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Start with the customer and work backwards

Amazon’s Tim Collins about customer obsession, self-criticism and the top trends affecting supply chain management.

The ”grand finale” of the Supply Chain Conference was delivered by Tim Collins, Vice President World Wide Logistics at Amazon, who spoke about Amazon’s customer obsession and his thoughts on supply chain challenges and trends ahead.

When Jeff Bezos founded Amazon in 1994, the goal was to create the earth’s most customer centric company. 23 years later, Amazon’s net sales are 136 billion USD (2016) and still growing – and most importantly, still with Jeff Bezos’ customer obsession as the basic business principle.

– We start with the customer and work backwards, constantly asking ”what do customers want?”. And we have identified that it comes down to price, convenience and selection. These are our three consistent pillars and we build our business around them. We see ourselves more like a manufacturing company. Our business is about continuous flow, optimizing bottlenecks and lean thinking, says Tim Collins who started his Amazon career in 1999, holding a number of different management positions until 2014, when he became Vice President Global Community Operations at Uber, before returning to Amazon in 2016.

Other corner stones for Amazon are constant innovation and to do things ”inhouse” as much as possible, including operating transports and deliveries.

Top trends – speed, product cycle and new markets

When it comes to top trends within supply chain, Tim Collins points out three major areas.
– Clearly, speed is important. Everywhere people want their things faster. Number two is the development cycle of the products, where innovation and digitalization makes product development dramatically faster. Today you can design a car in weeks rather than years. The third aspect is the rapid development of new markets, like India which is growing exponentially. They will also become a huge source of engineers, which will very much shape the global supply chain in the following decades.

Keys to successful supply chain

When it comes to digital strategies for successful supply chain, Tim Collins shares three key take-aways:

– You have to have a function for finding faults. We have a huge amount of information, so every part of the system must have feedback loops and a mechanism where people can point out that something’s broken or doesn’t work well. Number two is being open to this feedback and open to criticism, which is one of the most important leadership principles; to be self-critical.

The third key is to build your own solutions and grow functions and solutions internally as much as possible, says Tim Collins:

– Nobody cares about your customers more than you do. So if you have the ability to build your own solutions for your specific needs, that’s very powerful.

Global presence demands local understanding

Combining local presence with global efficiency in supply chain can bring many advantages, but also some pitfalls:

– You can leverage a global supply chain for efficiency and selection, with many advantages from a network optimization point of view. But you must also understand local customs and needs, otherwise you won’t succeed. India is again an example; unless you accept cash, you won’t have a business there. Until we learned that, we knocked our head against the wall. Our system was not at all designed for handling cash, so we had to innovate to learn how to do business in India and other places where ”cash is king”, says Tim Collins.

Can you grow too big?

One question from the audience was if you can become too big and dominant – how does Amazon work to maintain the culture and agility, not leaning back and become satisfied?

– Number one is to talk about it a lot and being self-critical. If you work at Amazon, you’ll hear a lot about what’s broken. We try to stay very humble, and it’s okay to fail – failure is important to drive innovation, says Tim Collins who also points out that Amazon’s growth is actually an engine for other companies.

– More than half of our stuff is sold by small businesses that are given the opportunity to grow. We love those stories and are very proud of them. So you could almost argue the opposite, that if we would slow down, it would stifle many small companies.

Amazon’s origin in Jeff Bezos’ small ”garage business” is clearly still an important legacy, which is also reflected in their view on the competition and threats:

– We are not afraid of all the big companies out there. Our biggest threat is that guy in the garage…

See Amazon’s filmed presentation in the Optilon Academy post Amazon’s supply chain is inspired by manufacturing.

Do you want to know more about how Optilon can help your business become more independent?

Please contact Optilon’s Sales Director Jens Stenquist on +46 709 379 285 or jens.stenquist@optilon.se.

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