Netflix-The DVD Giant

Netflix has grown to be one of the largest and most widely known distributor of mail delivered DVDs. Launched only eleven years ago, Netflix has branded itself against the top competitor in the movie rental business, Blockbuster. Blockbuster dominated the movie rental business, but had not broke into what would soon be the most profitable move in movie rentals. Soon after the launch of Netflix, Blockbuster announced its counter-product which had its own DVD-by-mail service, to which Netflix sued Blockbuster for patent infringement. However, no other company could touch Netflix.

The biggest question that most people seem to want to know is “How do they do it so fast?” That question is not easily answered, but from what the company has told the public, it is a combination of manual human labor and large machine processing. There are fifty-eight warehouses all spread out through the United States and each warehouse is intentionally unmarked and located in a secluded or discrete/unidentifiable business park. There are no logos or insignias anywhere and each employee is not allowed to release the location of a Netflix warehouse. Each shift starts at 3am where there are forty-two people hard at work, opening, examining and sorting each DVD sent to the warehouse.

An astonishing over 60,000 discs are shipped daily at a given warehouse location. That means that those forty-some people who are hard at work in the warehouse have to collectively inspect over 60,000 discs daily for scratches or placed in the wrong DVD sleeve, etc.

Once the hard and long manual labor is over, the inspected discs are put through a machine that performs many tasks all at once. This large machine scans the discs into the warehouse’s inventory at a record of 30,000 discs per hour. Once the machine has scanned the discs, it reads the bar code and a customer then receives an e-mail confirmation that their disc has arrived at Netflix. The discs are then scanned another time to see if the title has been requested by another customer. The machine then sorts and separates each of the discs by zip code and is sent to another machine, the “Stuffer.” This machine takes the sorted discs and stuffs each of them into an envelope, which is then sealed and labeled by a laser.

Once the manual labor and the machine labor have finished, at 5pm every night the unmarked, inconspicuous trucks are loaded with the newly inspected, labeled, and sealed discs to be sent to its next customers.

The efficiency and secrecy of this company is far superior to any other of its kind. Netflix has mastered efficiency by incorporating manual labor with automated machine labor. Many companies would solely rely on machine operated scanning, inspecting, sorting, labeling, sealing and the like because they would think that it would be the fastest way to do the process. However, Netflix seems to know much better. Their error margin is far less than a quarter of one percent, which is unheard of in any business. There are some places where machines can completely take over the labor processes and be the most efficient, but other times, it is not choosing human over machine or vice versa, but rather deciding what combination of the two makes the most sense and the most efficient.

http://articles.chicagotribune.com/2009-08-04/entertainment/0908030313_1_dvd-by-mail-warehouse-trade-secrets