Netflix Operations Management Report
NETFLIX OPERATIONS MANAGEMENT REPORT
TABLE OF CONTENTS
Executive Summary 2
Introduction .3
Netflix Process Strategy 3
Competitive Climate ..5
Competitive Strategy .7
Inventory Management 10
Supply-Chain Management .11
Management Critique 12
Future Innovation ..14
Conclusion .16
APPENDIX
Exhibit 1 Process Flow Diagram .A-1
Exhibit 2 Video Market Chart ..A-2 Exhibit 3 House of Quality A-3
Exhibit 4 Graph of the Pareto Principle ..A-3
Exhibit 5 Inventory Flow Plan .A-3
Bibliography .. A-4
Executive Summary For a company who emerged in the Dot Com Era and adapted to the virtual world through technology, the CFO Reed Hastings definitely found his niche in the competitive market for DVD rentals. 5.7 million customers receive the luxury of convenience of a subscription service with a personalized recommendation system, an extensive collection of titles, usual one day shipping, an interactive internet interface, detailed movie plot descriptions, and pre-paid envelopes to return the movies. Though being the innovator of this home delivery for entertainment, Blockbuster and Amazon.com compete for Netflix's market share. Netflix is one step ahead of the game by implementing a unique differentiating marketing tool, "No Late Fees." Vital to their success, Nelflix uses a sophisticated software system made specifically to efficiently deliver to subscribers individual title requests within 1-business day. With keeping its costs down, Netflix does not anticipate downsizing, instead it is out to reach higher demands of consumers by having a future innovation of having consumers the ability to download movies. Continuing with low costs, Netflix creates mutually
TABLE OF CONTENTS
Executive Summary 2
Introduction .3
Netflix Process Strategy 3
Competitive Climate ..5
Competitive Strategy .7
Inventory Management 10
Supply-Chain Management .11
Management Critique 12
Future Innovation ..14
Conclusion .16
APPENDIX
Exhibit 1 Process Flow Diagram .A-1
Exhibit 2 Video Market Chart ..A-2 Exhibit 3 House of Quality A-3
Exhibit 4 Graph of the Pareto Principle ..A-3
Exhibit 5 Inventory Flow Plan .A-3
Bibliography .. A-4
Executive Summary For a company who emerged in the Dot Com Era and adapted to the virtual world through technology, the CFO Reed Hastings definitely found his niche in the competitive market for DVD rentals. 5.7 million customers receive the luxury of convenience of a subscription service with a personalized recommendation system, an extensive collection of titles, usual one day shipping, an interactive internet interface, detailed movie plot descriptions, and pre-paid envelopes to return the movies. Though being the innovator of this home delivery for entertainment, Blockbuster and Amazon.com compete for Netflix's market share. Netflix is one step ahead of the game by implementing a unique differentiating marketing tool, "No Late Fees." Vital to their success, Nelflix uses a sophisticated software system made specifically to efficiently deliver to subscribers individual title requests within 1-business day. With keeping its costs down, Netflix does not anticipate downsizing, instead it is out to reach higher demands of consumers by having a future innovation of having consumers the ability to download movies. Continuing with low costs, Netflix creates mutually
Bibliography: "Interview with Reed Hastings" n Post 2002 http://www.npost.com/interview.jsp?intID=INT00032 "Throttling Angers Netflix Heavy Renters" ABCNews Feb 10, 2006 http://abcnews.go.com/Business/wireStory?id=1603927&business=true MICHAEL LIEDTKE, "Netflix offers $1M for better picks" AP Business Writer Mon Oct 2, 2006