Amazon’s nature of business is depends on the wide diversity of logistical strategies that aims to deliver product to their customers anywhere in the world. The daunting task of shipping the goods on time is achievable because of the available technologies that encompasses a great deal of solution to Amazon’s most critical part of operations. Part of Amazon’s supply chain solution is the employment of 4PLs both the traditional and virtual. When talking about traditional, it defines the properties of the 3PL solution combined with an outsourced provider, thus comprises the fourth party. In definition 4PLs are the independent, non-asset based and singularly accountable integrators of the supply and demand chain process (Win, 2008). Amazon adopts to phrase 4PLs because they rely largely on logistics.
However, it cannot be right to assume that Amazon employs the services of 4PLs. This is because they have the assets such as warehouse and order processing facilities all around the world that actually performs the functions that a fourth party logistics provider offers. The 4PL is supposed to function as the warehousing provider, the shipper's outsourced supply chain department that would handle the entire supply chain process from beginning to end (Fourthpartylogistics.wordpress). However, Amazon only outsource the transportation part of logistics because that is the only thing that they do not have in their assets, but the rest of the supply chain process are being done in the company's several order processing facilities all over the world. This assessment explains the traditional type of 4PL segment. On the other hand, Amazon employs one type of 4PL service, which is the virtual logistics service providers. The Virtual Logistics Inc. or VL is among the top names that Amazon outsourced to provide supply chain data integration.
The main function of VL in Amazon is to integrate the flow of electronic business documents produced by the in-house applications and ensure that all the organizations involve in the process will receive documents as intended. VL's system was suitably designed for online stores such as Amazon. Among the many function that VL serves in logistics part of the company's operation is EDI processing, B2B, B2C social media integration and E-commerce. Since the objective of the virtual logistics service providers are to connect the different organizations associated to Amazon, it would be more effectively utilized if the company also establishes a link between their customers and other service providers that they outsourced such as freight forwarders. Another effective use is of VLSP is to have the customer's contact details forwarded to the carrier service provider to let the customer know that their order from Amazon is already on its way.
Most of the time the only notification that the customer is getting from the online store is the order confirmation, date of delivery, cost of the purchased item and payment options. It is seldom observed in many online stores that they actually keep track of the customer's order, sending details of its trip from one point to another, or at least oblige the carrier services to provide a real-time and automatic tracking notification. The use of VLSP has its own set of advantage and disadvantage. The downside of using VLSP is that it requires rigorous planning before the implementation and most of the time subject to trial and error. There is also a risk of technology breakdown if the company rely too much on VLSP, otherwise they have to have a contingency process that would disrupt the entire logistical process. On the other hand, VLSP offers more advantage in the long run. This is because the integration of VSLP to the logistics operation would allow a simpler, faster and easier delivery of information, products and services on both ends of the supply chain process.
Fourthpartylogistics.wordpress.com (n.d.). Fourth Party Logistics | Chronicling the Fourth Party Logistics Provider Concept. Fourth Party Logistics. Retrieved November 2, 2012, from http://fourthpartylogistics.wordpress.com/
Win, A. (2008). The value a 4PL provider can contribute to an organization, International Journal of Physical Distribution & Logistics Management. Bradford: 2008, 38(9).