It’s no secret that Amazon’s successful evolution from an online bookstore or an online “everything store” would not have been possible without the supply chain that it built over the past three decades. Its reach into nearly every corner of the nation and beyond has brought e-commerce to the masses efficiently and economically at scale. In the process, it created and filled needs we never knew we had—such as free shipping and same-day delivery.

Many have admired the supply chain Amazon has built, trying to copy its success but few have matched it. Realizing the potential here, Amazon launched Amazon Supply Chain Services (ASCS) in May, causing a stir in the logistics sector. ASCS extends elements of the logistics network it built for its own e-commerce operations to businesses that sell both on and off Amazon. The service offers freight, distribution, fulfillment and parcel-shipping capabilities—putting Amazon in closer competition with third-party logistics providers, carriers, and other supply-chain service companies.

The move invites comparison to Amazon Web Services (AWS). Just as AWS commercialized the cloud-computing infrastructure and services developed for Amazon’s own operations, ASCS makes parts of Amazon’s logistics network available to external customers.

Tapped to lead that effort is Amazon veteran, Peter Larsen. Larsen is no stranger the challenge of starting up a new business inside a large corporation. He helped found Amazon Devices and Amazon Transportation, two businesses that expanded Amazon’s presence beyond its original online marketplace.

Larsen’s startup experience stretches back before his time at Amazon. Prior to working at Amazon, he was the CEO of Enpocket, a mobile phone advertising startup. He has also worked at Liberate Technologies, an interactive TV startup; General Magic, which was spun off of Apple in the 1990s to create a handheld, network-connected personal communicator; and LINC Computer, a systems integration startup in Tokyo.

Larsen will draw from these experiences for his keynote address at the Council of Supply Chain Management Professionals’ (CSCMP) EDGE conference on October 6 in Nashville, Tennessee. In advance of the conference, he spoke with Susan Lacefield, executive editor of Supply Chain Xchange.

Can you briefly explain what Amazon Supply Chain Services is, and why Amazon decided to form this organization?

Amazon Supply Chain Services gives any business access to our freight fulfillment and shipping capabilities, including those who don't sell on Amazon. Regarding the why, we spent two decades building one of the world's most advanced logistics networks to serve our own operations on Amazon.com. Other businesses, of course, face the same exact challenges that we faced on Amazon.com. So, the natural question was: How fast can we open this up to everyone? It's a little bit like what AWS did for cloud computing.

I've heard people describe it as being a third-party logistics provider. Is that a fair characterization?

I think it's technically accurate, but I would argue that it undersells a little bit what we actually deliver, because I think very few [3PLs], if any, have built for the speed, certainty, and scale that Amazon customers demand.

Taking a broader perspective, the global supply chain landscape has changed in some very profound and fundamental ways over the past six years. What do you see as the key challenges that supply chain managers are currently facing?

Well, there's a ton going on, needless to say. The thing that I hear from supply chain executives that I talk to on a weekly basis is that disruption isn't the exception anymore. It's the standard operating environment. And let me break that down a little bit, because there are a few different kinds of disruptions.

First, you have demand volatility. With the rise of lots of different marketplaces, like TikTok, for example, this makes inventory positioning, which was already hard, even harder because you never quite know where the next demand spike is going to come from. It makes it a daily puzzle, really, and it’s the number one kind of disruption that we're facing.

The second kind of disruption we're facing is network fragility. We've got geopolitical disruption, trade policy shifts, extreme weather, and as we've seen over the past couple years, these are just not rare events anymore. They happen almost on a weekly basis, and what's more, they overlap and they compound on each other.

And then I think the third one to talk about is just complexity. Most businesses manage a patchwork of carriers, warehouses, and technology systems that they've built up over years, and these systems were never really designed to work together. So, they end up with blind spots that come from manual handoffs, and that in turn leads to slow reaction times.

I'll just say that the pressure on all of us in the supply chains is relentless. I just don't think it's going to go away. It's the new status quo.

How have these new challenges changed what companies are looking for from their logistic service providers?

Well, I see three clear shifts in terms of what our customers are asking for. The first one is integration. They want a single provider that handles multiple legs, from freight, to storage, to fulfillment to delivery, without the breakage of stitching these vendors together.

Number two is technology, but technology that actually drives outcomes. We've been building these supply chain capabilities with technology deeply integrated for 20 years. You would argue that Amazon is really a technology company that has basically evolved into being a supply chain company. So technology is really at the core of everything we do. And then of course the acceleration that everybody in the industry is experiencing right now because of the rise of generative AI is unlike anything we've ever seen.

And then there is flexibility. Customers want to scale without long-term contracts. There's a lot of capex [capital expenditures] being spent out there, and it's expensive to keep pace with the requirements of supply chain customers with regards to capex. In our business, Amazon is already investing a lot of capex each year just to basically keep up with the growth and expectation of the Amazon.com business. Amazon Supply Chain Services get the benefit of all that capex that's already being spent without having to do them that themselves. So, people are demanding integration, technology that drives outcomes, and flexibility.

Shifting gears a bit, I recently saw that Amazon Supply Chain Services was involved in relief efforts in Venezuela following the two earthquakes, and I was wondering if you could explain how you came to be involved and what sort of services Amazon provided for the relief efforts?

Yes, I was very sorry about what happened in Venezuela but also excited we could help. We we've been activating our network for disaster relief for a number of years now, and so when those two earthquakes hit Venezuela with at least 6 million people affected, we wanted to try to find a way to help. We worked with Airlink, the U.S. State Department, and the UN World Food Program to support seven weekly relief flights into Caracas using Amazon Air Cargo, which is one of our ASCS services. That has produced an outcome of over 600,000 emergency supplies that reached over a dozen nonprofits near the epicenters of those earthquakes. We were just happy to help and proud to be able to do so.

Peter, you are slated as the closing keynote speaker for the CSCMP's Edge Conference, and I was wondering if you could give us a sneak peek on what you plan to talk about.

I'll want to challenge this idea that resilience and cost efficiency have to be opposing forces. I think too many companies still treat that as a trade-off, and we've spent decades proving that's just a false choice. You can have both resilience and cost efficiency when you invest in the right technology, infrastructure, and operational discipline.

And then I'll share my thoughts about where supply chain is headed, the role of artificial intelligence in demand forecasting, the shift towards composable logistics, and what all that looks like.

The Supply Chain Xchange

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