Information System Paper (1800-2300words)
kylecs14
TermPaperA.pdf
Term Paper, Part A
TIM 101
A supply chain refers to all parties involved directly or indirectly, in the procurement of a
good. Supply chain management involves the management of the flow of information among
stages in a supply chain in order to maximize the total effectiveness as well as the profitability of
the supply chain (McEntee, 2017). For the past years, firms focused primarily on production as
well as quality improvements within their operations, however, now their efforts have extended
beyond their operations to influence the entire supply chain including suppliers’ suppliers, and
consumers’ consumers. The modern supply chain is a complex network of suppliers, logistics
companies, sales, and marketing, as well as other concern partners connected mainly through
information networks as well as contract relationships. Supply chain management systems
manage and improve these relationships. Netflix Company reinvented and captured the market
using supply chain technology.
I am very glad that our class Tim 101 has invited a guest speaker Mr. Ming Chao. He is
one of the very first students at the University of California Santa Cruz studying Technology
Information Management. Technology Information Management is also known as Information
System Management (ISM). Ming Chao is Graduated in 2004 with a bachelor science degree.
And then he also received his master degree from Santa Clara University, Ming studied Master
Business Administration also know as MBA at Santa Clara University. Then he started working
as Netflix as head of trade compliance. Which that his job very much depends on the stuff he
learns from Technology Information Management. Mr. Ming has explained to us what he does
for Netflix, it is very interesting. Here is what I learned.
Netflix was established in 1998 at a time when the movie industry was largely crowded
by small retail medium-sized companies that were characterized by delayed deliveries (Lusted,
2013). During that time, the market was dominated by giant firm Blockbuster Inc. Although
Blockbuster had established its place in the market, it had no real marketing strategy and its
strength was based on consumer impulsive purchasing. The firm enjoyed huge success with their
sales almost amounting to 100 percent success when Netflix joined the market. Upon its
establishment, Netflix realized that the market was largely depended on brick-and-mortar
marketing techniques. The technique of this firm was during the commencing of online retailing.
Selling online was gaining a new opportunity in a traditional way. This obligated Netflix to
capitalize on this opportunity; they opened a new website that specialized in the use of
cross-platform technologies in delivering their services. Further, they also tested different pricing
models in an attempt to maximize sales. This eventually paid off; today Netflix is the largest
DVD rental service, offering flat rate products by mail to their customers. The company has
amassed a collection of over 70, 000 titles and have over 70 million subscribers. Moreover, it has
over 40 million and shipments about 1.8 million a day. On average their spending is about $320
million a year on postage. This firm provides its customers with monthly flat-fee service for the
rental of their products (Chopra, & Veeraiyan, 2017).
Netflix supply chain takes the form where a customer or subscriber creates an ordered list
known as a rental queue, of movies to rent. The products are then delivered individually via the
U.S postal services from a range of regional stores. A customer keeps hold of the DVD for as
long as he desires, however, there is a limit to the number of DVDs determined fixed by
subscription level checked out any given time. To rent a new product, the customer mails the
previous (watched) one back to the firm in a prepaid mailing envelope. Upon receiving, Netflix
ships another DVD in the customer’s rental queue.
Chopra, & Veeraiyan (2017), tell us that for a business to be successful, it has to
incorporate real strategies to aid propel success. A critical analysis, as well as evaluation, reveals
that Netflix had to an extent incorporated these strategies in its operations to garner success
worldwide. It mainly employs focus strategy along with others playing minor roles in the
company’s pursuits. Netflix concentrates its efforts in developing a new product and then
invested in selecting as well as incorporating unique traits that meet the needs of the consumer.
Lusted (2013) emphasized that by adding value in a good creates uniqueness in the product
which in turn attracts consumers. The improvements made on the product certainly will raise the
purchase price of which consumers will be willing to pay provided they receive it on a timely
basis. When this firm joined the market, it targeted the renting of DVDs in the movie industry.
They achieved this by the use of enhanced marketing technology which other firms had not
incorporated to promote their sales. Netflix’s newly launched website integrated a search engine
which enabled their customers to explore, access as well as select the movies of their choice. The
firm’s management exhibited such talent and cleverness in marketing their goods by employing
already established supply chain infrastructure and technology. By using the U.S’s postal
services, the company incurred lower expenses in delivering the products to its customers since
they were very light in weight. Further, when creating value as well as uniqueness to their
products, the firm endeavored to characterize its products with user-friendliness, quality, and
unique selections.
In McDonald & In Smith-Rowsey (2016) asserts that a firm that invests in this approach
is bound to succeed only when its led by members who are skilled and dedicated as a team.
Netflix management was led by entrepreneurs at heart. These entrepreneurs managed the
company through the pursuit of excellence as well as aimed at gaining a greater competitive
advantage in the market. Their advantage and goodwill revolve around high product quality as
well as innovation. The entrepreneurs did not just focus on DVD sales but had other
considerations in the innovation of their products. Among these were the focus on high video
demand and its alternatives. Although Netflix did may not necessarily integrate all the generic
features due to the nature of their business but evaluations of the case study reveal that the
company did not pay much attention to cost leadership. Netflix could not employ some pricing
models in their operations, for instance, Netflix never involved in a situation where it would
incur a huge cost in ads only to gain a partial income from such endeavor. The technology has
paced Netflix at an upper hand compared to other firms involved in the same business pursuits.
The firm’s management was keen on exploiting information technology in incorporating
their supply chain activities in its services. For instance, Netflix turnaround time for deliveries of
products was largely enhanced by the use of appropriate technology. Each of their customers
who opted to stay or part ways with the company was requested to leave fully answered
questionnaire concerning their decisions. These feedbacks were used to identify their weaknesses
as well as determine new techniques to fulfill customer needs. Other supply chain activities
traversed the infrastructure that Netflix was using and its implementations of new technologies to
improve value for its customers. The firm’s system product acquisition was digitalized with
automated searches using integrated search engines.
Implementation of Information Technology
To remain competitive in already a crowded industry and maintain a large customer base,
Netflix has implemented an IT infrastructure that offers reliable support for its business
transactions. Among these is the data mining application which has been integrated into the
firm’s information system to aid in making decisions. Since Netflix is a high customer-focused
company, data mining has assisted in enhancing communication, aided comparison of prices
between the firm and its competitors to evaluate consumer satisfaction, evaluate supplier
relationships, enhance staff skills, as well as provide an overview of the firm’s overall
performance and progress (Chopra & Veeraiyan, 2017). Furthermore, Netflix has also
incorporated the decision support system that has aided in improved decision making from the
firm’s data stores to provide real-time sales compressions. Additionally, the company has also
incorporated consumer relationship management in their midst to help sustain the old and new
consumers, meet their needs, as well as establish good working relationships with their
competitors and customers at large. The supply chain incorporated by this company has made it a
real force in the market and has enabled it to optimize all factors relevant to consumer
satisfaction. The management can now identify key factors that are central to its success as well
as enable them to optimize all aspects of controls in marketing strategies, supply as well as the
acquisition of logistics.
Based on the supply chain analysis above, the recommendation for the firm is that it
should continuously adapt to ever-changing technology and explore new market opportunities.
The firm should also employ experts on cross-culture management to ensure that the cultural
aspect is incorporated in their pursuits. Additionally, the company could also incorporate
user-friendly software products across its platform to enhance usability. And finally, they should
continuously evaluate the role played by technology in propelling their function.
References
Chopra, S., & Veeraiyan, M. (2017). Movie rental business: Blockbuster, Netflix, and Redbox.
Evanston, Illinois : Kellog School Pulishers
In Mcdonald, K., & In Smith-Rowsey, D (2016). The Netflix effect. Technology and
entertainment in the 21st Century. New York : Bloomsbury Publishers
Kevin McEntee, (2017). “Compexity in the Digital Supply Chain,” Netflix Technology Blog,
Retrieved from https://medium.com/netflix-techblog/complexity-in-the-digital-supply-chain
accessed Nov 2017
Lusted, M. A. (2013). Netflix: The Company and its founders. Minneapolis, MN: ABDO Pub
