Business Driven Technology 6th Edition by Paige Baltzan

Exercise 30

Netflix Your Business
Netflix reinvented the video rental business using supply chain technology. Netflix, established in 1998, is the largest online DVD rental service, offering flat-rate rental-by-mail to customers in the United States. Headquartered in Los Gatos, California, it has amassed a collection of 80,000 titles and more than 6.8 million subscribers. Netflix has more than 42 million DVDs and ships 1.6 million a day, on average, costing a reported $300 million a year in postage. On February 25, 2007, Netflix announced the delivery of its billionth DVD.
The company provides a monthly flat-fee service for the rental of DVD movies. A subscriber creates an ordered list, called a rental queue, of DVDs to rent. The DVDs are delivered individually via the United States Postal Service from an array of regional warehouses (44 in 29 states). A subscriber keeps a rented DVD as long as desired but has a limit on the number of DVDs (determined by subscription level) that can be checked out at any one time. To rent a new DVD, the subscriber mails the previous one back to Netflix in a prepaid mailing envelope. Upon receipt of the disc, Netflix ships another disc in the subscriber's rental queue.
Project Focus
Netflix's business is video rental, but it used technology to revamp the supply chain to completely disrupt the entire video rental industry. Reinvent IT is a statewide contest where college students can propose a new business that they will reinvent by revamping the supply chain (such as Netflix has done). You want to enter and win the contest. Reinvent a traditional business, such as the video rental business, using supply chain technologies.