Amazon's Newest Disruptions - Modern Distribution Management

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Amazon’s Newest Disruptions

Latest threats include convenience store model, supply chain positioning.

The words "Amazon threat" appeared less in our annual Industry Outlook Survey than in years' past, but the online giant appears to be brewing some new technologies that could have an especially disruptive effect on distribution.

For example, the company's latest creation is Amazon Go, a "convenience-store-sized shop staffed by robots and sensors rather than humans," according to a recent article in Fortune, Why Amazon's Convenience Store Test Is Worth Notice.

While it seems to be a bigger threat in the B2C realm, it could also be another way for Amazon to disrupt the industry and your company. "Amazon is like a computer virus: It probes, it examines, it learns. And then it attacks," according to the article.

For example, the technology could disrupt distributors who focus on vending in manufacturing shops because it could simplify and improve the inventory control process. Storerooms could be fully automated, with restock orders automatically sent when needed.

That's not all. "Amazon is building an app that matches truck drivers with shippers, a new service that would deepen its presence in the $800 billion trucking industry," according an article in Business Insider.

While it seems to be a bigger threat to the logistics industry, the Uber-like app gives the company a more prominent role in the supply chain, something all distributors must be wary of.

"This is the latest in Amazon's rumored plan to become a full-scale logistics company that controls the entire delivery cycle," the article says. "Over the past year, Amazon has purchased thousands of trailer trucks and dozens of cargo planes while launching new 'last mile' services like Amazon Flex that take packages straight to the end customer."

The "Amazonification of the supply chain," as Wade McDaniel, vice president of supply chain solutions, Avnet Inc., Phoenix, AZ, explained it to MDM for an article earlier this year, will continue to accelerate, even if fewer distributors list it as a direct threat.

As the Fortune article notes, "When Amazon tries something new, it is worth paying attention."

Look for our 2017 industry trends in the Dec. 25 issue of MDM Premium.

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