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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 226.19

-1.8%

3:59 PM EST

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To: Glenn D. Rudolph who wrote (60934)	6/6/1999 11:03:00 PM
From: Lizzie Tudor	Read Replies (2) of 164684

Do you know how good automation is for various products that number in the millions in variety to be fulfilled? I am referring to picking, boking, shipping without much labor involved. Also, the product has to be placed in the wharehouse via automation too without labor to much of an extent. Glenn I think you copied some erroneous stuff in your post so I'm not quite sure what you are asking here.... but to take a stab at it, picking/boxing/shipping can be separated into 2 parts, first there is demand fulfillment - thats when you decide which orders you can satisfy based on demand, this is the manufacturing part of the ERP software. Some orders expire and some are partial fills etc and the software decides how to optimally create the "pcking batches". Once something is in a picking batch some people have a wms (warehouse management system) in place to cut down on people requirements in the warehouse. The picking batches come up on the WMS software screen - the warehouse person sees it as, order#1 line2 isle 3, order#2 line2 isle4, order#3 line5 isle 6 break - the sole purpose of this is so one guy can drive his truck around once and pull orders in a contiguous fashion. Then shipping automation kicks in to use the best shipper (we've posted on this before). Of these 3 steps at this moment I think shipping automation where amzn can pick the cheapest shipper on a per piece basis would actually add the most to the bottom line - my guess is 1-2% off the cost of sales. The problem is there are no shipping packages like this and its a biz model change with the shippers so this is the most labor intensive. Second the ERP software adds to the bottom line with optimal order management, you can't get along without that and I can't put a % savings on it because order management has so many components. A lot of companies increase mfg efficiency by 20% with erp though. The biggest thing new erp software adds over older technology is it connects orders and mfg efficiently so you fill the best orders first. The next best thing is it helps to optimize purchasing from suppliers. Those 2 things are really key. The wms is a hard call as to what it will do for amzn. When you have a small wh a wms actually costs more than it is worth. But for a big wh its a necessity. At most a wms can add 1% but thats if labor costs are high - because thats all it saves - but amzn warehouses are in the cheap areas so who knows.

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