With its Vendor Flex program, Amazon has expanded its presence in the warehouses of Procter & Gamble and other major household goods suppliers such as Kimberly Clark. Amazon personnel have literally set up shop in seven of P&G's global distribution centers. So, when Amazon receives orders for P&G products, P&G workers gather the orders and hand them directly to Amazon employees imbedded in the warehouses. Then, Amazon ships product to its customers directly from the warehouses.

This is obviously a win-win scenario for both Amazon and P&G, since Amazon gets to shove off the costs of storing and moving inventory to P&G and the supplier benefits from increased orders through Amazon. P&G can sell an exponential number of products on the site at a better price point because of shared expenses. Plus, P&G saves on the typical transportation costs it would incur when trucking products to Amazon's regional DCs.

However, Amazon's rivals are not pleased. "Retailers don't like things that benefit their competitor but not them," said Anne Zybowski, vice president of retail insights at consulting firm Kantar Retail.

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Keywords: warehouse management, WMS, supply chain management, fulfillment strategies, logistics & supply chain, retail supply chain