Description of Technology
The information systems that Netflix uses to run their business are proprietary software – in other words, most of its technology was built in-house. Since Netflix technology was built in-house, the company can be private about sharing the exact details about how exactly their technology works (McGregor 2005). The essential systems that Netflix uses are the following: supply chain management systems and customer relationships management systems. Customer Relationship Management Systems
Netflix uses customer relationship management (CRM) systems to serve customers more efficiently. CRM systems discover the needs, wants, and behaviors of the customers. This information is then placed in a data warehouse and then analyzed by the CRM system. The goal of having CRM systems is to limit negative experiences with the company and provide positive experiences instead (Haag 50). One of the most important technologies that support Netflix’s customer relationship management is its custom-built intelligent agent. An intelligent agent is artificial intelligence software that helps or acts on behalf of the user to perform repetitive-computer related tasks (Haag 224). In particular, Netflix uses a buyer agent, also known as a shopping bot. A buyer agent is an intelligent agent on a website that assists the consumer in finding a product or service that he or she wants (Haag 225). Netflix’ shopping bots use two techniques in order to predict customers’ DVD preferences: collaborative filtering and adaptive filtering. Collaborative filtering is when a customer is matched with a group of users who have similar tastes. Then, the customer is presented with common selections in that group (Haag 225). Adaptive filtering is when the consumer is asked to rate a product or situation and then monitored over time (Haag 226). Ultimately, Netflix will know what the customer likes and dislikes. By using a hybrid technique, Netflix is able to give accurate, personal recommendations. Netflix has always used CRM systems to serve its customers better. Moreover, as time has passed, Netflix continues to improve its CRM systems to make the customer’s experience more enjoyable. For instance, Netflix’s website offers more than just movie recommendations. It also allows one account to have several lists of movies, so that family members using one account can each create their own list. Since Netflix is an online service, it is important for them to have an interactive website. According to Hastings, Netflix’s warehouse employees never interact with the customers directly; thus, Netflix focuses on developing an extremely personalized website (2005). Supply Chain Management Systems
Netflix uses supply chain management (SCM) systems to track its inventory and information as it moves through its business processes. By using SCM systems, Netflix can reduce the amount of inventory that Netflix keeps at its warehouses and deliver its DVDs quickly.
In order to reduce the amount of inventory kept at Netflix’s warehouses, one of Netflix’s proprietary SCM software can notify the workers where to ship its inventory as soon as it arrives in the warehouse. Once the inventory arrives at the warehouse, it is immediately sent off to its next destination (Haag 189). Therefore, inventory spends more of its time traveling and being used by a consumer and less time sitting idle in a warehouse. This method also ensures that the product reaches its next destination quickly.
The company has always used SCM systems to run their business. However, they did not always use the same software as they do today. Initially in 1999, Netflix had 75 000 customers and 100 support staff using packaged software for customer support. In order to serve the growing number of customers and continue to grow as a company, Netflix developed its own SCM software. Now, Netflix has 3.5 millions customers and only 45 support staff. This is possible due to...
Please join StudyMode to read the full document