Lean supply chains tend to favor scale. In this way, they can take advantage of economies of scale when they work with suppliers abroad and then work with logistics companies to move the suppliers’ products to their destination.
The problem with the large-scale view of supply chains is that it often eliminates smaller boutique suppliers and, in online retail, this can limit the product line. The reason is that smaller boutique supplies are an expensive addition to the product line.
But Amazon just went in a different direction.
Amazon has started a logistics company that focuses specifically on working with overseas boutique suppliers, consolidating shipments from these suppliers and, in the process, offering products to its buyers that are only available at high-priced domestic boutique retailers.
A belt that sells for $400 at a clothing boutique but sells in small quantities can now be purchased from a boutique manufacturer in China, consolidated with other boutique purchases, and shipped to Amazon fulfillment centers around the world. world. The retail cost on their site, $125.
Which is the message.
Lean’s usual approach is to maximize efficiency. But this often limits options to a few select strategic supply chain partners capable of delivering high volume at low cost. If the goal is expanded to also consider revenue, it may be appropriate to incur slightly higher supply chain costs. The network of higher supply chain costs with higher revenues can improve the shopping experience, attract new customers and enhance the brand of online retailers.