NETFLIX

SUPPLY CHAIN
MANAGEMENT

NFN Jotei, Toyamim Rahman,

Ruma Bhowmik
What is Supply Chain Management?
● It involves managing the flow of materials and

information from suppliers and buyers of raw

materials all the way to the final customer.

● This reduces the overall cost and increase

responsiveness to customers.

● Consists of physical flows and information

flows.
 Who used it in history first?
● Supply Chain Management has a long history
● Frederick Taylor wrote a book in 1911 that focused his research on
improving manual loading processes
● Scientists demonstrated the value of analytics in the study of military
logistics problems during World War II
● These two ideas became the framework to address supply chain and logistic
issues and was referred to as “Supply Chain Engineering”
 What company currently uses it?
● A supply chain includes:
○ raw materials
○ manufacturer
○ wholesaler
○ distributor and retailer
○ SCM system organizes the tasks for each.

● A SCM system organizes the tasks involved in the supply chain process.
● The objectives of a SCM system are to increase customer value and to
develop a reliable advantage over the competition.
Company Profile
● Netflix is the world’s leading internet entertainment
service
● Over 117 million members in over 190 countries
● They offer entertainment service such as TV shows and
movies
○ original series, documentaries and feature films.
● Members can watch as much as they want, anytime,
anywhere all without commercials or commitments.
 How did it start? Reasons?
● Netflix always used SCM systems to run their business, however not always the same
software as they do today.
● They developed their own SCM software to serve the growing number of customers
and continue to grow as a company.
● Netflix uses 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.
● Netflix constantly tries to improve their SCM systems in order to keep their customers
happy, reduce costs, and increase efficiency.
 Why and how did they use it?
● Web-Based SCM System
○ Advance Internet technology enables businesses to communicate with their consumers or
users.

● The Web-Based SCM System consists of commercially available software

packages that provide an integrated system to purchase.
● The Internet-based system allows all the participants in the supply chain to
obtain the information they need to improve their products.
 Streaming and Real-Time Content
● Allows their subscribers to stream content anywhere, anytime
● With streaming, customers can watch videos wherever they are with no limits
on the amount of content they can access
● Through supply chain management, logistic managers can manage shipments
in real time
○ Their exact location
○ Collect data

● They collect real time info which allows Netflix to view their shipment at any
time and optimize their supply chain net
 Big Data Analytics
● Takes the data that it collects from its
users to understand patterns and predict
what people want to watch
● Netflix can apply logistics along with
supply chain to combine big data with a
machine learning algorithm
● Instead of movie preferences, patterns
based on efficiency is analyzed
● Applications predict and recommend
solutions to prevent disruptions
 Single System of Engagement

● The interface is built so that people can easily switch from movies to TV

shows

● Logistic company can locate all the info about every shipment so that

decisions can be made quickly

● This displays every route in the supply chain network

 Innovative Technology
● Before Netflix, streaming videos was not popular or affordable

● With its breakthrough, Netflix put Blockbuster out of business

● Supply chain leaders have started to transit to better technology

● Implementation of loT (internet of things), big data, machine learning and

predictive analytics is revolutionizing logistics management

● This improves performance, efficiency, and costs

Supply Chain Strategy before 2011
● Used information technology and logistics to replace brick-and-mortar stores
such as blockbuster.
● Multiple distribution sites around the United States - more efficient to inspect
and quickly ship out DVD’s.
● One day delivery system and emailed customers a receipt as soon as a DVD
was shipped out or returned.
○ Flaws: If copies of a DVD were not available at one location, it was shipped from a further
location.
○ Shortage of DVD’s led to a longer shipping process and often damaged DVDs.
Supply Chain Strategy after 2011

● 2007- Implemented a more virtual storefront.

● But in 2011 moved to a virtual supply chain.

● No longer has a vast number of distribution centers.

● Flaws : Instead of relying on delivery services, Netflix now has to rely

on cable companies and ISPs.

 Citations
● https://www.savi.com/supply-chain-visibility-netflix-model/
● http://www.chegg.com/homework-help/introduction-to-operations-and-supp
ly-chain-management-plus-myomlab-with-peason-etext-access-card-package
-4th-edition-chapter-2-solutions-9780134111070
● https://www.impigertech.com/blog/supply-chain-management-lessons-from-n
etflix/
● http://cerasis.com/2015/01/23/history-of-supply-chain-management/