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Showing posts from 2019

Amazon: One Day...All this will cost more.

One Day Shipping, the new promise from Amazon, has filled the news headlines lately with consumers welcoming even faster delivery services of their online orders. The online Behemoth has cracked the code on how logistically this will all get done.
Consumers have bought into the notion that One Day shipping is what’s best for them, and Amazon has done just as well selling the notion that this can all get done simply because they have the scale, the logistics assets and distribution model in place to successfully deliver to you in One Day.
What isn’t in any of this press or talked about on TV is the extra costs of this model. Yes, this all costs more. 
The biggest piece missing in all this is a simple business finance line called Inventory Carrying Cost. For decades supply chains have worked on Just in Time distribution models to help mitigate or sometimes eliminate Inventory Carrying Costs for a company. 
Inventory carrying cost is the sum of the cost to “hold” Inventory. Some of thes…