Being the largest e-commerce company, Amazon has established its presence across various touchpoints of the supply chain network. With a widespread network comprising over 300 warehouses, Amazon has solidified its position as a prominent player in the supply chain industry.
Some of these warehouses function as “carrier facilities” or “Amazon carrier facilities”, catering to the company’s unique logistical needs. Amazon partners up with carriers who operate these facilities across a wide network, where packages are sorted, stored, checked, and prepared for dispatch.
In this article, we will take a comprehensive look at Amazon carrier facilities and why they require a large network of them. We’ll also be shedding light on the multiple benefits they have for the company’s logistical operations and a list of these facilities.
What Is an Amazon Carrier Facility?
An Amazon carrier facility, also known as a distribution center or simply a carrier facility, is an integral part of Amazon’s supply chain network. Designed to store, manage, and distribute products from retailers to consumers, these facilities are crucial in ensuring efficient and timely delivery of orders.
Located near major transportation hubs such as airports, these carrier facilities are strategically positioned to optimize Amazon’s supply chain efficiency. These facilities serve as temporary storage locations for products before they are dispatched to their final destinations or other facilities for further processing.
By being accessible to various carriers, these warehouses enable last-mile deliveries, meaning they can meet regional and local demand with ease by using multiple carriers. This distribution network ensures that Amazon can cater to its customer’s needs in a timely manner, no matter where they are located.
Moreover, it allows them to effectively manage the flow of packages, contributing to the overall success of Amazon’s operations. Regardless of package size or order volume, these carrier facilities ensure that every order is processed and dispatched with care and efficiency.
What Processes Occur in a Carrier Facility
In an Amazon carrier facility, several important processes take place to ensure smooth operations and efficient delivery of packages to customers. We’ll cover these processes below in more detail.
- Receiving – The first step in a carrier facility is when incoming shipments are unloaded and inspected for any damage or defects. The receiving process also includes quantity checks and quality assessments.
- Temporary Storage – After receiving, packages are scanned and stored within the facility temporarily until they are dispatched. Here, the received goods are sorted and organized based on various criteria, such as product type or SKU. This helps streamline the order processing stage.
- Order Processing – Once Amazon has identified a batch of packages to process, they will begin by order planning, picking the items from storage, packing them securely, and labeling them accurately for last-mile delivery.
- Shipping – After the orders have been processed, they are ready for shipping to the end customer or moved to another carrier facility closer to their respective recipients.
- Reverse Logistics – This is another important process in an Amazon carrier facility and involves handling customer returns, including inspecting the returned items and verifying their condition.
- Other Activities – Besides these core processes, other activities also take place in an Amazon carrier facility. These may include reporting inventory levels and order fulfillment metrics, conducting quality checks on products before they are shipped out, or providing additional value-added services such as gift wrapping, kitting, or personalizations.
Purpose of Amazon Carrier Facilities
Amazon carrier facilities play a crucial role in the company’s logistics network. These facilities serve as contralized hubs for organizing and distributing packages to various destinations aiming to ensure efficient and timely delivery of Amazon orders to customers. Below, we explore the core purposes of these carrier facilities.
Increased Supply Chain Efficiency
A carrier facility in a centralized location effectively adds value to the supply chain by eliminating the need for multiple smaller storage and distribution centers in various locations throughout a region.
Streamlining the flow of packages through larger centralized facilities in specific locations allows Amazon to process them in batches and account for redundancies. This can ensure faster delivery turnaround resulting in lower lead times for their customers.
Offers More Flexibility
With their ability to act as a buffer between different locations and end customers, carrier facilities greatly enhance supply chain resilience. It provides Amazon the flexibility to quickly respond to changes in demand and market conditions, ensuring it can adapt and thrive in the dynamic world of e-commerce.
Furthermore, these facilities allow other carriers to move packages to the end customer. This approach allows Amazon to leverage the benefits and services of multiple carriers, including Amazon’s own fleet as well as other trusted partners.
Building upon the faster delivery turnaround mentioned earlier, carrier facilities are equipped with the infrastructure and technology to efficiently handle incoming orders and organize shipments for outbound distribution.
Besides processing packages in bulk, the facility has warehouse management systems, conveyor belts, and robust standard operating procedures (SOPs) that enhance the speed and accuracy of picking, packing, and shipping to customers or retail outlets.
Ultimately, having a dedicated carrier facility with an optimized process significantly speeds up the fulfillment process, making sure that packages are delivered timely to customers.
Carrier facilities located strategically in a region increase coverage and support to local markets within the vicinity. This translates to reducing transport distances allowing faster pickup and delivery times.
Moreover, packages can reach their customers’ doorsteps without delays as the shorter travel distance makes destinations more accessible via various transportation options.
Consolidating cargo flow through each facility enables Amazon to leverage economies of scale by transporting large quantities of packages in full truckloads. Furthermore, carrier facilities also help Amazon minimize outsourced storage expenses as the facility’s utilization is fully under its control.
By optimizing operating costs, Amazon may even extend this cost reduction to their customers and maintain an edge over their competition.
Allows for More Services
As Amazon carrier facilities are within their control, they are able to not only handle packages more efficiently but also customize their services and add value to their clients. This includes catering to specific customer requirements like handling, kitting, assembly, and more.
By offering these additional services, Amazon ensures that customers receive a comprehensive range of solutions that meet their needs while also streamlining the overall processing and distribution processes.
More Efficient Returns Management
When it comes to reverse logistics, many e-commerce and logistics companies struggle, as there are various intricacies and complexities. With a designated space to manage returned products, Amazon is able to utilize the same infrastructure and processes for quicker turnaround time, handling returns promptly and efficiently. In turn, this helps reduce reverse logistics costs and improves customer satisfaction.
Why Does Amazon Use Other Carrier Facilities?
Amazon doesn’t own all the facilities it uses but partners with other carrier facilities as it allows them to leverage the expertise and capabilities of other carriers. By partnering with different carriers, Amazon can optimize its supply chain by reducing transit times and improving overall delivery speed.
Below, you’ll be able to find the key reasons why Amazon occasionally uses other carrier facilities to process packages.
- Increases Coverage – By partnering with facilities owned by carriers, Amazon can expand its coverage to countries or regions where it has not established its own facilities yet. This allows the company to reach more customers, maintain its high service quality, and offer its services in areas that might not be cost-efficient for them to operate indirectly.
- Reduces Operating Costs – Using other carrier facilities also helps Amazon reduce operating costs. Each facility comes with its own set of expenses, such as utilities and maintenance. By leveraging existing facilities, Amazon can avoid these costs and keep its operating expenses low, especially in areas with low demand. This ultimately contributes to the company’s bottom line and helps it remain competitive in the market.
- Overcomes Seasonal Demand – As shipment volumes are never consistent and can vary based on the seasons, Amazon may experience over- or under-capacity at their own facilities. By partnering with other facilities, they can disperse additional shipments and ensure timely deliveries to customers.
- Enables Strategic Partnerships – Carrier facilities allow Amazon to expand its reach and delivery capabilities without the need for heavy investment in building new facilities. This helps Amazon quickly establish a presence in areas where it doesn’t have nearby facilities. This approach also enables Amazon to tap into the expertise and resources of trusted partners already operating in those areas.
- Manages Risk – By relying on multiple carrier facilities, Amazon can minimize the chances of operational issues causing package delays. This proactive approach helps ensure customers receive their orders on time, improving overall customer satisfaction. In fact, this multi-carrier strategy also provides flexibility during peak seasons or unexpected surges in demand, where one carrier may be overwhelmed while others can step in and handle the load.
Co-Founder & Writer
About the Author
Gerrit is a certified international supply chain management professional with 15 years of industry experience, having worked for one of the largest global freight forwarders.
As the co-founder of freightcourse, he’s committed to his passion for serving as a source of education and information on various supply chain topics.