Project Descriptions AMAZON.COM, INC.- CANADA Alternative Fulfillment & Labor Planning Solutions for the Greater Vancouver Area

AMAZON - CANADA

Alternative Fulfillment & Labor Planning Solutions for the Greater Vancouver Area

Student Team: Ayush Gupta – Master of Business Administration Santhosh Narayanan – EGL (BSE & MSE in Industrial and Operations Engineering)

Project Sponsors: Sumegha Kumar – Director of Canada Customer Fulfillment (CACF) Operations Anshuman Kumar – Director Regional Operations Arun Srivastava – General Manager of Fulfillment Center Operations

Faculty Advisors: Mark Daskin – College of Engineering Stefanus Jasin – Ross School of Business

Amazon.com, Inc. is a multinational technology company with a valuation of $1.7 trillion. It is the number one visited online retail site in the US with a growing global presence. Amazon owns and operates its own complex logistics network that ensures fast and accurate delivery of their products in an effort to be “the most customer centric company in the world”. Products ordered on Amazon are generally processed and packaged at Amazon owned fulfillment centers (FC), then shipped out to the customer. FCs are critical to the speed of delivery as they allow for better placement of products near the customer.

Canadian Customer Fulfillment (CACF) has struggled with the Vancouver region as they are unable to build large FCs to support the 70% YoY growth in demand. Amazon is unable to build more FCs due to two main challenges: rising real estate costs and a limited pool of relevant workforce. As a result of limited FCs in Vancouver and understaffing within FCs, only 30% of demand is fulfilled in local FCs. The remaining 70% of demand is long-zoned (fulfilled in East Canada and shipped to the West) resulting in high shipping costs.

To address this concern, the Tauber team developed strategies to retain and attract labor and move fulfillment outside of traditional fulfillment centers. First, the team analyzed the effects of increased wages, better benefits, and attendance policies on Labor Order (LO) fill. Second, the team identified automation opportunities within FCs to reduce Amazon’s dependence on labor. Finally, the team explored external fulfillment strategies in developing markets such as India, Brazil, UAE, etc. and devised a launch & expansion plan for two external fulfillment programs in Canada.

The team’s recommendations consisted of a wage increase, transitioning to a new, rewarding attendance policy, the development of affordable housing to attract new labor, the implementation of five automation technologies in FCs, and the launch of two external fulfillment channels. Multiple analyses were conducted on the operational and financial viability of our recommendations.

The Tauber team’s recommendations to help Amazon’s Canadian Customer Fulfillment department better staff fulfillment centers and optimize cube space in Vancouver is expected to yield an extra 15,598 labor orders filled, 202K ft3 reduction in cube requirement, and a total of $142M in cost savings on reduced attrition, increased productivity, and decreased long-zoning over three years.

AMAZON.COM, INC.

Dynamic Preventative Maintenance

Student Team: Kazuma Katsuki – Master of Business Administration Deep Patel – Master of Science in Engineering in Nuclear Engineering

Project Sponsors: Bobby Singh Samra – Regional RME Manager

Faculty Advisors: Shima Nassiri – Ross School of Business Prakash Sathe – College of Engineering

Amazon Logistics (AMZL) Reliability and Maintenance Engineering (RME) team oversees to lead a large maintenance team that is responsible for maximizing equipment uptime, ensuring equipment maintenance, and leading improvement projects in a fast-paced, dynamic work environment within Amazon Last Mile Delivery stations. AMZL network is growing rapidly at a pace of 89% YoY growth rate. This rapid expansion has led to increased complexity within the delivery station network which in turn has led to emergence of varied types of issues across RME operations.

The goal of the project is to create a logic and a process to optimize AMZL’s current conveyance Preventive Maintenance (PM) Plan, as opposed to being at fixed intervals based on Original Equipment Manufacturer (OEM) recommendation. The current PM Plans can cause equipment to be under/over maintained, adversely affecting operational efficiency.

The Tauber team has proposed the Risk and Cost Minimizing Cadence (RCMC) model to optimize the PM cadence. Across AMZL, the savings from RCMC result in a 3-year Net Present Value (NPV) of $23.0M: coming from $7.9M of increased RME Technicians productivity YoY and breakdown reduction savings of $496.7k YoY. This optimization is based on a logic driven by risk of breakdown and costs associated with PMs and breakdowns. The RCMC is strategically customized to site-specific characteristics. Each RCMC Strategy is applicable to a subset of AMZL sites classified by factors like conveyance OEM and an average number of packages processed in a day at one site.

The proof of concept is being verified by piloting RCMC Strategies at 10 AMZL sites. The pilot is designed to be six months long due to the longitudinal (long-term effect) nature of this study. The preliminary result from the first three weeks is a statistically significant 45.5% reduction of breakdown rate (breakdowns per equipment per month) compared to the pre-pilot breakdown rate across the Pilot sites. To circumvent the time limitation, an analytical model was used to quantify the reduction in breakdown rate. The model predicts a 31.6% reduction in breakdown rate.

AMAZON – NEW SITE

New Site Launch

Student Team: David Lee – Master of Business Administration Christina Weiberg – Master of Business Administration

Project Sponsor: Mike Curry – Launch Program Manager, NACF Team Lead

Faculty Advisors: Debra Levantrosser – College of Engineering Eric Svaan – Ross School of Business

Amazon is dedicated to creating the best customer experience by providing a shorter lead time of packages based on expanded operational capabilities. To make the package shipment process efficient and maximize customer satisfaction, the Amazon Robotics Sort Centers (ARS) and Inbound Cross Docks (IXD) play a central role by automatically sorting inbound merchandise and speedily delivering outbound packages to the next fulfillment step, using industry-leading robotics and conveyors technologies. ARS and IXD are the most technologically-advanced Amazon fulfillment centers.

The RME Launch team is in charge of launching new Amazon sites and the NACF business division manages ARS and IXD’s launch process. As the launch process involves ensuring equipment and staffing readiness among supply chain disturbances and labor shortages in 2021, it is mission-critical for the launch team to improve process efficiency, to have visibility on the process, and to mitigate risks that delay site launches.

The Tauber team tackled five major challenges that affect the entire launch process: streamlining the Road-toLaunch process, creating an automated dashboard for site contacts, establishing effective technician training plans, providing risk mitigation plans, and creating and deploying launch processes in Mexico and Brazil. The Roadto-Launch is a launch process management tool with a check-list, and the Tauber team improved the process by 26%. The Tauber team created an integrated site contacts dashboard by using SQL and AWS Quicksight in order to provide clear lines of communication with launch managers. The Tauber team also bridged the gap between training plans and staffing challenges, which has caused low training seat utilization, by creating new synchronized training plans. Last, the Tauber team leveraged aforementioned process improvements to contribute to process creation and deployment in Mexico and Brazil.

By streamlining the RME processes, improving visibility on resources, establishing clear communication lines via AWS dashboard, and establishing risk mitigation plans, the Tauber team’s plan is expected to reduce yearly launch costs by $1,440,000. Also, 25% of cost savings is projected via synchronized training plans for technicians by increasing training seat utilization from 25% to 50%. Additionally, the Tauber team established systematic launch and start-up processes in Mexico and Brazil by providing performance metrics, training plans, and a recommended spare parts list. Tauber deliverables are under RME’s review and will be deployed soon. Based on the RME team’s 10% year-to-year growth projections of newly-launched sites within 3 years, the Tauber team’s impact is expected to be greater in the near future.