Citation: Qin, Y.; Liu, H. Application
of Value Stream Mapping in
E-Commerce: A Case Study on an
Amazon Retailer. Sustainability 2022,
14, 713. https://doi.org/10.3390/
su14020713
Academic Editor: Marc Lim
Received: 29 November 2021
Accepted: 3 January 2022
Published: 10 January 2022
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Article
Application of Value Stream Mapping in E-Commerce: A Case
Study on an Amazon Retailer
Yanfang Qin and Hongrui Liu *
Department of Industrial and Systems Engineering, San José State University, San José, CA 95192, USA;
yanfang.qin@sjsu.edu
* Correspondence: Hongrui.liu@sjsu.edu
Abstract:
In recent years, the e-commerce market has grown significantly, and the online retail market
has become very competitive. Online retailers strive to improve their supply chain operations to
reduce costs and to improve customer satisfaction. Value stream mapping (VSM), a tool created by
the lean production movement to identify and reduce errors, losses, and lead time and to improve
value-added activities, has been proven to be effective in many manufacturing processes. In this
study, we investigate the application of value stream mapping (VSM) in the supply chain of an
e-commerce retailer on Amazon. By visualizing the entire supply chain with VSM, the waste that
is produced during the delivery process from the retailer to the customer was identified. The five
whys method was then applied to find the root cause of the waste. Furthermore, a scoring method
was developed to evaluate and compare two different supply chain logistic models to identify a
strategy for improvement. This study provides a systematic methodology to understand, evaluate,
and improve the entire e-commerce supply chain process utilizing VSM. It was demonstrated that
the methodology could improve supply chain management efficiency, customer satisfaction, and
cost reduction.
Keywords: e-commerce supply chain; value stream mapping; customer satisfaction; cost reduction
1. Introduction
E-commerce has been the fastest-growing channel in the retail industry over the last
decade, and online buying and selling have become increasingly prevalent [
1
,
2
]. The
coronavirus pandemic 2019 (COVID-19) has changed people’s life profoundly, and e-
commerce has played an even more important role in maintaining the economic health of
society [
3
]. Euromonitor estimates that 17% of goods will be bought online in 2021, nearly
doubling from 2016. In 2020, the amount of goods bought online globally grew by 24%,
reaching a total of USD 4.2 trillion worldwide, while stored-based sales declined by 7% [
4
].
With e-commerce, not only can buyers enjoy the convenience of buying items anytime,
anywhere, but online channels also offer great opportunities for the retailers to sell their
products directly to customers all over the world without the need for a physical store [
5
,
6
].
The advantages are even more obvious in the current pandemic situation, when shopping at
physical stores is not convenient. At the same time, e-commerce has increased competition,
as more businesses choose to sell their products online [
7
–
9
]. Online retailers face some
unique challenges compared to those selling their products using the traditional brick and
mortar selling model. For example, the delivery time is usually long, customer service is
difficult since there is no direct interaction with the customer, and the product, information,
and fund transactions heavily rely on e-marketplace platforms and third-party logistics. To
remain competitive in the market, it is important for online retailers to understand their
supply chain issues and to manage their supply chain effectively in order to reduce costs
and to improve customer satisfaction [10,11].
A typical supply chain includes multiple stages, ranging from suppliers, manufactur-
ers, distributors, retailers, and finally, to customers. In the e-commerce supply chain, an
Sustainability 2022, 14, 713. https://doi.org/10.3390/su14020713 https://www.mdpi.com/journal/sustainability
