MIS Exam 2

Oops! - Netflix

"Neither RedBox nor Netflix are even on the radar screen in terms of competition." - Jim Keyes, CEO Blockbuster, 2008 Note: Netflix started streaming in 2007, Blockbuster filed for bankruptcy (the first time) in Sept. 2010 and closed it's last store in December, 2013.

Amazon Web Services - 2017 Results

---Amazon's North America e-commerce business delivered fourth quarter operating income of $1.69 billion on revenue of $37.3 billion. ---International e-commerce sales were $18.04 billion with an operating loss of $919 million. ---AWS had operating income of $1.35 billion for the fourth quarter with sales of $5.11 billion. ---For the year, Amazon's international e-commerce operating losses eclipsed the company's North American operating profit. AWS had 2017 operating income of $4.33 billion on sales of $17.46 billion. -SO a lot less in sales, but a lot more in profits. -A good amount of their profit comes from web services

Netflix - Brand Strength

---Brands are built through customer experience. • Walmart and Blockbuster could create brand awareness but couldn't translate that into an industry advantage. (Talking about mail DVD's - Walmart and Blockbuster had bigger brands at the time and brand awareness but couldn't translate that into any type of advantage because people knew them for what they were. Walmart was a big department store with very low prices. Blockbuster was a place you went to pick up your DVD's.- the brand and advantages didn't translate) ---Netflix remained a segment leader, as it had: • An early entry • Effective market execution

What is a Business Process?

---Business process: a standardized set of activities that accomplish a specific task, such as: • Processing a customer's order • Accounts payable process • Supply chain communication and visibility • Product quality assurance testing -It can be any number of activities that make up/in a process, 2 or 2,000 activities

Netflix - Content providers now have higher bargaining power

---Content providers are the sole source for unique titles • Video content is perfectly differentiated - there is only one owner who can provide that content • The media industry is an ologipoly with only a few media conglomerates controlling over 90% of U.S. media consumed o Comcast, Disney, National Amusements, AT&T (WarnerMedia), Sony • With DVDs, Netflix can pay once and rent many times • BUT with Streaming, Netflix must pay a streaming license o Flat rate for unlimited streaming o Rate based on # of subscribers o Per stream rate e.g. for exclusive content - e.g. $4/stream o Rate for a specific number of streams ---• Netflix costs of acquiring content increased 43 times the amount that it had spent in the past 5 years.

Sales Order Processing

---Customers place orders with a customer service representative who creates a documenterm-6t with information on: • Customer • Material Ordered - product and quantity • Pricing conditions for each item • Schedule lines - delivery dates and quantities • Delivery Information (location) • Billing information ---Information is pulled from master data on customers, materials and Prices to minimize data entry errors. (the more you can pull from existing files the fewer data entry errors you're going to have) ---Credit Check is performed

Amazon and the Cloud: From Personal Storage to AWS

---Kindle: Stores purchase content off-device and can load a customer's virtual bookshelf on demand. (competes with iBooks) ---Amazon cloud drive • Offers file storage similar to Dropbox and Google Drive. ---Amazon cloud player • Streams music purchases through a Web browser or smartphone app. (Competes with Spotify and Apple) ---Amazon Web Services - AWS • Allows firms to rent industrial-strength computing capacity on an as-needed basis. • Goal was to monetize the firm's expertise in scalability and reliability.

Zara

---Known as a "fast fashion" retailer -very effective at what they do; worldwide • clothing produced rapidly • in response to the latest trends • at an affordable price ---The Cube - headquarters • Houses: business operations, design, manufacturing, and distribution ---Clothing Manufacturers by size 1. Zara - fast fashion 2. H&M - fast fashion 3. Uniqlo - timeless classics

Amazon Prime Now Hub

---Provide 2-hour free delivery in larger, metro areas • In Texas: DFW, Houston, San Antonio, and Austin ---For Amazon Prime Members only ---Orders are placed on the Prime Now site/app • Not through their main site ---Processing • Most order are put in paper bags rather than boxes • Pickers: use handheld scanners,Pick products along a specific routes as directed by the device, Place items in a bag & seal it; placed on carts for pickup • Deliveries are handled by: Amazon trucks,Amazon Flex independent contractors - in-house Uber-like deliveries, and Delivery Service Partners (DSPs) - they are using these more than Flex drivers now

Rival firms refuse to offer Netflix streaming rights

---Rival firms are limiting content • Who would pay HBO $15 if you can have the same content on Netflix? ---Most firms don't want to undercut higher revenue early windows • If HBO has exclusive rights to broadcast a film, it will be pulled from all other services until the exclusive time window expires • Windowing - making content available to a given distribution channel for a specified time window. o Channels - Theaters, Hotels, Airlines, DVD, Pay per view, Subscription-based pay television, Commercial TV o Using different revenue models - ticket sales, disc sales, license fees for broadcast

Amazon Leverages their Rich Data Asset

---TO create "your" personal site: • Use insights from your data • Use Collaborative filtering o Monitors trends among customers and uses the data to personalize an individual customer's experience. • Cookies • Conduct A/B test ---35% of sales come from their firm's recommendations

Zara - Design

---Zara designs follow evidence of customer demands • Traditional clothing industry will create trends via fashion shows ---At the Cube • Using designer teams instead of individuals o Designer Incentive - bonuses tied to success of the team • 300 designers; recent design school grads • Design 30,000 items per year; compared to H&M - up to 4,000 per year ---Designs staff communicates directly with store managers

Zara - Technology and Strategy

---Zara has some proprietary technology and systems, but mostly the technology and software is available to anyone. ---Zara capitalizes from the technology by integrating it into a very specific and detailed business strategy In other words: It's how a company uses technology and MIS that creates competitive advantage!

Amazon- they are in the Ad Business too!

--Ads appear on their site, Kindle, etc. --A Kindle welcome screen ad can cost up to $1 million --Re-targeting ads on other sites

Book Notes 7.2- Amazon

--Amazon's sophisticated fulfillment operations speed products into and out of inventory, reinforcing brand strength through speed, selection, and low prices. --Rapid inventory turnover and long payment terms enable Amazon to consistently post a negative cash conversion cycle. The firm sells products and collects money from customers in most cases before it has paid suppliers for these products. --The cost structure for online retailers can be far less than that of offline counterparts that service similarly sized markets. Savings can come from employee costs, inventory, energy usage, land, and other facilities-related expenses. --Amazon's scale is a significant asset. Scale gives Amazon additional bargaining leverage with suppliers, and it allows the firm to offer cheaper prices in many categories than nearly every other firm, online or off. Scale through multiple warehouses allows Amazon to offer more products, a greater product selection, and same-day delivery for urban areas near warehouses. Amazon financials suggest that the firm is deferring profitability due to its increased investment in capital expenditures such as its warehouse and data center buildout. --Around 40 percent of products sold on Amazon are offerings sold through Amazon Marketplace by third parties. Amazon gets a cut of each sale, maintains its control of the customer interface, and retains the opportunity to collect customer data that would be lost if users went elsewhere for a purchase. --Amazon takes advantage of the long tail, a concept where firms can profitably offer a selection of less popular products. Amazon's enormous product selection—with offerings from the firm and from third parties—reinforces its position as the first-choice shopping destination. --Amazon's ability to acquire and leverage data further allows the firm to enhance customer experience and drive sales. Internet retailers have a greater ability to gather personal data on consumers than do offline counterparts. Data is used in personalization and in innovation fueled by the result of A/B experiments. --3 Pillars of Amazon's Business: large selection, customer experience (sometimes referred to simply as "convenience"), and lower prices -To foster improvement, warehouse movements are continuously logged and productivity is tracked and plotted. High-performing workers are praised throughout the day, with management calling out the names of workers who hit or exceeded goals. -Amazon software enforces an additional rule when stocking shelves, known internally as "random stow": No two similar products sit next to each other. While this makes Amazon's shelves look like an unorganized hodgepodge, when a product is the only one of its type on a given shelf, this actually reduces the chances that a picker will confuse a size or color or otherwise grab the wrong thing -In a set of steps called SLAM (scan, label, apply, manifest), and taking only about a second, packed boxes are weighed, and the software does an additional check to see if the weight is what's expected. If an order is too light, that's a sign that a box is missing an item, too heavy and the wrong item may be in the order. Boxes are scanned, and shipping labels are printed and blown on with a puff of air. Systems only stamp names and addresses on boxes after orders are complete and boxes are sealed. No floor workers know who you are or what you've ordered. Packed boxes are then loaded onto separate trays that ride into another conveyor belt system, where they are scanned and tipped down the correct chute among dozens of choices so that the box is routed onto the appropriate truck for that order's shipping provider and destination. Some warehouses ship products so quickly that outbound trucks are dispatched with a less-than-three-minute window between them -Kiva robots allow shelves to be slotted closer together and can be queued up for rapid, never-colliding, constant round trips. This helps Amazon store as much as 50 percent more product in Kiva-equipped warehouses (greater selection at lower cost), it has reduced unload time for inbound inventory from "hours" to as little as 30 minutes, and it has cut average order fulfillment time from about an hour and a half to as little as fifteen minutes. -Amazon has actually increased staff since deploying staff -It's estimated that Amazon spends over $26 million on equipment and $46 million total getting a large warehouse on board with Kiva robots -Amazon boasts on-time package delivery rates of up to 99.9 percent or more -Amazon alone consistently reports a negative CCC(cash conversion cycle)—it actually sells goods and collects money from customers weeks before it has to pay its suppliers. This gives the firm a special advantage since it has an additional pool of cash that it can put to work on things like expanding operations, making interest-bearing investments, and more -Amazon's private-label brands include AmazonBasics (cables, batteries, and other consumer electronics accessories), Mama Bear (diapers and other baby products), Happy Belly (foodstuffs, including nuts and trail mixes), Presto! (home cleaning products), Pinzon (bedding and bath), Strathwood (outdoor furniture), Pike Street (bath and home products), Denali (tools), and at least seven private-label clothing brands. -Amazon has set standards that require vendors to send it products using less bulky, easier-to-open, and more environmentally friendly packaging. -Amazon coder Greg Linden proposed that Amazon present "impulse buy" recommendations that match patterns associated with the consumer's shopping carts (e.g., customers who bought that also bought this), he was originally shot down by a senior vice president. Linden was undeterred; he ran an A/B testA randomized group of experiments used to collect data and compare performance among two options studied (A and B). A/B testing is often used in refining the design of technology products, and A/B tests are particularly easy to run over the Internet on a firm's website. Amazon, Google, and Facebook are among the firms that aggressively leverage hundreds of A/B tests a year in order to improve their product offerings.—capturing customer response for those who saw option "A" (recommendations) versus option "B" (no recommendations). The result overwhelmingly demonstrated that recommendations would drive revenue. While the "abandoned shopping cart" problem plagues many Web retailers, Amazon is considered one of the best "converting" e-commerce sites, moving customers from product evaluation through completing checkout -Amazon has claimed that as much as 35 percent of product sales have come from the firm's recommendations. Scale means the firm has more users doing more things, allowing the firm to collect more observations that fuel greater accuracy in tailoring the user experience. And this fuels that oh-so-important, brand-building positive customer experience -Nearly half of all units sold by Amazon are from the firm's 2 million participating Amazon Marketplace sellers worldwide. Marketplace allows Amazon to build a long tail of product offerings without the costly risk of having to take ownership of unproven or slow-moving inventory, while the firm gets fat and happy in the middle of a two-sided network effectProducts or services that get more valuable as two distinct categories of participants expand (e.g., buyers and sellers). (i.e., more buyers attract more sellers, and more sellers attract more buyers)

Choosing the Right Shipping Partner - Amazon

Starting with shipping, they look for the cheapest way to do it. Your items or orders could be shipped different ways. (UPS, Fedex, etc.) First have to decide if can get it from a Prime delivery hub and how quickly can it be done. If can't be filled at Prime hub then goes to an Amazon fulfillment center where they decide if better UPS or Fedex, if no then it goes to one of their sortation centers and then they take it to the USPS. However, they are now building their own delivery business.

Amazon Key

Using a smart lock device and the Key app -In home delivery: get compatible smart lock, cloud cam, and key app. Unable to unlock without keys, monitor your door from anywhere, schedule secure access for the people you trust, notified anytime your guest unlocks/locks your door. With Amazon Key, you get free in home delivery. (You can watch the delivery live or watch the delivery later) Can lock door by using Alexa. -In Car Delivery: Online available to Prime members; must have a vehicle with remote unlock capability. Same thing as in house just with your car as long as they know where your car is parked they can deliver to the trunk of your car.

Amazon is the Forbes #____ Retailer

#1

Amazon - Acquisitions and Category Expansion

---Acquisition & expansion has enable it to: • Broaden its product offerings • Absorb potentially threatening competitors • Experiment with new products • Integrate value-added businesses and technologies ---Including: •Whole Foods • Amazon Business • Amazon Instant Video - streaming • Amazon Fresh - like FreshDirect --all meant to increase the customer experience and make switching cost higher

Amazon has a Negative CCC!

---Cash Conversion Cycle Period between distributing cash and collecting funds associated with a given operation. • Barnes & Noble - 78 days • BestBuy - 70 days • Amazon - negative (collect cash upfront) -tremendous competitive edge!! -basically financing their business with other peoples money! ---Goal at Amazon: Sell quickly and pay suppliers later o Inventory turns - number of times inventory is sold or used during a specific period

Why Study Zara?

---While competitors are declining, Zara is: • Profitability is among the highest in its industry ---Characteristics • Competitively priced merchandise • Higher margins • Few markdowns • Faster inventory turnover (much faster than everyone else) • Reduced risk • Less advertising

Book Notes 7.6- Amazon

-Amazon offers personal cloud storage options for all forms of media, including books, games, music, and video. It even offers file storage akin to Dropbox and Google Drive. These personal cloud offerings allow users to access files from any app, browser, or device with appropriate access. -Amazon Web Services (AWS) allows anyone with a credit card to access industrial-strength, scalable computing resources. Services include computing capability, storage, and many operating systems, software development platforms, and enterprise-class applications. -Firms using cloud providers lose control of certain aspects of their infrastructure, and an error or crash caused by the cloud provider could shut off or scale back vital service availability. Amazon and other vendors have experienced outages that have negatively impacted clients. Despite these challenges, most firms believe they lack resources and scale to do a higher-quality or more cost-effective job than specialized cloud providers. -AWS and competing cloud services offer several advantages, including increased scalability, reliability, security, lower labor costs, lower hardware costs, and the ability to shift computing from large, fixed-cost investments to those with variable costs. Since Amazon also uses products developed by AWS, the firm's e-commerce and Kindle operations also benefit from the effort. -AWS provides the majority of Amazon's corporate profit and is significantly ahead of rivals in terms of market share and available infrastructure. -Fire TV and Alexa services are also thin devicesThin or thin client computing devices have very little computing power in the device itself, and instead perform the bulk of computing and storage over the network, "in the cloud." Smart speakers and television streaming sticks are all examples of thin clients. The term is also used to describe applications that run in a browser, but where most of the computing happens remotely (e.g., SaaS tools like Salesforce)., with very little computing in the devices themselves, and the bulk of computing (apps, recommendation software, media storage) happening at a remote location, over the Internet. -AWS, or Amazon Web Services, allows firms, and really anyone with a credit card, to rent industrial-strength computing capacity on an as-needed basis. The best-known offerings are Amazon's EC2 (Elastic Computing Cloud), which provides the virtual equivalent of physical computing hardware; and S3 (Simple Storage Service), providing Web-based storage. -Amazon WorkSpaces provides access to fully functional, remotely served, virtual Windows PCs through the cloud—offered up in a desktop browser window, or even on an iPad or Kindle Fire—for prices starting at just $25 a month. -While e-commerce brings in the most in terms of sales revenue, AWS is now responsible for the majority of the firm's profits. AWS brought in $25.7 billion in 2018, that's more money than McDonald's, Starbucks, or drug company Eli Lilly

Zara - Fast Fashion

1. Design 2. Sourcing and Manufacturing 3. Retailing 4. Distribution

Order to Cash Process

Getting customer to order, processing the order, filling the order from your warehouse, getting it delivered to the customer, getting the invoice delivered to the customer, and then arranging payment.

Amazon

an Empire stretching from cardboard box to kindle to cloud

Amazon is the

largest retailer in the world AND the largest cloud computing offering in the world

Netflix - Leveraging the Data Asset

**this is where Netflix really makes a difference. They use the data to provide a better customer experience. They were building on that convenience with Cinematch. ---User data can be leveraged to provide better customer experience and build brands. ---Cinematch is a proprietary recommendation system (tracking what we were buying/watching) • This type of software is known as collaborative filtering: 1. It monitors trends among customers, and 2. Uses this data to personalize an individual customer's experience • Personalization is key - especially when there are so many offerings • Mathematicians write computerized algorithms to determine what your personalized page should look like o Determining clusters of movies o Using customer movie ratings o Using data collected from customer behavior on their website/app o DVD - recommended movies from the stock of their closest warehouse

Netflix Background

--"Netflix is the world's leading internet entertainment service with over 148** million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments." --**Almost 16 million new subscribers were added from Jan-Mar 2020 bringing total to 182 million!!!

Billing

---A Billing Document is created by copying information for the sales order and delivery document into the billing document which is used to create the invoice. ---Creating a Billing Document will automatically • Debit the customer's accounts receivable account • Credits the revenue account. ---Postings also be made to other accounts. ---Invoice splits can be used to bill for different items like materials and services. (Splits or leave them separate) ---Collective invoices can be used to consolidate deliveries onto one invoice to minimize paperwork.

Netflix - Largest Customer Base

---A large customer base delivers true Economies of Scale • Economies of scale are cost advantages reaped by companies o attained by leveraging the cost of an investment across increasing units of production. o Having a bigger customer base enables firms to: - Have better cost structure - Have better profit prospects -Offer better pricing -Same cost to run each business but Netflix had many millions more subscribers. (Netflix had 23 million subscribers with the cost to run being $300 million. Blockbusters had 1.3 million subscribers with the same cost to run of $300 million.)

Amazon Brick and Mortar

---Amazon Books (expanding their brick and mortar business front) • Has about 18 stores • Purpose: help customers discover great books • Shelves are organized sort of like the website o No prices o Stars & 1 review on the card o You might also like ---Selling Books • 4+ ratings • Top sellers • New releases ---Selling devices • Kindle, Echo, Fire stick ---Its an on-ramp to recruit more Prime members ---Amazon Go A store without registers or checkout lines Sell prepared foods and grocery staples • Started with only 1 store (in Seattle within one of their corporate buildings) • As of May 2019: o Seattle (4) and Chicago (4), and two in San Francisco (2), New York (1) --Process o Scan your phone when you walk in (use the amazon go app to enter the store) o Shop, bag, and just walk out (anything you pick up is added to your virtual cart and any items you put back will automatically be removed from your cart. Once you walk out your amazon account will automatically be charged.) o Uses cameras & artificial intelligence - Image recognition, motion detection, weight sensors (makes sure no one steals anything) - Could use this technology at Whole Foods one day -Up in the ceiling and rafters is full of cameras and sensors that keep track of where the items are located- very very complex technology to make it work -- HOWEVER the technology is not perfect as some youtubers have proven

Technology - Netflix

---Amazon Web Services (cloud) • Largest AWS customer (Netflix holds all of their movie titles and shows in the cloud) • Amazon handles hardware, Netflix focuses on software in terms of content, analytics, etc. ---Broadband -Largest broadband user • 125 million hours of TV/Movies per day • Largest service user. Uses more broadband than YouTube, Hulu, Amazon, iTunes, HBO Go combined -Netflix couldn't exist if it weren't for Moore's Law ---Data Storage • 12 petabytes of data per day • Content Delivery Network - "Islands of Access" special service servers (this is an example of edge computing - basically because of the amount of broadband that Netflix is using, if they just had one central cloud provider, it would create a huge jam due to the demand going to just one data center.) ---Data Analytics • Collaborative Filtering Systems ---Software Development • Custom • Open Source- willing to share it.

Amazon has scale advantages

---Amazon has high bargaining power with Suppliers • Can achieve: o Lower prices o Longer payment terms ---Created its own branded products • Amazon Basics, Mama Bear, Happy Belly, etc. ---Acquired Whole Foods Market •organic grocery store (gives amazon a lot more locations to store products) ---Entered the B2B market Amazon Business o corporate procurement market, which Forbes estimates as being valued at $7.2 trillion

Inventory Sourcing

---Inventory Sourcing determines: • If a product is available (availability check). o Full pick o Partial pick o No pick (sold out, customer doesn't want partial shipment) • How the product will be supplied: o From stock on hand. o From production or purchase orders that should be available. o From make-to-order production. o Shipped from an external supplier. o Shipped from another plant or warehouse. (May do multiple shipments from different locations for the same order)

Delivery

---Delivery activities include: -You create a delivery documents once you've got everything picked, you package it up and create your shipping documents. You update your accounting and inventory data immediately. • Creating delivery documents • Creating transfer orders for material picking o Transfer ownership from stock to order • Provide packing information (if required) • Goods issue (updating accounting and inventory data) o Goods allocated to shipping order ---A delivery can be created for each sales order. ---Sales orders may split into multiple deliveries (availability). ---A delivery may combine a number of sales orders for efficiency. -If you're doing partial deliveries how do I break them apart? -You may create a delivery for each sales order. You may combine sales orders. Depends on the timing of orders through the picking process, fulfillment process, and what the rules are relative to what customers can get and what they want.

Digital Transformation

---Digital transformation is the changes associated with digital technology application and integration into all aspects of human life and society. It is the move from the physical to digital. ---Digital transformation refers to how a company has or is transforming its core business processes using digital technology in order to gain competitive advantage and gain differentiation in its market segment. ---It refers to the streamlining of business process through digital computer applications and hardware to achieve collaboration and interaction between its partners as well as provide greater customer value. --"The fundamental purpose of digital transformation is not to digitize an existing state but to reimagine an entirely different business model that habitually places technology at its core. " -Forrester Research

Zara- Manufacturing and Logistics

---Efficient! • From idea to store implementation - 15 days o Competitors - once or twice a season; H&M 3 to 5 months • Zara is 12x faster than Gap (yet offers 10x more unique products) ---How? • Vertical integration - owns several layers in its value chain o 60% of Zara's merchandise is produced in-house o Makes 40% of its own fabrics & purchase dyes from its own subsidiary • JIT Manufacturing (have raw materials show up the day you're ready to start making it; have to have very extensive software and extremely good data to make JIT Manufacturing work because if data is wrong, lots of problems ) • Inventory optimization models -determine how much for each store, sizes, etc. • Heavy use of IT • Fabric cut by robots • They use some contract manufacturers: o Trendy clothes - shops are close (Portugal, Morocco, Turkey) o Staple items with longer shelf life (jeans & t-shirts) - Asia & Latin America

Customer Obsession is Key

---Every 2 years every employee must spend 2 days on the service desk answering customer calls ---Website Features • One-click ordering • Customer reviews • Recommendations • Bundles • Search inside the book • Where's my stuff? ---Amazon Prime Subscription • 100 million customers • $119/year o Prime Video o FREE Two-Day shipping o FREE Same-Day Delivery o Unlimited music streaming o Unlimited photo storage o Unlimited reading • Discounts at Whole Foods --these are building customer experience and increasing switching costs ---Amazon has repeatedly scored the highest rating on the University of Michigan's American Customer Service Index (ACSI) • 2010-2018 - Amazon • 2019 - Costco

Netflix- First Sales Doctrine applies to DVD but not Streaming

---First Sale Doctrine • Ruling that states that a firm can distribute physical copies of legally acquired copyright-protected products • "First Sale" o Copyright owner has exclusive rights on the 1st sale of a specific item • After the "First Sale" o The purchaser can sell it, rent it out, lend it, give it away it, destroy it (but can't copy it) --Ex. Think of Netflix going to MGM and buying the rights to a movie or buying 100,000 DVDs of a certain movie. They pay the price and once they've done that the copyright owner is out of the equation. Now Netflix has 100,000 DVD copies so they can rent it as many times as they want to. ---Only applies to the physical product so now that Netflix is streaming it is different. Now, the content provider, MGM says they can stream this to their customers but they can only do it in the US and Mexico. If you want to do it in Europe its a different licensing agreement. And you can only do it for a certain amount of time. So the power started shifting back to the content providers. o Firms that rent products don't have to pay royalties to the copyright owner ---Applicable only to the physical product (i.e. the atoms) • Thus, Netflix must have license to stream media (i.e. the bits)!

Why is Understanding Business Processes Important?

---Helps determine bottlenecks and identify outdated or duplicate processes • Continual Process Improvement - Incremental improvement (suggestion box on a door- small, incremental improvements for little cost) • Business Process Reengineering - Significant/large improvement (change a process or number of processes; very expensive and take a lot of time) ---Document to ensure the process is understood by everyone - Training (means you understand them and these can be used to teach new employees) -very effective in training ---Ensure the process has value - Activity Based Costing (determines the cost of the process and measure that against the value. If the cost is higher than the value then you are going to look to how you eliminate that process or step that's costing you a lot of money)

Netflix IPO

---IPO in 2002 - by going public, Netflix had to disclose its financial position. ---Resulted in Blockbuster and Walmart entering the market (bc Netflix had to disclose how profitable they were by having people rent DVDs vs. having people come in and picking them up and buying them) -Since streaming started, Netflix has really taken over -In terms of capitalizing on the data, Netflix was renting their videos over the internet and then they would mail those videos to you. By doing it this way Netflix was able to collect way more data than Blockbuster and know what people were looking for, what they were actually ordering and browsing. Over this time since 2002, Netflix generated a tremendous amount of data. ---Netflix experienced: • Constant customer and revenue growth • Record profits • Rising stock price ---Netflix dominance was due to leveraging technology and timing! --Started the streaming business in 2010. ---Netflix executed a successful strategy of creating reinforcing resources rivals could not match: • Brand • Scale • Data asset

Transition to Streaming - Netflix

---Industries that have changed to digital o Music industry: physical CDs to Spotify & Apple Music o News: newspapers to online news sites & news aggregators (newspapers going out of business more and more each year) o Books: hardback/paperback to e-books & e-book readers (putting bookstores out of business) ---Netflix - from DVD-by-mail to the streaming business • Poses new challenges: o Content availability o Content acquisition costs o The legal and regulatory environment o Potential opportunities for revenue and expansion o Potential partners o Competitors and their motivation

Zara- Manufacturing and Logistics contd.

---Logistics • Coordinating and enabling the flow of _____ among locations. o Goods o People o Information o Other resources --- Distribution Center • 5 million sq. foot distribution center o Approx. 90 football fields o ONLY HAVE TWO -- One in La Coruña and one in Zaragoza • No item stays in house for > 72 hours • Clothes are ironed in advanced • Clothes are placed on hangers • Price tags are affixed • Security tags are affixed • RFID embedded in security tags ---RFID tags (used to track where things are, where they are supposed to be, where they are on the shelves) • Better than barcodes o RFID does not require line of sight o RFID has a unique code per item • Due to vertical integration, they can tag items before sending out to stores • Stores remove the tags for reuse • Zara can now take inventory: o 4 times as often as before RFID o With ¼ less staff ---Fast Deliveries • Twice-weekly deliveries to each store • Truck deliveries - overnight distances; cargo flight deliveries - within 48 hours ---52 eCommerce stockrooms Globally

Netflix - Largest Selection - capturing the Long Tail

---Long Tail is a business strategy • A business can make money by not only selling high volumes of popular products but also by selling low volumes of hard to find, lower demand items. • Collectively these low volume items can makeup market share ---Traditional retailers • limited shelf space; sell only popular items • No room for niche products ---Internet retailers can easily implement a Long Tail Strategy • Have more space • Netflix - space is practically unlimited (huge warehouses with bigger selections and more copies) -- Netflix could carry all the DVD's where Blockbuster could only carry the big new releases. • Internet retailers are more scalable o Have more space o Serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that internet businesses are more SCALABLE.

Netflix: Data is an Asset - Data is Used to...

---Make better content investments • e.g. How many subscribers would watch a new film with actor X? ---Create ultra-tailored promotions • e.g. 7 versions of a trailer for House of Cards (so they could see which type of marketing was most effective) ---Improve user interface design • They conduct A/B Testing (i.e. split testing) of their app on about 300k users o Testing 2 different versions ---Make accurate recommendations • Data Collection: o User ratings o Every search keywords o Every click, view, review, abandon • Data Analysis - study preferences by... o Genre - Children & Family Movies o Subgenre - Disney, Disney Musicals, Education for Kids, Family Adventures, Family Comedies, etc. -Disney will stop licensing to Netflix and all the others - it will all be on Disney + - disney has it because they have a huge library. o What else?

Netflix- Largest Network of Distribution Centers

---Nationwide network of automated distribution centers ---Delivered DVDs overnight to a large percentage of the population in the US ---Took all their videos and spread them out across the country. Wasn't much of a disadvantage to this as far as a customer was concerned. Customer went online from their home and picking out what video they wanted to watch that weekend, placing the order, and having the movies show up in their mailbox a day or two later. --What Netflix was selling first was convenience. --This made the Netflix membership have much more value than the Blockbuster membership at the time

Netflix- First Mover Advantage

---Netflix enjoys a triple scale advantage by being the 1st: • Largest customer base • Largest network of distribution centers • Largest selection -They were the first mover in this whole concept of internet based ordering. In both DVD and streaming.

Netflix is offering its own Exclusive Content

---Netflix is combating rivals by offering exclusive content of its own (have won Emmy's and Academy Awards) -Bc of first mover advantage they can afford to pursue these additional revenue streams such as licensing and content creation ---Acquiring or developing original content • It is an expensive proposition • BUT...it gives Netflix exclusive first-window streaming rights • AND...it allows Netflix to pursue additional revenue streams o e.g. DVD sales or licensing to other channels and services. ---Netflix is doing really well with original content • By 2016, it was estimated Netflix had a viewership larger than any network, including ABC, CBS, Fox, and NBC. --Largest entertainment provider on the internet

Zara - Reaction to Covid-19

---New strategy for 25% of sales to be online by 2022 (last full year was 14%) ---Plan to close 1,200 stores by 2022 ---Vertical manufacturing allowed Zara to turn off it's supply chain quickly. Inventory is 10% less than a year ago.

Payment

---Payment is the final step in the customer order management cycle ---Final payment includes: • Posting payments against invoices. • Reconciling differences, if necessary ---The Cycle may not always go as planned (material not in stock, defective material returned for credit, etc.)

Zara - Stores

---Point of Sale (POS) systems (ex. cash register, devices company uses to ring up sale) • looking to see what actually sold --- Mobile Apps (apps that are in stores that the employees use to track what customers are looking at) Ex. if you take 4 items into dressing room but only come out with 1 to buy, they're going to track those 3 items that weren't purchased so they can see what's selling. • what else would customers like • Enter customer preferences (size, style, color, etc.) after directly talking with them • Trendspotting - after hours looking through clothes that customer tried but didn't purchase • Incentive to Managers o 70% of salary comes from store sales; plus 10% from overall firm performance ---Most items manufactured for limited production runs. (most other companies produce just a few items in mass amounts but Zara produces multiple items in limited amounts) • Creates exclusivity/uniqueness of its offerings • Encourages customers to buy now and at full price (because if go home and come back a few days later it might not be there because don't normally make another batch of the item) o At Zara: 85% of items are not discounted o Industry average markdowns are 50-70% • Encourages customers to visit often o 17 times per year for Zara vs. 3 times per year for the rest of industry • Almost no advertising • Reduces the risk of making a mistake (bc won't end up with a ton of inventory) --- Employee Scheduling • Done at Corporate headquarters via Scheduling software based on forecasted sales volume and peak times

Ch.4 Netflix Book Notes (4.2)

--Analysts and managers have struggled to realize that dot-com start-up Netflix could actually create sustainable competitive advantage, beating back challenges in its initial and highly successful DVD-by-mail business, from Walmart and Blockbuster, among others. --Data disclosure required by public companies may have attracted these larger rivals to the firm's market. --In understanding the initially successful DVD-by-mail business, technology leveraged across the firm's extensive distribution network offers an operational advantage that allows the firm to reach nearly all of its customers with one-day turnaround. --Durable brands are built through customer experience, and technology lies at the center of the Netflix top satisfaction ratings, and hence the firm's best-in-class brand strength. --Physical retailers are limited by shelf space and geography. This limitation means that expansion requires building, stocking, and staffing operations in a new location. --Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more scalable. Firms providing digital products and services are potentially far more scalable, since physical inventory costs go away. --The ability to serve large geographic areas through lower-cost inventory means Internet firms can provide access to the long tail of products, potentially earning profits from less popular titles that are unprofitable for physical retailers to offer. --Netflix technology revitalizes latent studio assets. Revenue sharing allows Netflix to provide studios with a costless opportunity to earn money from back catalog titles—content that would otherwise not justify further marketing expense or retailer shelf space. --The strategically aligned use of technology by this early mover has allowed Netflix to gain competitive advantage through the powerful resources of brand, data and switching costs, and scale. --Collaborative filtering technology has been continually refined, but even if this technology is copied, the true exploitable resource created and leveraged through this technology is the data asset. -Brands are built through customer experience -Cinematch is a software technology known as collaborative filtering(A classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience). These systems monitor trends among customers and use this data to personalize an individual customer's experience. Firms use collaborative filtering systems to customize webpages and make all sorts of recommendations, including products, music, and news stories. -Recommended titles made up over 60 percent of the content that Netflix users placed in their DVD request queues—an astonishing penetration rate. This data is also a switching cost.

Ch.4 Netflix Book Notes (4.1)

--Many firms are forced to deal with technology-fueled disruption that can challenge the current way they do business. However, successfully transitioning to a new business model is often extremely difficult, even for firms that were dominant under a prior operating model. --Despite being the clear leader in global streaming, Netflix faces a daunting set of challenges, including rivals that enjoy a set of assets that Reed Hastings' firm lacks, These include existing distribution networks from telecom subscribers and hardware owners, popular media libraries with loyal fans, and profitable businesses that can fuel the foray into streaming. -First, Netflix lost $8 billion in market value within minutes of Disney announcing that its new Disney+ service would undercut it in price. Disney has stated it would not renew a streaming agreement with Netflix, taking the world's most popular collection of media properties—including Marvel, Star Wars, Pixar, and the princesses—along with it. Oh yeah, and Disney now owns the majority stake in Hulu and has acquired 20th Century Fox. Then came a rare, big Netflix miss in subscriber growth. Analysts had been expecting Netflix to add 5 million subscribers in a quarter when the firm added only 2.7 million and actually saw US subscribers drop by 126 thousand. Wall Street's response was another $26 billion valuation haircut in the week after the shortfall.

Ch.4 Netflix Book Notes (4.3)

--The shift from atoms to bits is impacting all media industries, particularly those relying on print, video, and music content. Content creators, middlemen, retailers, consumers, and consumer electronics firms are all impacted. --Netflix's shift to a streaming model (from atoms to bits) is limited by access to content and in methods to get this content to televisions. --The firm is right to be concerned that it needs to quickly transition to a new business model and that there are many potential advantages to the early mover who can create dominance in that space; however, the firm also made several blunders in its Qwikster attempt at this migration, and the failure of the firm to execute this shift effectively offers many lessons for firms considering customer-impacting changes. --While the "First Sale Doctrine" allows Netflix to send out physical DVDs to subscribers, this law doesn't apply to streaming. --Windowing, exclusives, and other licensing issues limit available content, and inconsistencies in licensing rates make profitable content acquisitions a challenge. Although the marginal cost for digital goods is zero, this benefit doesn't apply to licensees. --Licensing issues will make it impossible to create a long tail as long as it is enjoyed in the DVD-by-mail business. Its new model is about providing a "long enough tail" to attract and retain subscribers. --Netflix is attempting to secure exclusive content and to fund the creation of original programming for first-window rights. This makes the new, streaming-centric Netflix seem more like a premium pay channel (e.g., HBO or Showtime). --Netflix offers more programming than pay channels, has a larger customer base and more viewing hours than these channels, is available in more countries worldwide, can stream to customers who don't have a cable TV subscription, and is less expensive than most premium cable channels. --Streaming allows the firm to collect and leverage data for improved customer targeting, to help build models on content value, to promote original content in highly targeted ways, to allow for "binge-watching," and to potentially serve the needs of original content producers who are freed from distribution timing and content length constraints that conventional networks place on their work. --Netflix makes its streaming technology available to hardware firms, and it has facilitated the development of streaming apps for a host of consumer electronics devices. As a result, Netflix streaming is available on more devices than any competing rival service. --Netflix's competitors in streaming are large, deep pocketed, and may have different motivations for offering streaming content (such as generating ad revenue, pay-per-view content sales, or as an incentive to make existing hardware platforms more attractive). --International expansion offers the prospect of significant growth but is complicated by many issues, including increased licensing costs and disparate legal requirements. --Netflix also faces threats from ISPs, including bandwidth caps and additional charges to ensure the quality of streaming efforts. --The massive networks streaming delivery and operations infrastructure are largely hosted on the Amazon Web Services (AWS) cloud computing platform. This platform is available to all competitors, and it represents a cost that is potentially more variable as the firm grows than would be the case with a series of fixed-cost data centers. However, Netflix frees itself from dealing with many operational issues by contracting with Amazon, and it frees the firm to focus on proprietary systems that are a source of competitive advantage for the firm. --Netflix is a significant creator of and contributor to software offerings—especially those that can be used to support cloud computing. The firm also uses crowdsourcing and code contests to fuel innovation. Both of these efforts also help the firm identify potential staffers and partners. --The Netflix work culture is in many ways radically different from that of peers. The firm has shared its approach toward corporate culture, and this is increasingly having an influence on many firms—especially those in Silicon Valley.

Amazon Fulfillment Centers

-175 Amazon fulfillment centers -Process 65 million shipments a day -Focus: costs, data, and processes -Can't realize any profits (ex. 20 minutes packaging a flip chair--required seller to pre=package the chair ready to ship) -Approach: ----Problem solvers- removing barriers ----Kiva Robots: no humans running around to fill orders; 5000 robots in one warehouse and the robot carries exactly what is needed for an order ----Random Stow: no 2 similar items next to each other because if they tried to say "this rack only has books" then the robots would spend a lot of time moving the items to their appropriate shelves. By putting different products next to each other, the shelves get filled, they get moved, items get sold, and shelves come back to be refilled. Much more efficient use of movement and time. Customers want selection, convenience, and availability -As soon as they scan the product at fulfillment center it immediately become available on the website -Robot helped improve selection for the customers by 50% -Label gets blown onto box by a little puff of air -Robotic fulfillment center means packages can get out the door in minutes instead of hours --Tremendous amount of technology to make it all work

Amazon Sortation Centers

-40 sortation centers -They sort orders by final destination (no products, just sealed boxes) -Can hold on to packages further down the delivery chain ------Before: -packages were given to UPS or Fedex to mail ------Now: -packages arrive at the Sortation center -employees scan them and place them on pegasus robots -Robot deliver to correct chutes - organized by zip code -Packages are put on large pallets and wrapped as one unit -Deliver to a local USPS by 6 am for distribution that day

Book Notes 7.4- Amazon

-Amazon is expanding into the university bookstore business: providing a hub for free textbook delivery and rental, and a link to customer acquisition and retention among college students. -Amazon Books is a real-world bookstore chain that offers website prices to Prime members, and that also sells the firm's growing line of consumer electronics. -The grocery market is massive and could fuel significant Amazon growth. The firm's tech-fueled logistics model, and other advantages in leveraging tech for customer service and enhanced shopping convenience, are influencing several models, including Amazon Fresh delivery, Fresh "click and collect" pick-up centers, and even the firm's purchase of Whole Foods Markets. -The Amazon Go concept store shows how machine learning influences computer vision, AI, and other techniques to eliminate cash registers. A shopping experience without lines is potentially far more attractive for consumers, and would offer any retailer benefits such as more shelf space, stores in a smaller real estate footprint, and perhaps even a smaller staff size.

Amazon Fulfillment Centers - Operations

Receiving: -As new products arrive, they are scanned, placed on a pod shelf, and immediately available online Picking: -Kiva Robots: bring products to workers -System determines: items to pick and shelf location -Employee picks item off shelf and scans item to reduce inventory -Employee puts all items in an order bin and sends bins to conveyor belts Packing: -System determines: box size, amount of bubble wrap and tap -Employee packs the order Shipping: -SLAM machines-scan, label, apply, manifest -Name and address label is added only after box is sealed -Box is weighed for quality control -Package is placed on correct conveyor for next transport (i.e. final destination, UPS/Fedex, Sortation Center) ---- based on shipping method, location, speed

Book Notes 7.1 -Amazon

-Colony, CEO of Forrester Research, proclaimed that the recently public firm would soon be "Amazon.toast" as larger traditional retailers arrived to compete online -Amazon went seven whole years without turning a profit, losing over $3 billion during that time -Amazon isn't just the Internet's biggest superstore, it's the world's most valuable retailer and the largest, most profitable provider of cloud computing services, by far. While sales are still a fraction of Walmart's, Bezos's firm is worth twice as much as the world's largest physical retailer, and is growing far faster -Amazon is now under intense scrutiny from antitrust regulators, workplace advocates, privacy groups, lawmakers, and a public wondering if it's justifiable that a firm earning $11 billion in profits paid $0 in federal taxes (and in fact, received government rebates) over two years ----Key Takeaways: -Amazon is the largest online retailer and has expanded to dozens of categories beyond books. As much of the firm's media business (books, music, video) becomes digital, the Kindle business (which has expanded to tablet, set-top box, and smartphone) is a conduit for retaining existing businesses and for growing additional advantages. And the firm's AWS cloud computing business is the largest player in that category. The firm has even begun investing in physical retail locations, including opening Amazon Books stores, pioneering the no-checkout Amazon Go concept, and buying Whole Foods and gaining over 430 grocery stores. -Amazon takes a relatively long view with respect to investing in initiatives and its commitment to growing profitable businesses. The roughly seven-year timeline is a difficult one for public companies to maintain amid the pressure for consistent quarterly profits. -Amazon's profitability has varied widely, and analysts continue to struggle to interpret the firm's future. However, after years of investing in new businesses and in building scale advantage, Amazon is now solidly and reliably profitable. Studying Amazon will reveal important concepts and issues related to business and technology.

Amazon has built a "Delivery and Logistics Business" within Amazon

-Cost and control drive Amazon's interest in logistics -Exactly like Walmart, doing everything they can to get as much excess cost out as they can -- so they now own a shipping company, trucks, and jets. -44% of the US population lives within 20 miles of an Amazon facility -Goal is to have unmanned drone delivery of small packages in less than 30 minutes. -Amazon spent $21.7 billion on shipping costs in 2017 (twice what it spent 2 years earlier) -A delivery network gives Amazon more control over the customer experience. -Controlling parts of its distribution channel means Fedex and UPS will be increasingly disintermediated from a larger percentage of Amazon orders. **Amazon Key -Delivery method is based on multiple factors: 1.Cost (fuel prices) 2.Delivery time (routes, weather, traffic) 3. Fleet availability

Amazon postponed profits and concentrated on

-Expanding warehousing capacity -Building e-commerce operations worldwide -Pioneering eBook readers -Developing a cloud computing platform -For the first 7 years Amazon was in business they didn't make a profit. Put every single penny back into business to work on the things above.

Book Notes 7.3- Amazon

-Shipping represents a large portion of Amazon's expense for each order, and the firm leverages several approaches to bring down this cost. -In the United States, Amazon can choose to deliver products to consumer homes via the US Postal Service, UPS, FedEx, or itself. Algorithms decide which path is most effective from both a cost and customer service perspective. -Local delivery is coordinated in several ways, including Amazon's Uber-style recruitment of contract drivers. -Amazon owns its own trucking fleet to handle long- and medium-haul product transit, when appropriate. -The firm has also leased 40 cargo planes, allowing it to funnel the most cost-effective shipping to its own fleet, and giving it more time to accept orders for next-day shipment. Planes utilize underserved airports that are still near metro centers or other Amazon facilities. The company is also building its own air hub in the center of the US, to further improve cost and speed efficiency. -Amazon also operates its own ocean freight for products from overseas (primarily East Asia), which it knows it will need in its warehouses, but which lack the immediacy of plane delivery. -While Amazon is a customer of large shipping firms, it has also begun offering its own shipping option to third parties, making it both client and competitor to package delivery firms. Amazon's experience in shipping provides an opportunity to create a shipping and logistics business in the way that its expertise in computing allowed it to create a cloud computing business. -Amazon has leveraged technology in ways that may make it a more attractive shipping partner, and which better serve consumers. Amazon Key is the firm's service for providing the option of in-home delivery, even when customers are not present. The acquisition of Ring smart home products gives Amazon a supplier of this tech, vertically integrating components of the solution offering. The firm has also partnered with GM and Volvo to offer app- and OnStar-powered delivery to customer automobiles. -One analyst estimates that by mid 2019, Amazon was already carrying about half of its own shipments, compared with just 15 percent only two years earlier -Amazon spent $27.8 billion on shipping costs in 2018; that's up from just $1 billion spent in 2007 -A delivery network also gives Amazon more control over the customer experience. Interest in taking control of logistics increased after December 2013, when UPS couldn't handle the massive volume of Amazon's holiday package delivery, costing Amazon millions in refunds, and damaging the firm's reputation for delivery reliability among those who were left with empty spaces under the tree -The network is so extensive that 75 percent of the US can now be serviced with next-day or same-day delivery

Zara - RFID Tags Video

-put on from the time they are manufactured -scanned again when arrive to store -employee can scan item to see if they have the available size and where to find it -scanned again at the end of the night when they close to check inventory, know what they sold, know what needs to be reordered --Zara's motto: 1. Agility 2. Simplicity 3. Information 4. Confidence 5. Precision 6. Speed

McLane Warehouse Video

-selling to convenience stores, not the end user -Ozark Distribution center in Missouri - 370,000 sq foot -Unique because the center was built upward to reduce size of carbon footprint and construction costs -10 stories -receives pallets of products and then redistributes to its clients -System pallets used to identify and control products they hold and these are scanned as they move along conveyor belt -160 pallets wrapped per hour - 12 stations have 4 white tubs above and 7 red tubs below (white =ingoing, red= outgoing)

3 Pillars of Amazon's Business

1. Large selection 2. Customer experience 3. Lower prices --It's a cycle: >better customer experiences = a strong brand, 1st place to shop online >more customers = more products =creating scale = attracts more suppliers --Selection leads to lower prices which gives a good customer experience from a price standpoint but then how it gets delivered to your house with their 2 day delivery - that good customer experience generates traffic. Only about 50% of the products being sold on Amazon belongs to Amazon. A lot of the 3rd party sellers go to Amazon because of the amount of customers. So tremendous amount of technology to support all this.

Netflix

A company that incorporates technology extremely heavily into their strategy. -They might not even exist if not for certain technology aspects

Zara - Vertical vs. Horizontal Integration

Horizontal- an independent or different company does each step -- this is common way companies do thing Vertical- Zara owns most of their own supply chain; each step isn't done by a different company -- gives them a huge advantage!!

Book Notes 7.5- Amazon

Key Takeaways -About one-quarter of Amazon revenues come from the sale of media businesses that are rapidly shifting from atoms to bits. -Moore's Law has allowed Amazon to radically drop the price of Kindle offerings while increasing device functionality. -Amazon does not make money by selling Kindle hardware; instead, it seeks to fuel media and e-commerce sales as well as side businesses such as on-Kindle and in-app advertising. -It is estimated that 20 percent of Amazon's US customers own at least one Kindle device. The dominance of the platform potentially creates several advantages, including network effects (more Kindle users attract more Kindle-compatible titles and products), switching costs, and user data. -The firm's Kindle Fire, Fire TV, and Echo are additional platforms for delivering digital content, sales, and data gathering. These platforms face significant challenges in growing market share, and none has seen the success of the firm's e-book readers. -Fire tablets and Fire TV have prompted Amazon to accelerate gaming efforts. -Fire Phone provides a cautionary tale to late-movers. A high price, entrenched rivals, consumer switching costs, and a lack of compatible apps all contributed to the device's failure. -Amazon has upended the publishing value chain and significantly changed the cost structure of the industry. -Amazon has also become a force in sponsoring original film and video series and creating video games, and has spent over $1 billion in the acquisition of the extremely popular Twitch video game broadcasting service. -Amazon and partners have also been victims of channel conflict, stopping the sale of Kindles and blocking the sale of books published through Amazon imprints. But when channel conflict occurs, the winner will likely be the channel that offers the greatest aggregate value to its partners. -Amazon's dominance of publishing, 41 percent of new US book sales and 61 percent of online sales, suggests inordinate market influence. The firm will need to be careful how aggressively it uses its bargaining power, as this could prompt domestic and international regulation and sanctions. -the Kindle isn't as much about reading digital books as it is about putting a store in the hands of the firm's over 300 million customers, not only allowing them to lap up goods from an increasingly massive digital trough, but also instantly linking those customers with the firm's entire inventory of physical products -Thanks to Moore's Law, Kindles, originally offered at $399, grew in power while plummeting in price, with a low-end model selling for just $69 five years after introduction. -In terms of fueling overall sales, SmartMoney reported that Amazon customers who don't own a Kindle spend an average of $87 each month while those with a Kindle spend $136 and Kindle Fire owners spend over $150. -Alexa has wheels, too, with Alexa skills extending to Toyota, Mercedes, BMW, Ford, Hyundai, and many others -For several years, Amazon had offered the Dash button, a single button device that could place an Amazon order each time it was pressed. But in 2019, Amazon discontinued the product and stopped taking Dash orders. With Alexa increasingly embedded into more products, specialty ordering devices may be less useful. Amazon cited significant declines in usage as the reason for sunsetting Dash. That may be the case, but many of the items that could be ordered from Dash were low-cost, low margin items where profits would be eaten up by shipping costs, so it might also be likely that getting another box of grocery bags with a single press was no longer an Amazon priority. Another reason Dash may have been discontinued—a customer who visits Amazon.com will see a personalized page of AI-curated items the firm hopes you'll buy. Each customer pulling up the Amazon app or browser is a chance to order more than the one-click Dash purchaser. -Channel conflictExists when a firm's potential partners see that firm as a threat. This threat could come because it offers competing products or services via alternative channels or because the firm works closely with especially threatening competitors. exists when a firm's potential partners see that firm as a threat. This threat could come because it offers competing products or services via alternative channels or because the firm works closely with especially threatening competitors. Amazon has become a victim of channel conflict when other retailers have dropped its offerings. For example, Barnes & Noble and other book retailers have refused to carry titles from Amazon's publishing arm. And Walmart and Target once carried the Kindle but have since stopped, fearing Amazon's e-reader would also be a conduit for stealing physical sales.

Amazon- Kiva Robots

Kiva Robots -they use about 5000 at each fulfillment center -only about 10 are out of commission at a time -Speed:3-4 mph; never collide -Run a couple of hours on charge -Return to a recharging station when low Total Cost: $46 million to set up a warehouse Benefits: -Make a warehouse 50% more efficient at moving inventory -Store 50% more product -Amazon boasts on time package delivery rates of up to 99.9% or more

Amazon Warehouse Video

Lakeland facility - building is 1/3 of a mile (equal to 59 football fields) - The floor is covered in tiny QR codes that are read by the robots and tracks their location to avoid collision and keep your order on time -Robots Bring items from where their stored to the associate for packing -Computer tells the employee which box to pick -SLAM (Scan, Label, Apply, Manifest -1 million items stored in this one facility - software regulates the line to maintain a steady pace of boxes -109 facilities nationwide

Valero - Crude Supply Chain

look at screenshot!!! Key Questions: ─ Who can we buy from? ─ When is it required? ─ How will we price the contract? ─ What are the agreed upon terms and conditions? ─ What mode of transportation? ─ Where is my shipment? ─ What transportation costs will we incur? ─ What is the price risk? ─ How will we hedge the risk? ─ Was it profitable?