CASE STUDY Netflix continuing to earn revenue, while lowering demand somewhat fo
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CASE STUDY Netflix continuing to earn revenue, while lowering demand somewhat for the “latest" releases. NETFLIX, at almost 20 years old, has more than 44 million subscribers worldwide and is now the most popular sub scription media business in the United States.14 In the fourth quarter of 2013, Netflix had estimated total revenue of nearly $1.2 billion.15 But the road has not always been so smooth for Netflix. In 2011, Netflix dramatically changed its business strategy from one based on the physical distribution of DVDs and Blu-ray discs, to one based predominantly on the direct streaming of entertainment content across the Internet. This case study looks at the impact on Netflix's supply chain strategy. The second major piece of Netflix's supply chain, its dis- tribution system, was just as critical to the firm's success. By operating several distribution centers around the United States right from the start, the company was able to accept, inspedt and clean DVDs quickly and ship them out just as fast, so cus tomers experienced very short wait times between placing their orders and receiving their DVDs. By 2011, Netflix had about 60 dstrib centers in operation For the most part, Netflix's traditional supply chain, with its one-day delivery and same-day processing, was effective. Its in ventory system not only automatically tracked incoming DVDs that customers had returned, it also emailed each customer a Netflix's Supply Chain Strategy, before 2011 Before 2011, Netflix's supply chain strategy mixed information confirmation of receipt and alerted the appropriate shipping technology and physical logistics to replace traditional brick center to send the next title on that customer's list or queue. It and-mortar stores, such as Blockbuster. The Netflix Web site also ensured that subscribers weren't sent more DVDs than they not only served as a virtual storefront but also used custom had paid for (customers were limited to a certain number of ized software to track its subscribers' preferences and make DVDs per month). However, a number of factors affected which recommendations based on an individual's viewing habits. DVDs a subscriber got and when they got them. If there weren't Enough subscribers responded to these recommendations that many copies in the system, the company would ship one from a Netflix could keep many of its older DVD titles circulating and center that was far from where a subscriber lived. Another was Netflix, Investor Relations, http://ir.netflix.com I5B. Carter, "Strong Finish to 2013 for Netflix as Profit and Subscriptions Soar" The New York Times, January 22, 2014. www.nytimes.com/2014/01/23/ business/media/growth-of-netflix-subscribers-surpasses-analysts-expectations.html.Explanation / Answer
1)
Key structural and infrastructural element of Netflix Supply Chain Strategy before 2011:
Netflix Supply Chain Strategy its a mixed information and technology and physical logistics to replace the motor stores .
Netflix website used to serve storefront and track its subscribers preferences using the customized software.
Shipping process involve the multiple process which results in damage of DVDs
Key structural and infrastructural element of Netflix Supply Chain Strategy After 2011:
Researched about the earlier problems with Netflix traditional suppl chain tied with delivery of intangible service to tangible items,
With the use of advanced Technology started the virtual supply chain that manage subscriber account and the content.
However Subscriber receive the content and no longer need to manage the expensive network to distribution center.
No longer need to make decision regarding the orders and stock of the DVDs or Blu ray disc.
2)Netfix traditional chain supply within one day delievery and same day processing was very effective.
Netflix completely depend on the network service providers and where users have to pay higher due to more traffic in the network .
due to this situation that Netflix customer changed overtime .
NO, As Netflix supply chain used the methodology before 2011 is to not acceptable for today customer .
AS there is no many other set of providers will provide the better service with the help of better technology.
However today the Netflix provide the best example that how supply chain strategy can change with new technology to provide the best service in the industry.
3)As we can see that there is a drastic change in the technology and user are adopting the new technologies as well.
All the user will not migrate to the new methodology or the technology there some users still need the physical mailing services from the service provider and should not abandon completely.
However User are getting the live stream using the internet and still Netfilx is mailing the DVDs as its traditional methodology of supply chain will no work out with most of the user today.
However it has to adopt the new technology to serve better to the customer.
Netflix showed that how to adopt the technology to make changes in the marketplace and provide the better service to subscribers.
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