Netflix’s supply chain strategy
1. What were some of the key structural and infrastructural elements that defined Netflix’s supply chain strategy before 2011? After 2011?
2. How have the customers’ order winners for Netflix’s customers changed over time? Would today’s customers be satisfied by the delivery performance or selection of Netflix’s “old” supply chain?
3. At the end of 2013, Netflix still had 39 distribution centers mailing DVDs to seven million subscribers, although the latter number had fallen by half from the prior year. Should it abandon its physical distribution system altogether? Why? or why not?
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Answer
- Before 2011, Netflix’s supply chain strategy was heavily dependent on a DVD-by-mail model. Its key structural and infrastructural elements included a wide distribution network of regional shipping centers that were strategically located to reduce shipping time and cost, and a sophisticated inventory management system that utilized data analytics and predictive algorithms to optimize DVD stocking and fulfillment. The company also had strong relationships with movie studios and distributors, which allowed it to secure a large selection of titles for its subscribers.
After 2011, Netflix shifted its focus towards online streaming, leading to a significant change in its supply chain strategy. The company invested heavily in developing its own content, such as original series and movies, and also expanded its streaming services to international markets. This required significant investments in the company’s IT infrastructure, including cloud computing and content delivery networks, to ensure seamless streaming experiences for its customers.
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The customers’ order winners for Netflix have changed over time, with the primary focus shifting from selection and delivery speed to content quality and variety. While customers in the past were mainly concerned with having a large selection of DVDs to choose from and quick delivery times, today’s customers prioritize access to exclusive and high-quality content, as well as the ability to view it on multiple devices. It is unlikely that today’s customers would be satisfied by the delivery performance or selection of Netflix’s “old” supply chain, given their different expectations and needs.
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The decision to abandon Netflix’s physical distribution system altogether would depend on several factors, including the cost of maintaining the system, the revenue generated by DVD rentals, and the company’s ability to retain its current subscriber base. While the number of subscribers using the DVD-by-mail service has declined over the years, it still represents a significant portion of Netflix’s revenue. Additionally, some customers may prefer the DVD-by-mail option due to limitations in their internet connectivity or device compatibility. As such, it may not be feasible or desirable for Netflix to completely abandon its physical distribution system at this time
is of Netflix Inc. Netflix is a service that allows users to stream and watch a wide variety of television shows, movies, documentaries and more on thousands of internet-connected devices. Netflix users can view an unlimited amount of content without being required to watch any ads or commercials. There are new shows and movies added each month, so the possibilities are endless.
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