompasses the analysis of such diverse data points as order volumes, lead times, transportation costs, inventory levels, and customer behavior trends. This fusion is a natural convergence, given the voluminous data generated at each juncture of the supply chain.

Here are four real-world examples:

Amazon’s Demand Forecasting By meticulously analyzing historical sales data, seasonal patterns, macroeconomic indicators, and even external factors like weather events and cultural trends, Amazon employs advanced predictive models. This enables the firm to anticipate product demand with remarkable accuracy. As a result, it can adjust inventory levels dynamically, minimize excess stock, and ensure the timely availability of popular products. The outcome is not just optimized inventory costs but also a seamless customer shopping experience.

UPS’s Route Optimization UPS harnesses data analytics to refine its delivery routes. By integrating real-time traffic data, intricate delivery schedules, fuel costs, and even road closures, it constructs a comprehensive algorithmic approach. This approach identifies the shortest, most fuel-efficient routes for its fleets. The outcome is not just a reduction in fuel consumption and operational expenses, but also better on-time deliveries, positively impacting customer satisfaction.

Toyota’s Proactive Quality Assurance Toyota exemplifies how data analytics can revolutionize quality control within assembly lines. By tapping into data generated by sensors embedded within production equipment, Toyota has pioneered real-time quality assurance. This enables the detection of deviations from predefined quality benchmarks throughout the manufacturing process. Swift identification of potential defects lets Toyota rectify issues promptly. This means a reduction in defective units, lower warranty claims, and enhanced customer satisfaction.

Maersk Line – Transforming Container Shipping Maersk demonstrates the impactful combination of data analytics and sustainable supply chain practices. With the aim to minimize emissions and optimize routes, Maersk uses data analytics to study factors such as weather patterns, sea currents, and fuel efficiency. By leveraging these insights, it optimizes vessel routes, reducing fuel consumption, and subsequently decreasing greenhouse gas emissions. This data-driven approach not only aligns with a commitment to sustainable shipping, but also helps achieve substantial cost savings.

OM in the News: Dancing Pods at Amazon’s Warehouse

“At Amazon’s fulfillment center in Carteret, N.J., the workers don’t walk to and from shelves,” writes The Wall Street Journal (Sept. 5, 2023). The shelves come to workers. (Click on the 7 second video below). About 45,000 pods—the name given to the four-sided shelving units—are shuffled around the 1.3-million-square-foot facility on self-driving units that hoist and carry them to workers in a kind of choreographed waltz. Those workers either fill the pods with arriving goods or empty them to build packages for shoppers.

Most of the facility’s 3,000 employees, including the top manager, aren’t allowed to enter that area, even to lean over to retrieve an item they have dropped. The specialists permitted to move amid the shuffling units must don a specialized vest that syncs up via radio and acts almost like a sort of electric force field, helping direct the pods around them. An AI system situated in the cloud helps oversee the pods’ movements.

Amazon calls the approach of moving the shelves a “goods-to-person” strategy. The design, which uses artificial intelligence and sensors, is meant to promote a mix of efficiency, ergonomics and safety, with the thinking that it is ultimately better to have shelving units, rather than employees, scurrying around its cavernous facilities. Globally, Amazon has about 750,000 autonomous robots to move around its shelving pods. Though most operate in specialized zones, its newest design is intended to mingle with workers and move around them as though navigating a cocktail party.

Amazon said its lost-time injury rate has fallen 69% from 2019 to 2022. Last year, lost-time injury rates were 21% higher at sites that didn’t use robotics technology. Proponents of the technology say it can help prevent injuries that can be ruinous for workers and costly for employers. Some workers say they find the technology creepy, but others say it can keep them out of harm’s way, preventing some of the costs—financial and otherwise—associated with a workplace injury.

Amazon has ample resources to put toward safety initiatives—the company has about 8,000 staff who work on safety matters.

Classroom discussion questions:

Why is Amazon changing the warehouse order-filling process?
What are the advantages and disadvantages of this new “moving shelves” approach?

OM in the News: Amazon’s Robotics Ambitions

In the Amazon warehouse outside of Boston, a yellow-plated, gooseneck-like mechanical arm stretched and plucked a plastic jar holding a powdered drink mix out of a yellow box. The new device rose up, spun around with a loud whirring sound and gently placed the jar a few feet away into a gray bin. It twisted again toward the yellow box and soon after grabbed a DVD case, a very different shape, before pivoting quickly again to drop the item into an adjacent bin.

These actions are executed rapidly and smoothly, just like the countless movements that workers undertake to pick and pack millions of online orders each day in warehouses across the world.

But the robotic device, known as Sparrow, is outfitted with suction cups and artificial intelligence software rather than the eyes and hands of humans. It is Amazon’s attempt to automate more of its warehousing operations by turning some of the most physically challenging and repetitive tasks over to robots, reports The Wall Street Journal (Nov. 20, 2022).

Warehouse workers pick items up, sort them and put them down millions of times a day. But Amazon is trying to get Sparrow to do something that robots have long struggled with—picking up a variety of objects as easily as humans can, as well as identifying them by characteristics such as color, shape and size.

Amazon has been criticized for the tough requirements it imposes on workers in the name of efficiency. Warehouse workers there risk of developing repetitive-stress injuries and musculoskeletal disorders (a topic in Chapter 10). Sparrow is meant to be the next step in that safety process. The robot “is going to help really transform our network in those repetitive motion challenges we have,” said Amazon’s VP.

If Sparrow can eventually on a large scale handle items as varied as vitamins, Apple watchbands and packaged board games, it could carry Amazon’s stalling logistics operations forward during a period of cost-cutting across the company. Sparrow can handle millions of items that represent about 65% of Amazon’s total inventory. The process of picking orders accounts for roughly half the labor costs at warehouses. “That really is the kind of Holy Grail and the last final frontier of automation,” said an industry expert.

Classroom discussion questions:

What other robotic advances has Amazon conducted in the past decade? (Hint: see the Chapter 12 Global Company Profile that features Amazon)
Will robots replace workers at Amazon centers? Why or why not?

OM in the News: Amazon’s New Delivery Route Algorithm

Amazon expects its new delivery route algorithm will help it avoid millions of miles driven this year after deploying it across the entire U.S., according to Supply Chain Dive (Aug. 31, 2022). The Customer Order and Network Density Optimizer (Condor) algorithm assesses customer orders before they leave a fulfillment center to identify the most effective shipping options. It began running in a few Amazon delivery stations in January before going live nationwide. “We can enable carriers to deliver more packages to more customers on time, while reducing miles driven and carbon emissions from fuel,” said an Amazon exec.

Amazon vans delivering packages in Hicksville, N.Y.

For Amazon, a decision on how a customer order should be fulfilled is made quickly based on item location and other factors. However, there can be a 5- to 6-hour gap from when an order is placed to when the fulfillment center begins processing the order, and the plan may be updated if a nearby customer places an order later in the day.

This period prior to fulfillment gives Condor a chance to reevaluate the original decision multiple times to see if a more optimal route can be created.

Condor takes into account the entire geographic area a delivery station serves while determining how orders are split into shipments and the sourcing fulfillment center for each shipment. The program’s “breakthrough” is that it is able to reduce the number of possible routing decisions to less than 10 per geographical block, despite the complexity involved.

Delivering the same number of packages in fewer routes and miles driven helps parcel carriers save on last-mile shipping costs, a big reason why UPS and FedEx have launched their own initiatives in this regard. UPS’ pilot involves holding an order for as long as the service agreement allows until it can match another shipment to the same address. FedEx is consolidating routes run by its separate Express and Ground companies via its “Network 2.0” plan.

Classroom discussion questions:

Explain how Condor works.
What is meant by “last-mile” shipping costs?

OM in the News: Amazon’s Forecasting System Misfires

Amazon expanded operations and staff during the pandemic, but demand hasn’t kept pace.

As Covid-19 spread in 2020, homebound customers turned to Amazon at an unprecedented clip. Orders neared that of the holiday season and the company was short-staffed and often out of stock on key items, pushing delivery windows from 2 days to weeks on some items. Founder Jeff Bezos greenlighted a strategy, guided by a revered internal forecasting tool, that overshot the long-term projections for demand. Instead of a permanent shift in consumer behavior, the pandemic-fueled growth in online shopping has slowed as in-person shopping has bounced back.

Early in the pandemic, Amazon opened hundreds of new warehouses, sorting centers and other logistics facilities, and doubled its workforce from 2020 to 2022, to more than 1.6 million people. But demand hasn’t kept pace with that planned capacity. Now new CEO Andy Jassy is cutting back the excesses. He is subleasing at least 10 million square feet of warehouse space, deferring construction of new facilities, and finding ways to end leases with outside warehouse owners. Jassy has also abruptly closed down the company’s bricks-and-mortar retail operation—68 stores—and is paring back its bloated head count.

Part of Amazon’s e-commerce challenges today, writes The Wall Street Journal (June 17, 2022), stem from a piece of technology long prized as a secret weapon, an internal forecasting system called Supply Chain Optimization Technologies, or SCOT. It was designed to incorporate a multitude of factors and spit out projections for product demand and the growth in logistics needed to fulfill it.

SCOT forecasts produced low, medium and high estimates. Because of unprecedented volume in the early days of the pandemic, Amazon repeatedly chose the higher end of SCOT’s estimates. Those estimates meant that the company needed many more fulfillment centers and other infrastructure to keep up. So Amazon aggressively built out new warehouses and transportation hubs, and went on a hiring spree to get customers their packages. But the forecasting technology wasn’t equipped to process an unforeseeable event like the pandemic and caused the company to commit to building infrastructure early in the pandemic that take 18 months to 2 years to come online. When the virus receded, Amazon was left with more planned capacity than orders. After being understaffed for 2 years, the company was suddenly overstaffed.

Classroom discussion questions:

Using Chapter 4 terminology, what type of forecasting system did Amazon employ?
What could the company have done differently, in hindsight?

OM in the News: Amazon’s Capacity Issues

Amazon’s growth has skyrocketed throughout the pandemic, doubling the size of its operations and nearly doubling its workforce over a two-year period. While some of Amazon’s fulfillment network hires during the quarter covered employee absences amid the omicron variant surge, the company quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity, reports Supply Chain Dive (April 29, 2022).

“Capacity decisions are made years in advance, and we made conscious decisions in 2020 and early 2021 to not let space be a constraint on our business,” said Amazon’s CFO. “During the pandemic, we were facing not only unprecedented demand, but also extended lead times on new capacity, and we built towards the high end of a very volatile demand outlook. ”

The tide has turned, however, as consumers have slowed their e-commerce spending activity in recent months. Net sales at Amazon’s online stores dropped 3% last quarter, while Amazon’s fulfillment expenses jumped nearly 23%. UPS, which counts Amazon as its largest customer, reported an unexpected drop in home delivery volume as March e-commerce sales saw their weakest gain in more than three years.

Amazon aims to rightsize its massive fulfillment network in response to demand now falling back to pre-pandemic levels. But this process won’t happen overnight. It will take several quarters for Amazon to grow into the current capacity it has built out. In July, the company was focused squarely on adding capacity to meet the current high customer demand. Three months later, labor was the company’s primary capacity constraint, creating $4 billion in added costs. In early February, omicron added to Amazon’s staffing challenges.

“We hired more people and then found ourselves overstaffed when the omicron variant subsided rather quickly, at least from our standpoint in warehouses,” said the CFO. “So, the issue has switched from disruption to productivity losses to overcapacity on labor.”

One issue that has been present throughout the past year is inflation, specifically for transportation costs and wages. The war in Ukraine has amplified inflationary pressures as fuel costs have climbed, and Amazon is looking for ways to offset the higher prices. This year, it hiked the price of its U.S. Prime membership and introduced its first fuel and inflation surcharge for sellers using its fulfillment services.

Classroom discussion questions:

Summarize Amazon’s capacity issues and their genesis.
Which of the 6 tactics for matching capacity to demand listed in Supplement 7 of your Heizer/Render/Munson text might Amazon apply?

OM in the News: Amazon Air’s Supply Chain Obsession

There is nothing like a pandemic and a European war to highlight the value of logistics, writes The Wall Street Journal (March 17, 2022). Amazon’s growing fleet of planes shows that it is investing hard to deliver—probably at the expense of FedEx, UPS, and DHL.

Amazon’s cargo airline currently makes an average of 187 flights a day, compared with 85 in May 2020.

Since the Covid-19 crisis started, e-commerce purchases have skyrocketed and a lot of belly-hold space in planes has been removed. Many airfreight companies have seized the opportunity to grow. Amazon has taken the lead. It now has as many as 110 jets—less than DHL’s 202, UPS’ 289 and FedEx’s 474 but a lot more than the 50 it had at the start of 2020.

Having previously leased its planes, Amazon started buying some last year as a flood of parked jets entered the secondhand market and freighter conversions surged. This strategy of building extra flexibility and control may herald more encroachment on the territory of FedEx and UPS. Amazon already provides some “third party” services to companies, and could soon start competing head-to-head in business-to-consumer deliveries.

Even after spending heavily on its own vans, trucks and warehouses, Amazon still relies on traditional logistics firms to deliver a lot of packages, which makes for a strained partnership. But the company hasn’t used its planes much to compete directly with the likes of UPS. It typically flies inventory between warehouses on daytime flights, with a focus on two-day delivery. There are clues that this may be changing. Routes seem increasingly designed not just to align with warehouse needs but also to close geographical gaps.

A rule of thumb among OM professors is that companies have good reason to buy a supplier when sourcing a product is subject to a lot of uncertainty. (See our discussion of “vertical integration” on page 448). With uncertainty today pervading the entire global supply chain, Amazon’s logistics ambitions seem ready for takeoff.

Classroom discussion questions:

What are the advantages and disadvantages of Amazon’s strategy?
Provide other examples of vertical integration.

OM in the News: Amazon’s Way of Measuring Work

Amazon warehouse workers who can’t ‘make rate’ don’t last.

Austin Morreale worked at the Amazon fulfillment center in Edison, N.J.. “It was 10 hours of pretty much mind-numbingly boring work, pretty much standing in the same position for the whole shift,” he said. “But at the end of the shift, I was drenched in sweat and aching like I hadn’t ached since I was playing competitive soccer.” Morreale was slow, he says, and kept messing up the patterns for efficiently putting items on robotic shelves—known as “stowing.” He couldn’t “make rate”: Amazonese for keeping up with the pace of work. In Amazon’s fulfillment centers, writes The Wall Street Journal (Sept. 11-12, 2021), human productivity is measured by an overall pick or stow rate calculated for each worker at a robot-fed pick-and-stow station.

On the job, no one ever stood behind Morreale and barked at him to work faster. But twice a day at a stand-up meeting, his shift managers told the group how everyone was doing. They knew because Amazon’s software, and an assortment of sensors in the warehouse, tracked workers’ every move. Knowing that if you don’t make rate you’ll get a warning, triggered by an algorithm, and if it happens often enough your job is in danger, can be a powerful psychological spur to work harder, and possibly to exceed your physical limits. (In 2019, Amazon reported 5.6 injuries per 100 workers. The average rate for warehouses in the U.S. that same year was 4.8 per 100).

More than a century ago, Henry Ford pioneered systems for speeding up work that we take for granted today (see Chapters 1 and 10). What Morreale experienced was Amazon’s 21st-century, algorithm-driven successor to Fordism. It’s a mix of surveillance, measurement, psychological tricks, targets, incentives, sloganeering, and an ever-growing array of technologies. This system of technologically supercharged management can be benevolent, or sinister, or both.

Imagine the delight of Ford, if he could know, to the millisecond, how long it took every worker to complete a task, every day, in every facility he owned. Imagine what early time-and-motion experts Frank and Lillian Gilbreth could have accomplished had they been able to discard their film cameras and replace them with millions of hours of video captured from the digital cameras that watch every station at Amazon’s fulfillment centers.

Classroom discussion questions:
1. How would the use of time studies, detailed in Ch. 10, be impacted by the Amazon approach for setting standards?

2. What are the responsibilities of operations managers in dealing with productivity and safety at their warehouses?

OM in the News: Inside the Amazon Warehouse

“In his drive to create the world’s most efficient company, Jeff Bezos discovered what he thought was another inefficiency worth eliminating: hourly employees who spent years working for the same company,” reports The New York Times (June 15, 2021) in a very critical analysis of Amazon operations. Longtime employees expected to receive raises. They also became less enthusiastic about the work. Bezos came to believe that an entrenched blue-collar work force represented “a march to mediocrity.”

amazon1

In response, Amazon encouraged employee turnover. After 3 years on the job, hourly workers no longer received automatic raises, and the company offered bonuses to people who quit. It also offered limited upward mobility for hourly workers, preferring to hire managers from the outside. It worked. Turnover at Amazon is much higher than at many other companies — with an annual rate of 150% for warehouse workers, which means that the number who leave the company over a full year is larger than the level of total warehouse employment. The churn is so high that it’s visible in the government’s statistics on turnover in the entire warehouse industry: When Amazon opens a new fulfillment center, local turnover surges.

At Amazon, workers sometimes find out about a new shift only the day before, scrambling their family routine. When workers want to get in touch with human resources by phone, they must navigate an automated process that can resemble an airline customer-service department during a storm. Employees are constantly tracked and evaluated based on their amount of T.O.T., or time off task. One employee who had earned consistent praise was fired for a single bad shift.

As Bezos prepares to step down as CEO, he says he wants to change Amazon’s workplace culture, stating “We are going to be Earth’s best employer.” Still, it is not at all clear that Amazon will change its basic approach to blue-collar work. The constant churning of workers has helped keep efficiency high and wages fairly low. Profits have soared, and the company is on pace to overtake Walmart as the nation’s largest private employer. Bezos has become one of the world’s richest people. People want to believe that being a generous employer is crucial to being a successful company. But that isn’t always true.

Classroom discussion questions:
1. Evaluate Amazon’s warehouse employee strategy.
2, In Chapter 2, we we provide 3 strategies for competitive advantage. Which does Amazon employ?

OM in the News: Amazon and Injuries

Amazon recorded 5.6 injuries per 100 workers in 2019, the last full year of data, compared with the 4.8 rate nationally for the warehousing sector. So the firm, after years of criticism over worker safety at its depots, is establishing a program focused on improving the health and wellness of its hourly warehouse staffers, reports The Wall Street Journal (May 18, 2021).

The new program, called WorkingWell, aims to better educate employees on how to avoid workplace injuries and improve mental health on the job. The firm began testing parts of the program 2 years ago and plans to expand it to 1,000 facilities by the end of the year. Amazon said it aims to cut recordable incidents in half by 2025.

amazon2

Amazon, which employs about 950,000 people in the U.S., says it is acting because of the frequency of workplace injuries in the warehousing industry and because the coronavirus pandemic has heightened the awareness of healthcare needs. It is particularly concerned about musculoskeletal disorders, known as MSDs, which account for 40% of its work-related injuries.

Under the WorkingWell program, warehouse employees gather on a rotating basis near their work stations to watch videos about injury prevention, including how to lift items properly. Employees also are given hourly prompts at their stations that guide them through 30-60 second stretching and breathing exercises.

The company also is installing kiosks where employees can watch videos that show guided meditations and calming scenes and sounds. New wellness zones provide dedicated spaces for workers to stretch or meditate. The company also is developing staffing schedules that rotate employees among jobs that use different muscle groups to reduce repetitive-stress injuries. Amazon’s program does not include a significant reduction in the rate at which employees are expected to work. That pace has been a source of worker complaints. Employees, for example, are expected to take about 300 items off shelves each hour.

Experts say introducing educational tools in workplaces is often not enough to substantially reduce injuries, and that measures that provide mechanical lifts or reconfigure how a workplace is organized have a bigger impact.

Classroom discussion questions:

Comment on Amazon’s new program.
What else can the firm do to improve worker safety?

OM in the News: The Amazon “Factory” and Unions

All of our students are knowledgeable about Amazon, its growth, its products, and its hyper-wealthy chairman, Jeff Bezos. Many may have followed the news about the recent attempt to unionize at Amazon, starting with the Bessemer, Alabama, fulfillment center. The New York Times (April 12, 2021) takes an interesting perspective on the story, tracing the Bessemer facility to its origins as steel plant in the mid-20th century that provided middle-class lives to its workers. Now defunct, the steel factory is still a “factory”, writes The Times, but of a different sort, with Amazon paying $15 per hour, double the federal minimum wage.

That is not the kind of pay that seems likely to help again build a thriving middle class. And Amazon jobs are looking more and more like the future of the U.S. economy, with the company growing from 750,000 to 1.3 million workers in the past 18 months.

amazon book

A new book about Amazon, called “Fulfillment,” points out that Amazon’s warehouse jobs have a lot in common with the industrial jobs of the past. They are among the main options for people who graduate from high school or community college without specific job skills. They are also physically demanding and dangerous.

Fulfillment reminds us about the injuries and deaths that came with old factory jobs, and documents the similar risks that warehouse jobs can bring. Jody Rhoads was a 52-year-old mother in Carlisle, Pa. Her neck was crushed by a steel rack while she was driving a forklift in an Amazon warehouse, killing her. (“We do not believe that the incident was work related,” an Amazon manager reported to the government, falsely suggesting her death was from natural causes.)

One former Amazon worker adds: “Amazon is reorganizing the very nature of retail work — something that traditionally is physically undemanding and has a large amount of downtime — into something more akin to a factory, which never lets up.” And rather than working in teams of people who are creating something, warehouse workers often work alone, interacting mostly with robots.

Classroom discussion questions:

Why did the Bessemer workers soundly turn down the union organizing effort?
How do fulfillment center jobs resemble factory jobs? How do they differ?

OM in the News: Amazon and the Choke on NYC

When the pandemic gripped New York City, it propelled an enormous surge in online shopping that has not waned, writes The New York Times (March 4, 2021). But it also highlighted the need for an unglamorous yet critical piece of the e-commerce infrastructure: warehouse space to store and sort packages and satisfy customer expectations for faster and faster delivery. Amazon today has 12 warehouses in NYC and more than two dozen in the suburbs, totaling over 7 million sq. ft. Having warehouses in the city is more cost effective and can trim roughly 20% off delivery expenses compared with deliveries that originate in New Jersey. No other large competitor has a single warehouse in the city.

The onslaught of e-commerce has meant a flood of delivery trucks crowding streets and vying for limited parking, resulting in 500,000 parking violations

While New York’s narrow streets, chronic traffic jams and brutal lack of parking are all formidable challenges, the city also has a severe shortage of warehouses just when they are most needed to properly grease an efficient delivery system. Roughly 2.4 million packages are delivered in the city every day, nearly half a million more than before the pandemic, And 80% of deliveries are to residential customers, compared with 40% before the outbreak.

The online shopping boom will only worsen problems like congestion and pollution that were already bad before the pandemic, sending flotillas of delivery trucks across the city and flooding sidewalks and lobbies with packages. The e-commerce demands also place added pressure on warehouse workers and drivers to fulfill and deliver orders on time, as customers now expect. Just-in-time delivery and last-mile delivery means you need to be very close to customer to provide the level of service that people now expect.

Classroom discussion questions:

Why is Amazon investing in so many warehouses in the area?
Will online demand drop after the pandemic is under control?