Mechanical Sensei

The holiday shopping season officially kicks off this week with the frenzy of profligacy known ominously around much of the world as Black Friday.

There will be two vastly different common experiences among those who indulge in this annual rite. Customers of traditional stores will encounter crowded aisles, long lines, limited parking, and overworked employees as they jostle to grab the hottest holiday gifts. For some, the chaos will be energizing. Others will return home slightly traumatized, credit limits dinged by bulging bags.

On the Web…The shopping process is almost entirely curated by computers. Algorithms decide what products to recommend, how to display them, what price to set. and how an order can be most expeditiously and inexpensively shipped.

At mighty Amazon, the omniscient computer program that practically runs the company’s supply chain is known internally as the Mechanical Sensei. The program tracks all the items and orders coursing through Amazon’s systems. It makes millions of small decisions, such as how much of a particular product Amazon should buy, and—given the geographic dynamic of demand for that particular —where in its massive network of fulfillment centers to store it. As I researched my recent book on Amazon, The Everything Store, some employees even asserted that the Mechanical Sensei’s simulations helped to decide where the company should locate its newest fulfillment centers.

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