When Dave Bozeman, vice president of Amazon Transportation Services, goes to work each day, there's just one thing on his mind. It's not the competition. Nor is it the latest marketplace innovation. It's the Amazon.com customer. "Everything is about the customer, and anything outside of the customer doesn't matter," he says. "We wake up every day, and we go to war for the customer."
So far, his team appears to be winning both the battle and the war. In less than two decades, the online retail giant has turned the market on its ear, conditioning customers to expect free two-day deliveries, seven-day-a-week service, and in-home and in-car deliveries, to name just a few examples. But Bozeman has no illusions that his job is now done. "Once you've accomplished all that, are the expectations just going to stop?" he asks. "No. There are going to be even bigger expectations."
Bozeman sat down with Mitch Mac Donald, group editorial director of DC Velocity and CSCMP's Supply Chain Quarterly, for an interview in October, following his opening keynote at the Council of Supply Chain Management Professionals' (CSCMP) Edge 2018 conference. The following is an edited version of the conversation. See the full interview here.
Q: You work at a company that continues to enjoy historic growth year after year, with no end in sight. How do you make sure that your supply chain keeps up?
A: First, it is scale and innovation. You have to have scale and innovation in order to do what we do. But more foundational than that is leadership. Amazon is run off of 14 key leadership principles. I'm not going to talk about all of them here, but they all support what we see as our primary mission: staying focused squarely on the customer, or what I call our "customer obsession." We wake up every day, and we go to war for our customer.
When I tell you everything is about the customer and anything outside of the customer doesn't matter, that's how it is at Amazon, including the supply chain. The supply chain has evolved, it has scaled up, and it's all been for the customer.
As we plan for tomorrow, we keep our eye on three basic elements: quality, cost, and the delivery experience for the customer. "Quality, cost, and delivery" is the obsession we have. We build our supply chain around that obsession. Be it planes, trains, or automobiles, we're going to make sure we have quality and speed. And we're going to make sure we provide an exceptional delivery experience because I know our customers expect nothing less, and that's what we are here to do.
Q: Let's talk a little bit about the tactical side. What role have enabling technologies like automation played in the evolution of Amazon's supply chain?
A: They've been extremely important. Amazon's operations have obviously grown in scale since that day 23 years ago when Jeff [Bezos] put a few books in a box, sealed it up, and took it down to his local post office. We've made millions—even billions—of customers happy since that time, but in order to continue to do that today and tomorrow, things had to continue to evolve and change. At Amazon, we're never satisfied with the status quo. When it comes to serving the customer, there's "divine discontent" here, meaning we're never happy and we're always looking to provide a better experience.
That was the case in our fulfillment operations a few years back. We knew there had to be a better way to fill orders. That ultimately led to the acquisition of Kiva Systems [a robotics company Amazon bought in 2012 and later renamed Amazon Robotics]. We now use robots to bring goods to human order pickers, instead of sending workers out into the aisles in search of items. And what does that do? It only makes quality better. It improves accuracy and obviously boosts speed, and it's going to improve the delivery experience for our customers.
I should note here that the robots aren't replacing people. When they hear about the tens of thousands of robots we've introduced into Amazon's operations, people will say, "Wow, robots! Where are we going with this? What happens to the people element?" Well, during that same time, we have hired over 300,000 more Amazonians. They're just doing different work now. Using the robots allows our people to focus more on quality.
Q: It sounds like a key to Amazon's success is there's never ever going to be any resting on laurels. So what we did yesterday doesn't matter. Only today matters. Do you think that culture has helped to drive all of this?
A: Oh, that is our culture. If you go to work at Amazon, you'll be challenged to look at things in a whole new way. I mean, we have a bar—a performance bar that you have to clear when you're interviewing at Amazon. We have that bar when it comes to what we want to do in growing out and scaling projects, but ultimately we look at the customer. We say, "Hey, what is the next thing that we have to do?" Think about supply chain. Think about where things are going. People want things faster, but tomorrow, it will be something different.
People have choices now in the supply chain. What are some of those choices? Well, they can choose the day they want their product delivered. And along with choosing when they want it delivered, they can choose where: on this part of the porch or in this milk box or even inside their home or car.
And tomorrow, who knows? You can be somewhere, and we may just fly it to you in a drone. The point is, it's about innovating for the customer through your supply chain and not being apologetic for being divinely discontent.
Q: I'm going to get a little more into the weeds here and ask about Amazon's decision to enter the airfreight business. What made you decide to build your own air fleet? Private truck fleets are very common. Private air fleets not so much. Why go this route rather than simply using the standard commercial air carriers?
A: I love that you said operating an air fleet is not so common, because at Amazon, we love to hear that what we're doing isn't common or normal. But at the end of the day, you know what I am going to say: Everything we do is ultimately driven by the customer experience and our obsession with our customers. In the case of air, this is what we've had to do to ensure we have the capacity we need.
That said, we have a number of great partners that we've worked with from the beginning and continue to work with—partners like UPS, FedEx, and DHL. But we also know that we have to continue to supplement that capacity in order to make sure we can keep up with our projected growth and ultimately, satisfy our customers as we continue to grow. That's why in 2016, we launched Amazon Air and are continuing to expand the operation. In just two short years, the fleet has grown to 38 planes—767s-200s and -300s—that fly millions of packages around the U.S. every day.
Q: It's clear you have a passion for your work at Amazon, so it might be tough for you to give an unbiased answer to this question. But here goes: Is there another company out there that has achieved the scale that could justify a private air fleet?
A: Well, that is a good question. But at Amazon, we don't let ourselves be distracted by what others might be doing. We could spend a lot of time talking about competitors. We could spend a lot of time talking about other companies. Instead, we take all of that energy and talk about the customer.
What we want for our customers is speed, lower costs, and an exceptional delivery experience. Concentrating on that—and not on the competition—allows us to maintain a laser focus on what we have to do. That enables us to be clear on the decisions we have to make, be it building an air fleet or automating our operations or going into drones. Those are things that we do with our customer in mind, not the competition.
Q: Do you see anything on the horizon—for instance, the shortage of labor we hear so much about—that could disrupt your growth and momentum?
A: The macros of the world are the macros of the world, right? We will deal with those things as they come, and we'll solve them. Take the labor shortage you mentioned. Unemployment is obviously at a low right now and the labor market is tight, but we feel really good about the number of Amazonians that we have and the number of Amazonians that we bring on. Why? Because we feel we are a great company to work for.
The real challenge—the thing I personally look at—is the challenge of customer satisfaction. Customers are always going to have something they want and in some cases, they're going to be dissatisfied. But how and why? You have to think about it—that is the key. How do we identify and address the problem before the customer becomes dissatisfied? And along those same lines, how do we anticipate the customer's future needs? Those are the things we think about at Amazon each day.
Q: Do you have any final advice for our readers?
A: Stay close to the front lines—the people who are out there doing the work. We have over 550,000 Amazonians out there working for us, and I appreciate every one of them for the work they do every day. As a leader, you have to stay close to that because those people know how important our customers are.