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Amazon ACE Challenge 2017 Operations Case Breaker

Instructions
Please use Calibri Font, size 10 for the answer document.
Please write your answers in one document. Appendix and excel answers are to be separate.
Your solution should not exceed 4 pages in all, refer to the expectations of each question inline. Appendix
can be extra for only providing data supporting your recommendations/solutions. Recommendations given
in the appendix will not be considered for evaluation.
Your solution will be evaluated on 3 broad parameters- Recommendation, Structure & Innovative idea.
Every case needs to be approached with a Quantitative and Qualitative thought.
Original ideas would be preferred over suggesting existing Amazon programs/features available or
implemented globally.
Provide the source for every data point provided in the solution.
Clearly state any assumptions you make while giving recommendations/solutions.
In case of any financial model, you want to provide (not mandatory), please attach along with the 4-pager
solution and upload a zip folder.
In case you have any particular question related to Consumer Business Case, please mail your
questions to ace2017ops@amazon.com

Introduction

Amazons mission is to be Earths most customer centric company at all times and across all its functions.
Any organization is incomplete with its operations and here at Amazon operations stands as the heart of
customer centricity.
A basic operations overview of Amazon would cover the span of receiving an order placed by the
customer and its complete journey from that time till it is delivered to the customer. It is critical for the
Operations to maintain its TAT (Turnaround Time) even when they are faced with surges and peaks. The
major functions in the operations of Amazon entities in India are Customer Service (CS), Transaction
Risk and Management Systems (TRMS) and Fulfilment Centre (FC) which is undertaken by one entity
and Retail Business Service (RBS) with respect to IT/ IT enabled services, which is housed in another
entity.
Customer Service is the primary touch point for helping Amazon customers with both pre-order and post-
order questions as well as the major intake mechanism for any feedback related to Amazon. It serves as a
vital cog in the Amazon Supply chain for capturing Customers' voice as well as being a starting point in
its journey to become the earth's most customer centric company. Amazon customer service has its
employee footprint across a network of sites around the world and capacity planning for this network
spread across geographies, languages and skillsets in a centralized and optimal fashion. This ensures
uninterrupted 24x7 coverage, poses an interesting challenge to solve for.
AMAZON CONFIDENTIAL 1
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Transaction Risk Management Systems (TRMS) is the heart of customer trust. When a customer places
an order, TRMS assists in ensuring that they receive what they have ordered, in the condition they
expected, in a timely fashion. When a third-party seller creates an offer to sell an item, TRMS ensures
that all sellers listing their products on the marketplace follow the same rules, and that when the order is
placed they receive the money they have earned. The team leverages a mix of risk analysis techniques,
from machine learning models generated from massive (petabyte) data sets to manual analysis by trained,
high-judgment investigators. In this manner, TRMS helps in minimizing the cost to Amazon.
In the Amazon network, sellers can store all their material in Fulfillment Centers (FCs), which are later
packed and delivered on tight timelines to customers as per their demand. Along with delivering timely
orders to customers as per varying seasonal demand, FCs work closely with RBS and CS team (RBS
being part of one entity while CS & FC being part of another) in analyzing and addressing root cause of
any customer complaint for receiving a product in undesired condition.
The Retail Business Service (Its a part of separate entity from other operations functions mentioned in
the case) team analyzes defects, contact internal teams and vendors to resolve the root cause. The item is
not sold unless the root cause is resolved. It works closely with the CS team whenever the CS team raises
an issue to it in correspondence to a customer complain.
With a huge customer base to cater to, Amazon handles fluctuating volumes throughout the year. When
looked at for different functions, this variation is even more sporadic. While it is still easier to meet
volumes for planned events, unplanned peaks become even more difficult to maneuver. One such scenario
is depicted on the eve of Mahishratri, a festival in the kingdom of Mahishmati.

TRMS (Transaction Risk Management Systems)

Every great kingdom has enemies, and Mahishmati is no different. As Bhallaledeva prepares an army to
take on Baahubali, a group of his followers have decided to take matters into their own hands. They
regularly disguise as devotees to enter the great gates of Mahishmati. On the auspicious occasion of the
Mahishratri, devotees from across the kingdom visit the castle. On this happy occasion the king
distributes Upaharam to the devotees, which consist of all possible items of requirement that a devotee
can wish for. Some villagers also compare the kings stash of items with the largest river in the world. As
the number of devotees rises, so does the number of intruders who try to take benefit of the kings
benevolence and steal the Upaharam.
Kattappa, the Chief of the Mahasena, ensures he has deployed enough people to prevent intruders from
passing through the gates. He has three types of personnel:

Inspectors Attend to devotees, and allow them through the gates, at 31 people every hour
Swordsmen Fight arsonists and catch intruders at a rate of 16 villains/hour
Archers Arrest intruders, at 12/hour

AMAZON CONFIDENTIAL 2
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Kattappa must employee enough Inspectors to maintain small queues. This may at times require archers
and swordsmen to fill in as inspectors. The number of people that reach the gates, and the number of each
type of personnel are available in Appendix A.
As Kattapas intern, you have been tasked to help him in the following, which would help you achieve a
good position in Mahasena.
1. Kattappa knows he can better utilize his resources, but how?

2. What are the opportunities of Cross-utilization of resources among the various departments?
What are the challenges to this, and how can they be overcome?

Customer Service (CS)

The devotees of Bahubali, if they want an information or help regarding the Upaharam, or if they want
to raise any complaints against the inspectors, they approach the Tribunal of Mahismati. Of all devotees
and loyalists visiting the castle, 65% contact the tribunal for any information, help, and getting their
disputes addressed. They can either visit the Tribunal, send a pigeon, or send a runner (25%, 30% and
45% respectively, of all the contacts). Justice is must and free for all, Bahubali has decreed, and all such
communication is fully reimbursed to the devotees. The costs to the Kingdom are summarized in
Sivagamis notes in Appendix B, and the number of people approaching the Tribunal in Appendix C.
Bahubali has asked a Gold Statue of Kattappa, to be erected at the city gates, and Sivagami is looking to
save gold to make this happen.
As Sivagamis intern, you have been tasked to help her with the following:
1. Devise a strategy and timeline to build Kattappas Statue, if only funds saved from the Tribunal
can be used (the statue would cost 200 crore gold coins). What is the present cost, % increase in
cost and growth rate of the cost? What will be the strategy to handle the cost while maintaining
attrition, considering such peak demands emerge every month?

2. Give at-least 4 KPIs for each, the employees, their managers, and the senior leadership (Hint:
Create Operational & Leadership Metric Systems).

AMAZON CONFIDENTIAL 3
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
FC (Fulfillment Center) and RBS (Retail Business Service)
[Both the operations functions are a part of separate entities)
Kumara Varma, the Commander of the City Watch, ensures swift and safe passage of the devotees
through the city. The devotees flock to the city gates to receive the Upaharam and the City Guards are
responsible to carry the Upaharam from the Kings Warehouse to the city gates. The City Watch can
collect 75 incoming Upaharam every hour from the merchants to store in the kings warehouse (inbound
operation), and process 29 to be taken to the devotees (outbound operation). Some other facts about the
City watch workers are given in Appendix E. Due to Mahishratri, there is a surge in demand. The number
of Upaharam received and processed during a fortnight are tabulated in Appendix F. The highlighted
days are those where city guards see a surge in volumes. Kumara Varma has sufficient city watch recruits
to manage the volumes in the given week. Again due to the proposal of building a gold statue of
Kattappa, Kumara Varma is unable to hire more recruits and has to strategize to manage the surge with
existing recruits only.
The Cardinals inspect the Upaharam for quality, after which the City Guards carry these Upaharam to
the City gates and distribute them to the devotees as per their request and requirement. The details of top
volume drivers or quality issues can be found in Appendix G. However, the Cardinals take between 0-10
days to adjudge the worthiness of goods. 47% of the check coming to cardinals are referred back to the
city guards to get more details, and once it is resolved the Upaharam with correct attributes are
forwarded to the city guards for distribution. This entire process might take up to 3 days to get the
Upaharam back to the City Watch. Kumara Verma has observed that there has been increase in
sidelined Upaharam due to poor quality in the last 3 months. He identified that the spike is due to
increased poor quality delivery by the merchants to the Kings warehouse. Please refer to Appendix D for
the week-on-week trend of stockpile. This has led to shortage of space and there is less number of
Upaharama coming in, which is almost 80% of the kings plan.
As Kumara Varmas intern you must help him with the following:
3. How can Kumara Varma plan the use of his personnel effectively and meet demand, without
considering additional hiring?
4. How can Kumara Varma reduce Stock Choking at the City Watch Headquarters?

5. Quality:
During packing process there are chances that the worker packs a different item than what is
ordered by customer, this problem is known as Tehelka. There is an unprecedented spike in
Tehelka cases in last few weeks. You have been advised to minimize the Tehelka cases during
Week-26, Help Kumara Varma in a preventive and corrective action plan in not more than 500
words.

Common Question
What are the opportunities of Cross-utilization of resources among the various
departments?
What are the challenges to this, and how can they be overcome?

AMAZON CONFIDENTIAL 4
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Appendix

Appendix A

Day People at Gates Arsonists to fight Arrests Needed

Sun 7871 7175 3462


Mon 8656 9268 5354
Tues 9786 9503 5534
Wed 9414 8799 5755
Thurs 8077 8412 5458
Fri 6988 7519 4989
Sat 6019 5621 3968
Sun 6598 6001 3829
Mon 10323 8022 5103
Tues 11758 7378 6063
Wed 10513 7172 5988
Thurs 8482 8955 5853
Fri 6079 8010 5432
Sat 6754 7265 4317
13% people are on leave everyday
People work for 8 hours everyday

Day Inspectors Swordsmen Archers

Sun 15 64 44
Mon 14 98 57
Tues 17 136 74
Wed 18 121 73
Thurs 20 115 61
Fri 9 103 57
Sat 7 65 46
Sun 17 64 44
Mon 19 101 54
Tues 19 126 71
Wed 19 113 71
Thurs 21 107 62
Fri 11 94 57
Sat 7 64 50

Appendix B
AMAZON CONFIDENTIAL 5
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Sivagamis Notes:
o On the occasion of Mahishratri, 30% contact on the same day and then remaining spreads evenly
for next 3 days.
o 30% of Day 1 and 10% of Day 2 are repeat contacts, i.e. the same devotees contact us again
through any one of the media in the same proportion as mentioned above
o On an average, it takes 30 minutes to address pigeon notes, 15 min to answer a runner, and 8 min
when the devotee directly comes to the Tribunal.
o The Tribunal associates work 5 days a week and 8 hours a day effectively and they run 4 shifts a
day of 9 hours each.
o 70% of the associates are permanent employees while 30% are on contract for 3 - 6 months,
extendable as per demand.
o The cost of 1 direct contact is $2, pigeon mail is $0.3, and through a runner is $1 for ($1 = 65
gold coins)
o The gross salary of a Tribunal associate is 5 L gold coins/annum, which includes a 30%
performance based variable component.
o 80% of our associates are decent performers, 15% are bad performers and 5% are terminated
every 2 months based on poor performance.
o The ratio of Associates to Managers to Senior Leaders in the company is 50:2: 1. Average Salary
of a senior leader is 15 Lac gold coins/annum and Managers is 10 Lac gold coins/Annum.

Appendix C
Day Outbound Volume Customers
(Units) Contacting/Day
Sun 41806 27174
Mon 41913 27243
Tues 43524 28291
Wed 46765 30397
Thurs 39701 25806
Fri 39492 25670
Sat 40663 26431
Sun 78000 50700
Mon 75000 48750
Tues 65000 42250
Wed 38500 25025
Thurs 38100 24765
Fri 37500 24375
Sat 37600 24440

Appendix D

AMAZON CONFIDENTIAL 6
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Week No. Excess Incoming Stock

Wk 14 6%
Wk 15 5%
Wk 16 4%
Wk 17 10%
Wk 18 7%
Wk 19 6%
Wk 20 5%
Wk 21 8%
Wk 22 9%
Wk 23 8%
Wk 24 6%
Wk 25 5%
Wk 26 11%

Appendix E
o The Kings warehouse in all 7 days in two shifts, 9 hrs. working duration for every shift hence 18
hours working duration for a day
o Absenteeism of 10% to be considered for all purposes.
o As per guidelines from Mahismatis Ministry of labor, a worker can work for a maximum of 54
hours in a week which includes 9 hours of overtime. Without OT maximum hours a worker can
work in a given week is 45 hours.
o In Outbound Operations there are two key processes which gets involved Picking and Packing.
The pickers are supposed to go the storage locations (shelving areas where the inventory is
stored) and pick the items and the packers are supposed to pack the items in boxes/polybags and
dispatch the same to the devotees. One of the key factors which impacts pick productivity is pick
density (Pick density is high when the inventories are stored in nearby areas and hence, pickers
need not travel much in picking the items leading to increase in pick productivity).

Appendix F
Day Inbound Volume (Units) Outbound Volume (Units)

AMAZON CONFIDENTIAL 7
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption
Sun 60,600 41806

Mon 60,600 41913

Tues 45,400 43524


Wed 30,400 46765
Thurs 54,624 39701

Fri 62,290 39492

Sat 44,082 40663


Sun 43,400 78000

Mon 45,000 75000

Tues 24,277 65000

Wed 36,540 38500


Thurs 53,866 38100
Fri 61,426 37500
Sat 43,471 37600

Appendix G
Issue faced by FCs Distribution Common resolution steps
Percentage
Catalog information not matching 39% Conduct bin checks to validate if there are errors in
(Title/ Other detail page the catalog; if so, make changes to the catalog
information not matching the through simple system uploads
product at hand)
No PO found (There are no POs 33% Check with vendor and update the product in an
raised for the items received at existing PO
FC)
Item not in Catalog (Product 14% Share the new item set up process with vendors
shipped by vendor doesn't appear
in Amazon catalog; primarily
these are new versions of existing
products with different bar codes)
Image not matching with Catalog 7% Conduct bin check to ascertain is the image on
catalog is accurate; if not, remove image, ask the
vendor to share correct images and provide go ahead
to inbound the product

Others 7%

AMAZON CONFIDENTIAL 8
This case and the numbers published in this case are not representative of any Amazon businesses within India or in
any other region where Amazon has offices or operations and should not be used for any public or media
consumption