CNBC has a story this morning about the logistics transformation taking place at Amazon, where the company is "focusing on using artificial intelligence to speed up deliveries — by minimizing the distance between its products and customers." The goal is to make sure that inventory is in the right place at the right time.
"Amazon has been focusing on a so-called 'regionalization' effort to ship products to customers from warehouses closest to them rather than from another part of the country.
"But doing so requires technology that is capable of analyzing data and patterns in order to predict what products will be in demand and where.
"That’s where AI comes in. If a product is nearer to customers, Amazon will be able to make same-day or next-day deliveries, like what its Prime subscription service offers."
Progress is being made, the company says: '"In the United States, more than 74% of the products customers order are now from fulfilment centers within their region."
In a Wall Street Journal story about the same subject, it is pointed out that Amazon has been opening these "same-day centers" around the country, "and could expand to at least 150 same-day centers in the next several years … The facilities primarily store items that are in high demand for quick delivery, such as toiletries and electronics."
CNBC notes that Amazon also is focused on realigning its transportation priorities, focusing on "mapping and planning routes, taking into account variables like the weather." And, Amazon is upping its use of robotics "in its fulfilment centers to help with repetitive tasks such as lifting heavy packages. The company said that 75% of Amazon customer orders are handled in part by robotics."
- KC's View:
Amazon's troubles in recent months have suggested that the bloom is off the company's rose, and to be fair, that's a narrative that I have bought into - there has been an undeniable sense that Amazon has been more reactive than ever before, and that its priorities have shifted away from customer satisfaction and toward short-term profitability that will satisfy Wall Street.
But, to be equally fair, everything that CNBC and the Journal are talking about in these stories are elements in creating customer value. It may not be the sexy stuff, and it may be more about the mundane than mojo, but in the long run these are the building blocks of long-term success.
Which is why Amazon is talking about them so much. These elements will satisfy analysts and customers. Which is the secret sauce.