How much of its supply chain will Amazon control in the future?
In an epic note published Wednesday, analysts at Deutsche Bank examine, among other things, the potential that lies in Amazon’s growing supply chain control.
Deutsche Bank outlines what it calls a “blue-sky” scenario in which Amazon could reverse the entire logistics footprint it has built so far, opting to go deeper down the chain on the sourcing side. Which is a way to say the company could get control of products nearly to the factory floor level in Asia.
Deutsche Bank adds that this new chain could increase private label opportunities for Amazon and greatly reduce the amount of time products spend in the company’s supply chain.
Here are the steps Deutsche Bank lays out below for Amazon to create its entirely new supply chain:
- Amazon leases ships to speed up the sourcing of goods from China
- Amazon sets up a mega-fulfillment centres near several ports in China (or in other APAC regions where factories spring up in the future) that can manage sorting of goods into location-specific pallets — at a freight-consolidation facility
- The ships serve as “active sortation centres” while moving product across the Pacific and Atlantic, potentially taking advantage of the “anticipatory package shipping” patent from 2013, but on boats (vs. trucks) whereby Amazon predicts demand in every coastal population center and has inventory-in-transit
- As orders come in, Amazon sorts items on the ships and in smaller sortation centres on the other side of coasts — ie “freight deconsolidation” facilities, the orders are labelled and loaded directly into trailers eliminating intermediate storage, solving one of the biggest inefficiencies in today’s logistics supply chain
- Orders are routed using self-driving trailers to local sortation centres or drop off points for Amazon’s own carrier, USPS, UPS, and FedEx for last mile delivery
And here’s what this might look like:
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.