As “Pottermania” reached epidemic proportions recently, it provided a good example of how a single business event can strain critical information systems in even the most advanced organizations. When each Harry Potter book was due for release, pre-orders for the book swamped bookstores and Internet booksellers. This demand had an impact on the supply chain, from the publisher who needed to predict how many copies to produce, to booksellers who accepted pre-orders at a record pace, to the FedEx drivers charged with getting books delivered on the official release date. As the fourth book neared release, Amazon.com received over 275,000 advance orders for the single volume, exceeding its previous record-setting preorder of 43,000 copies of John Grisham’s The Brethren.
This large number of orders challenged Amazon’s information systems in many ways. Although advance orders were accepted, for example, the book’s title was not made public until shortly before the release date, leaving Web developers scrambling to update the many Web screens on which Harry Potter and the Goblet of Fire needed to appear. Amazon also made careful arrangements with FedEx to ship the first 250,000 preordered copies on the announced delivery date, which happened to fall on a Saturday.
FedEx scheduled 100 flights and 9,000 delivery specialists to meet the deadline. But perhaps the biggest challenge of all fell to the Information Systems staff at Amazon.com. Because the orders were received weeks or even months ahead of time, data on each customer needed to be confirmed and stored for future shipment. Billing information for the shipment had to be verified ahead of time, even though billing could not be completed until the shipment was released. Then the data was updated as each delivery was packaged and kept in a warehouse until FedEx shipped. These proved to be challenging data quality issues for Amazon. Each order was confirmed by sending e-mails to customers to make sure that delivery information was correct. Customer credit card charges were readied to enable billing as soon as legally possible on the Saturday of the shipment.
Did it work? Well, Harry Potter fans around the world returned vicariously to Hogwarts on July 8. As the parent of a voracious Harry Potter fan, one of the authors of your text can attest that Amazon’s information system worked well in handling this highly publicized business event.
Many business professionals at Amazon.com had to work together to be able to plan and implement the successful Harry Potter release. They had to address Information Systems issues across several business processes as part of this effort. These business processes in organizations, including management, operations, and information functions, are assisted by—and sometimes operated by—large, complex enterprise systems that govern the collection and sharing of data by various groups. Sometimes business processes extend to business partners through the Internet, permitting electronic business relationships to flourish.
In the case of Amazon.com, the Internet is not an alternative communications channel, but the lifeblood of its business. Amazon’s e-business systems had to be highly reliable even when faced with unprecedented levels of demand.
Required
Explain three (3) major challenges with the supply chain of Amazon. (5 marks)
As an expert in electronic supply chain, explain an information system that could solve the challenges explained in (1.) above. (5 marks)
Explain why you would recommend a Pull or Push model for the book publishing house of Harry Potter. (5 marks)
Discuss the likelihood occurrence of the “bull-whip” effect and how this could be minimised. (5 marks)