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- June 4, 2014 -

 
       
   

Supply Chain Graphic of the Week: Amazon's Changing Network Strategy

 

Pace of Fulfillment Center Construction Continues On, but Now Focus is On Major Metro Markets, not Low Cost, Less Developed Areas

 
       
   

By SCDigest Editorial Staff

 
   

 

Most of us know that Amazon has been constructing new fulfillment centers almost as fast as it can build them.

But are you aware how that its overall network stratrgy is evolving?

 

No one - and we mean no one - follows the goings on of Amazon's fulfillment center strategy like Marc Wulfraat at MWPVL International, who also happens to be an SCDigest expert insight columnist.

 

MWPVL tracks in detail Amazon's FC activity both in North American and across the globe, which includes the chart below, taken from the company's web site, which also enumerates each Amazon North American FC.

 

Amazon's US Fulfillment Center Network (as of the start of 2014)

 

 

Source: MWPVL International

 

According to MWPVL, as of May 2014, Amazon operates 55 FCs in North America, representing more than 43 million square feet of space (not including any mezzanines.). Those numbers do include facilities brought in as part of its Zappos acquisition, but not those of subsidiaries such as Diapers.com.

 

Those facilities are of multiple types, such as buildings for large and also smaller sortable items, non-sortable items, replenishment centers for other FCs, returns processing facilities, etc. That is in part why you see several facilities clustered together in some cases.

 

Additionally, Amazon has some 14 new FCs, representing about 11 million square feet, currently planned or under construction in North America.

 

But observe the change as to where these new buildings are being constructed. The existing network (blue dots) were largely in more rural areas, or at least not highly urban - regions where land and labor costs were lower, and often where certain tax deals could be worked out.

 

Now, the facilities under construction are generally in urban areas - the New York City area, Chicago, Philadelphia, etc., as shown in the larger red dots.

 

"The new Amazon distribution strategy calls for the fastest level of order turnaroud time (i.e., same day) for all major cities within the US," MWPVL says.

 

The company appears to also be planning to create a network of as many as two dozen FCs for its Amazon Fresh grocery delivery offering, again in major urban markets.

 

There really has been almost nothing like this in the history of the supply chain.

 

Any Feedback on our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback section below.

 
   
 
   
 

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