Free Essay

Supply Chain Management in Amway

In: Business and Management

Submitted By prernamalhotra
Words 513
Pages 3
About Amway
Amway is an abbreviation for "American Way" and was coinedin 1959 by company founders, Jay Van Andel and Richard DeVos. In the following decades, Amway Corporation has successfully established itself as a leading MLM (multilevel marketing business), built on strong values and founding principles that continue to sustain our company today. The business is built on the simple integrity of helping people lead better lives. Today, Amway is a multibillion-dollar international business representing freedom and opportunity to millions of people in more than 88 countries and territories around the world. Unique Distribution System
The problem faced by the distribution system is that companies have very little or nocontrol over the cost of transportation. This is mainly due to certain external factors involved which include strikes, increase in fuel costs etc. Amway has effectively tried to overcome this problem by the improvements in corporate performance. Amway does as opposed to normal retail stores believes in the slogan; "Shop without going shopping". This is a great concept as long as people have enough money and are willing to shop without going to their neighborhood departmental store
Essence of the Distribution system at Amway: “Since we cut out the middleman and don't have employees, buildings, and inventory, we can deliver products cheaper.”
• The difference in Amway’s supply chain is that it is vastly different from a more conventional one that normally sells goods to final consumers through retail outlets. Amway's way of working depends on building lasting connections with the end consumer. Feedback provided by consumers and Independent Business Owners helps to shape future changes in products and the service provided.
• Amway products are distributed exclusively by Amway affiliates known as Independent Business Owners (IBO) in North America and 90 other countries and territories.
• Independent Business Owners (IBO), Amway’s method of direct sales gives a lot of independence to the referrals to have their own approach to build their business.
• E-commerce, selling products via amway.com, snapdeal.com which provides the facility of ordering online and support.
Distribution Process
Amway manufactures the majority of its own brand products at their manufacturing plant in Ada, Michican. It then distributes these directly to the IBOs through a centralised warehouse in Venlo, Netherlands. Having signed a contract to work within Amway's Rules of Conduct and Code of Ethics, IBOs are trusted to operate flexibly within a 'self-regulatory' environment. They develop direct supply channels and sell products to friends and customers that they know or meet.

The Road Ahead
There are further improvements that are required to be done in the distribution system. In such a type of distribution system customer’s end up paying special shipping fees on goods, that usually equalizes the difference between Amway's retail prices and the prices quoted in normal shops.
Also, a right image is very vital in a business that relies on building relationships with individuals and customers. IBOs often sell directly to friends and it is essential to provide high quality, value for money products. Thus, quality improvement steps must be taken to further improve the products.…...

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