User:Damitha2021/sandbox

Introduction

Amazon is company founded by Jeff Bezos in 1994 out of his garage as an online bookstore in Seattle USA. The company has exponentially grown to become the world’s largest retailer & the market leader in cloud computing. Amazon employs approximately 1,298,00 full-time and part-time employees as at December 31,2020.

Unlike other online retailers who invested heavily on advertising and branding, Amazon invested in their supply chain in order to meet the expectations of their customers including on time delivery, accurate delivery, and providing value for money. Amazon has a profit oriented autocratic leadership culture stemming from founder CEO Jeff Bezos himself. Even though there is growing criticism about the stress level of their employees and the impact to the sustainability of the planet, Amazon brand equity and value has automatically grown by delivering on the customer promises.

Productivity is about the reconciliation of inputs vs outputs. While productivity is a fairly specific concept related to the ratio between output and input, performance is a term which includes almost any objective of competition and manufacturing excellence such as cost, flexibility, speed, dependability and quality. (Tangen, n.d.)

whereas effectiveness is usually described as ‘doing the right things’, while efficiency means ‘doing things right’.

Challenges of effectively and efficiently managing productivity and performance to increase profit.

1.     Fulfillment process - This process runs from picking up a product from the shelf, then to be sorted, packed, transported and delivered at the last mile. There are many challenges meeting fulfillment promises including the lowest price, on time and accurate delivery. In addition, failure predict customer demand which results in failure to optimize the fulfillment network increases net shipping cost by requiring long-zone or partial shipments. Inability to forecast product demand where amazon maintains inventory for other companies may result in unexpected costs for storage and other harm to business and reputation.

2.     Direct and indirect competition – The rapid growth of the industry and consumer behavior shift is creating competitors across geographies, in different industries, other ecommerce stores, physical stores, infrastructure computing services, transport and logistics services and many more.

3.     Supply chain management - Amazon’s supply chain management challenges include single sources of supply, not having long term arrangements with most suppliers to guarantee availability or particular payment terms, or extension of credit limits. In addition, the increased risk of violations by suppliers or vendors of applicable laws, regulations, intellectual property rights can result in reputational damage, limit growth and negatively affect operating results.

4.     Managing Big Data – Amazon being the largest retailer in the world, has the wealthiest data at hand. While data is one of the most important resources without the correct technologies and data management systems amazon can suffer from data paralysis. Effective use of data to forecast product demand, consumer behavior and inventory management is of utmost importance in increasing productivity.

5.     Achieving CSR goals – Amazon has embarked on a CSR agenda to achieve the triple bottom line. However, it is paramount for amazon to develop sustainable leadership that will bring about change that gets the buy in of employees for CSR goals. To achieve the CSR agenda, amazon culture will have to shift towards employees taking ownership of CSR targets and where employee performance is not only measured on quantitative profitability targets but also qualitatively on CSR Initiatives.

6.     Employee Retention – Competition for skilled employees in the technological industry has historically been intense. The loss of executive officers, key employees can be harmful to the business.

Opportunities to effectively and efficiently managing productivity and performance to increase profit.

1.     Commitment to Triple bottom line – Amazon has committed to being sustainability champions. An opportunity for increasing productivity and performance is the commitment to the triple bottom line and sustainability.

2.     Automation - In the case of amazon the nature of the business is such that many tasks are repetitive. Therefore, there are an ideal candidate for automation. This will make the jobs of employees vulnerable and there would be eventual retrenchment, which will demotivate employees who remain. Therefore, amazon needs to multitask and multi skill the employees so that they can be moved around and job security improved. According to the CSR agenda Amazon plans to optimize its supply chain with automation at multiple levels. This includes the use of Ai, Drone, Robots to perform repetitive tasks which will significantly increase efficiencies and reduce the carbon foot print. Even though, this could result in employee retrenchment, amazon should inculcate multiskilled employees who could adapt to other areas to minimize retrenchment.

3.     Strategic Alliances and Partnerships – Amazon can explore outsourcing, franchising, licensing opportunities, logistics and shipping partners. While global partnerships have inherent treats associated, the opportunities to increase productivity could outweigh.

Management of Human resources with consideration for sustainability of the planet

Amazon has several issues with regards to Human resources including employee burn out, lack of work life balance, toxic work culture and employee dissatisfaction.

Therefore, amazon should make a strong commitment to human resource management and human resource development giving equal focus to both areas. Also, an employee centric performance management system should be developed with both quantitative KPI’s and qualitative KPI’s linked to CSR goals which will get the buy in of the employees for achieving organizational sustainability initiatives.

Amazon is fairing extremely well with regards to profitability and shareholder interest. However significant importance is needed to the other areas of their commitment to TBL. Amazon needs to focus on creating a people-oriented culture by focusing on sound HR principles such including empowerment, recognition, rewards, engagement and motivation. It is the responsibility of the board at amazon to set strategic human resource management direction that setout clear policies that outline performance, training and development.

Amazon has talented and committed employees who add value to the organization. A change in human resource management and development practices infused by a strong commitment to the triple bottom line is needed to increase employee retention. Amazon should treat employees as assets and not as resources. An Amazonian culture needs to be inculcated through which a sustainable competitive advantage could be achieved resulting in further growth in profitability and shareholder value

Amazon is a customer centric organization with a commitment to delivering a seamless customer experience which is a combination of lowest price, fastest delivery and error free fulfilment. While processes and systems are key to achieving these promises, an empowers and motivated workforce will be the ensuring factor.

Amazon has made very optimistic sustainability commitments in the CSR agenda. However, these commitments are currently at the top management level and haven’t cascaded to other levels of the company. It is important to create a loyal, committed and empowered workforce who take ownership to make these commitments a reality.

Conclusion

Amazon needs to focus on achieving the triple bottom line. Even though, they have achieved profit in the past, the focus on people and planet will automatically increase productivity and performance which will further increase profits. Improving employee motivation, work culture, service quality in the short term through sustainable leadership will enhance long-term profitability and shareholder value.

Recommendations

'''Performance management systems. (PMS)'''

PMS is used to establish an objective method of managing employee performance. They generally consist of KPI’ s. Amazon should implement a system that not only use quantitative measurements but also qualitative in terms of attitudes, values, team work, interpersonal relationships and commitment to sustainability. For example, qualitative measurement of CSR initiatives promotes employee ownership of overall CSR objectives and targets.

Training and empowering line managers

In modern organizations the management of human resources are expected to be managed by line managers with very little involvement from the HR department. Since Amazon has significant improvements to be done in HRM a structured training program should be in place for line managers to be equipped to manage people particularly in terms of managing performance, motivating employees and handling operational grievances. Also, Amazon need to give utmost importance to training and development of employees.

High Performance Work Systems

Amazon is focused on delivering the promises of on time delivery, accurate delivery, and value for money. To meet these expectations employees need to demonstrate agility which can be developed through a rewarding organizational culture with  strong motivation, where employees are challenged to go beyond the extra mile for mutual benefit.

References

Annualreports.com. 2021. Amazon Annual Report 2020. [online] Available at:  [Accessed 14 July 2021].

Amazon Web Services, Inc. 2021. AWS Culture. [online] Available at:  [Accessed 13 July 2021].

Heizer, J., Render, B. and Munson, C., 2019. Operations Management. Harlow, United Kingdom: Pearson Education Canada.

Tangen, S., n.d. Understanding the concept of productivity. Proceedings of the 7th Asia Pacific Industrial Engineering and Management Systems Conference (APIEMS2002), Taipei,.