Unit 9 – Supply Chain Designs (Units 7–9). Purpose:Explain the ongoing evolution of an industry ecosystem and evaluate associated risk, resilience, logistics, and emerging supply chain designs for a s

Running Head: LOGISTICS 0

Logistics and supply chain context

Stanley Thompson Jr.

DB 8035

3 May 2020

INT RODU CTION

Firms unders tand the reputational risk that the environment could cost their suppliers as a result of the launch of the green supply chain management initiatives. Firms have then opted to collaborate and work jointly with their suppliers to facilitate activities within the business and ensure that they are environmentally friendly . Firms can hence engage with their clients one of the following two ways. One option would be to monitor their environmental performance or engaging with suppliers and collaborating and joining forces to ensure there are pro-environmental processes and practices are taken up (“Collaborate with suppliers to ensure green practices in the supply chain”, 2017). Therefore, this paper seek s to discuss trade agreements that affect Amazon and their consequences, ways in which Amazon applies the NAFTA tribunal process to navigate laws that affect the firm's dealings, some of the global collaborations strategies that Amazon may have implemented and their risk factors and finally Amazon's global supply chain strategy.

REGIONAL TRADE AGREEMENT

Regional and other trade agreements that affect Amazon

Trade agreements are aimed at creating opportunities for firms to help grow the economy . Rules and policies are laid down for firms aiming to carry out businesses in the markets around the word and barriers are reduced to influence exports while protecting the interests of the involved firms. There are a few trade agreements that affect firms in the US which include the World Trade Organization agreements, the Free Trade Agreements, and the Bilateral Investment Treaties. The government of the US has entered into treaties and agreements to facilitates trading activities across its borders. Trade agreements regulate taxes, tariffs, and duties imposed on exports and imports (“Trade agreements”, (n.d.)).

Trade agreements may not always favor firms by providing reduced rates on tax and other forms of duties. Firms at times depend on duties and protective tariffs to shield themselves from the competition by other firm s. This makes it rather difficult to conduct business hence end up going bankrupt and subsequently out of business. Trade agreements are known to trigger competing agreements with other nations to do business with. T his has often attributed to undo the few advantages that trade agreements bring forth in an attempt to level the business ground to make treading and business transactions less harsh and more bearable (Scott & Schott, 2016).

Consequences of choosing the wrong characteristics when classifying products for tariffs

When making agreements and signing treating that influence trading activity, it is important to make sound decisions during the negotiation process. In the past, there have been horrifying results of trade agreements causing more harm than good to firms and countries' eco nomie s. Firms and governments need to have strong negotiation skills to make better trade deals that equally and positively impact both parties to the agreement. President Trump has put some effort into renegotiating trade deals as he had promised to do. Better deals were made with China who was America's source of automobile imports. The US had the upper hand as the national security tariffs on steel and aluminum. Due to the trade war with China, a new deal was made between the United States, Mexico, and Canada to replace the NAFTA agreement with USMCA (Scott & Schott, 2016).

The North American Free Trade Agreement had several weak points which led to huge losses and damages. Both the American and Mexican labor forces were negatively impacted by the North American Free Trade Agree men t. Amazon as one of the firms whose largest area of operation was in the US suffered. Amazon is the leading online retailer in the US hence items such as automobile spare parts are just some of the items that are most purchased by Amazon's users. Firms shifted their production and manufacturing activities to Mexico as there was a cheaper source of labor as opposed to the United States. At least 682,900 jobs were lost in the US as activities were shifted down south (“Trade agreements”, (n.d.)).

For products produced in Mexico was subjected to duties and other forms of tax. This made the trade and business environment quite harsh to deal with. In many cases, importing countries would also impose additional tariffs on components making it next to impossible to trade with other countries. The price of commodities tends to become inflated causing firms to spend more than they are ready to spend on purchases and making little profit margins less than bearable to operate in. costs incurred in operation tend to go above the roof making business processes unsustainable for many firms (“Trade agreements”, (n.d.)).

It is important to identify tariffs in trade agreements that could influence the daily business act ivities . Working around trade tariffs could be of great benefit to firms as negotiations can be made to subsidize certain costs such as duty and tax expenses incurred during exports and imports. Finding tariffs or negotiating tariffs that could impact business activities is considered as intelligent strategies on attempting to make a breakthrough in a given market space as often there could be better working conditions that could favor the daily business dealing creating more profits easier and faster (Scott & Schott, 2016).

Areas of uncertainties that can impact business strategies

At times, rules and regulations in treaties are quite unfair to one party hence the oppressed party will often retaliate spike a trade war . In this circumstance, it important that a tribunal process is taken up to help solve the issue amicably. As the most preferred method of recourse, it could be preferred that both parties try to arbitrarily solve the issues at hand. This could be done renegotiating the initial terms that may have been harsh and tight to operate in. both parties can then air their views and points of grievances to the other party for reconsideration, renegotiation, and adjustment of terms. Both parties have an understanding of what they want from the trade agreements and how much they may be willing to give up (Ikenson, 2019).

There may certain areas of the trade agreement that may need adjustments of consideration. Parties may consider a slight simplification of procedures that could then reduce costs incurred to meet all compliance requirements for the benefit of the enviro nment . Complicated procedures are often unnecessary as it only complicates issues for host countries to effectively harness the nosiness gains from global supply chains. This discourages both foreign and domestic investments. Standards of compliance may need to be reconsidered and adjusted to be made reasonable and archivable for firms seeking to conduct businesses in a host country (“policy framework for investment user's toolkit”, (n.d.)).

Similarly, upon negotiations, transaction costs can be sliced by a given percentage using more predictable and transparent processes. Simplified clearance systems can be implemented, and administrative requirements can be harmonized. This is often done by the adoption of applicable standards such as certification procedures, testing processes, and uniform and impartial administrative border requirements. This releases pressure on firms as they attempt to comply with requirements, standards, and procedures associated with trade. Custom procedures ought to be designed to provide predictability, transparency, and simplicity. Impractical regulations and requirements often compromise business activities. Similarly, inefficiencies in administration procedures hence creating unnecessary obstacles to firms who seek to do business and carry out trade transactions within a host country. This unnecessarily increases operational costs beyond a sustainable level hence could possibly drive out businesses as well as potential inv estor s. (Ikenson, 2019)

GLOBAL COLLABORATIONS

Amazon has greatly relied on outsourcing its inventory management with more than 80% of its sales coming from third -party sell ers. Amazon's warehouses have been strategically located and stocked. This makes it easier to transport and deliver products to its customers. Using the push strategy, Amazon forecasts the demand for certain items within a given region while when products are from third-party sellers, it uses the pull strategy. Similarly, Amazon had to acquire robotic automated services for its daily business procedures. This service was called the Kiva Systems which was later rebranded as Amazon Robotics which provides robotic warehouse solutions. Warehouse processes such as pick, drop, and rearranging procedures are done without human supervision. Amazon has hence been able to complete warehouse activities quicker than before and kept its overall cost per unit at a mini mum (Leblanc, 2019).

GLOBAL SUPPLY CHAIN STRATEGY

Most deliveries are still being done by Amazon's branded vehicles. Amazon has been described as the only firm in the United States of America to have been able to leverage its position to the point of partnering with corporates such as the United States Postal Services and FedEx to deliver its products to its customers. Most of its customers are quite impressed by the prompt and timely deliveries . Amazon has opted for delivery firms as they have a better understanding of route networks that are proficient and adequate for delivery purposes. Amazon can hence focus on other logistical challenges as deliveries have been handled by more professional and experienced couriers that they are.

Amazon has as well partially implemented a drone-based system that delivers products to the firm’s clients. The service is called Amazon Prime Air where it delivers products weighing under five pounds to locations within a ten-mile radius. Delivery times have been cut to thirty minutes or even less. This has greatly increased people’s loyalty to the retailing online firm as they now have the capacity to push more products out of their warehouses and make delivery drops at an increased rate. This strategy was however faced with many hurdles along the way as the firm still sought to realize the dream. The drones are yet to be fully commissioned to handle delivery drops and designed to self-destruct during flight in the event of any technical hitches to reduce any resultant damages and harm to people.

GLOBAL RISK FACTORS

There are certain risk factors that are common to firms that take up Green Supply Chain Management as such firms are heavily dependent on data. With a lot of customer data, cyber-attacks tend to be quite common in a world that has been connected by the internet . This could hence cost the firm a great deal in damages and reputation to its customers. Similarly, war and conflict have a direct impact on supply chains hence production can be stopped as there is limited access to materials. Country disputes might as well erupt leading boycotts and economic turmoil that could greatly impact supply processes. Supply chains have a direct relation to labor and related laws as they are the heart of supply chains. Any issues related to labor might bring about a huge ripple effect compromising logistics and other areas of supply (Ortegoli, & Ghadim, 2016).

CONCLUSION

It is of great importance that Amazon ought to closely scrutinize any agreements and treaties that impact its business strategy. Tariffs may at times be unfavorable for any business ventures to take place to their unpractically or at times is often unsupportive of the firm's business strategy. Firms should invest in economies that have bearable policies to facilitate business development and ventures as a key requirement to the success and a guarantee of the future for the entity (“Collaborate with suppliers to ensure green practices in the supply chain”,2017).

References

Amadeo, K. (2020, February 14). 6 negative effects of NAFTA. The Balance. https://www.thebalance.com/disadvantages-of-nafta-3306273

Collaborate with suppliers to ensure green practices in the supply chain. (2017, July 20). Ideas for Leaders. https://www.ideasforleaders.com/ideas/collaborate-with-suppliers-to-ensure-green-practices-in-the-supply-chain

Ikenson, D. J. (2019, April 10). USMCA: A marginal NAFTA upgrade at a high cost. Cato Institute. https://www.cato.org/publications/commentary/usmca-marginal-nafta-upgrade-high-cost

Leblanc, R. (219, October 15). How Amazon is changing supply chain management. the balance small business. https://www.thebalancesmb.com/how-amazon-is-changing-supply-chain-management-4155324

Ortegoli, A., & Ghadim, M. R. (2016). The effect of risk factors on the green supply chain and prioritizing of the effects by using AHP. INTERNATIONAL JOURNAL OF HUMANITIES AND CULTURAL STUDIES, 1478-1493. http://www.ijhcs.com/index.php/ijhcs/index

policy framework for investment user's toolkit. (n.d.). OECO. http://www.oecd.org/investment/toolkit/policyareas/trade/PFItoolkitTRADE.pdf

Scott, R. E., & Schott, J. J. (2016, March 17). Are Trade Agreements Good for Americans? The New York Times. https://www.nytimes.com/roomfordebate/2016/03/17/are-trade-agreements-good-for-americans

Trade agreements. (n.d.). International Trade Administration | International Trade Administration. https://www.trade.gov/trade-agreements