Product-Flow Process

When looking at Blockbusters production flow you can see that they use both the batch flow and line flow production. Blockbuster Video uses a batch flow when it comes to production of some of our products. Blockbuster receives 100s of copies of the same movie every week. They are all produced in a batch and shipped out to all the stores across the country. They also produce their product by using the line flow production. The Blockbuster distribution center receives the movie disk in their movie cases but the movies then go into a process that makes the movies Blockbuster rental ready. They must get rental labels put on and their boxes changed to the lockable cases that are used at the stores.
Blockbuster uses the make-to-stock customer order when it comes to making the products for the stores. Since it is a movie and game rental and sale business all the products are the same. Blockbuster pays a company to make a certain amount of movies for them but the quality of the movies don’t differ; they are all the same and can’t be customized for the customers. Customer don’t come into a Blockbuster expecting to get a customized DVD so the make-to-stock customer order works well for them and it keeps their costs down because they are ordering in bulk. By looking and this information it is safe to say that this would put Blockbuster in between two cells on the Process Characteristics Matrix they would land on Make-to-Stock side but right in the middle of line flow and batch flow. I think Blockbuster has chosen to uses these types of product flows because it helps to keep their costs down. Most movie companies bring down their costs if product is ordered in bulk so Blockbuster takes advantage of this by purchasing movies in batches. This helps them to receive big discounts and save them some money. So I believe that a big part of why they chose these product flows is because they want to save money so they can spend it on other things for the company. Blockbuster applies some form of mass customization of services in there stores as well as with their online program. In stores they have the Rewards program that keeps track of customer rentals and then offers the customers free rentals throughout the month because they have rented so much. The online program keeps track of customers renting patterns and sees what kind of movies the customers enjoy. As customer watch movies they can rate them and the computer generates recommendations for them based on the movies that they enjoyed.

INVENTORY

Blockbuster Video does a lot when it comes to maintaining inventory in their stores. They must make sure that the stores inventory matches what the computers say the stores inventory should be at. The difference is the calculated “shrink,” or stolen product. Blockbuster employees a division called lost prevention whose only duty is to keep track of inventories. They run quarterly inventories in stores whose shrinks are low and monthly inventories in those stores that have high shrink.
Blockbuster stores do inventory on their store supplies which are usually ordered in the beginning of each month. Supplies are ordered by using a system called the EOS system. The EOS system allows the store to use the computer system to order supply items, non-inventory office supplies, cleaning products and new retail movies from the Distribution Center (DC). The stores all receive a binder filled with an updated list of products that can be ordered. The General Manager or the Assistant General Manager will take an inventory to see which supplies need to be ordered and place the order the first Monday of the month, shipment arrives two weeks later. There is not calculation of when to order, it relies on the mangers experience and ability to estimate buying patterns using previous year’s sales.
Blockbuster runs inventories in every store, they have an inventory team that goes around to every store during their scheduled inventories. They scan every product in the store including rentals, sell-thru, candy and soda, and other items such as toys. A report prints up showing what is missing from the inventory. The inventory team will then go around and see if they can find the missing product, then scan any product in that was missed. This concludes the inventory, based on how much product is missing will determine if the store is high shrink or low and how often inventory will have to occur at that specific store. This helps lost prevention and management to see if there is any theft going on in the store possibly internal.
Blockbuster has a system called the Point of Sales System (POS) that keeps count of the entire inventory. When customers are looking for specific products, either for sale or rent, an employee can just look it up in the system. When it comes to the new release rentals corporate sends the store copies of the movies. They base the amount of copies sent based on the demographic of the area, if they think the movie will rent a lot then they will send more copies of it. No store places orders for sell-thru, that too is done through corporate. The system notifies corporate when the store is running low or has sold out of a specific title and ship more out to them for the following week. Corporate also recalls movies that don’t sell or rent, they will send a transfer through the computer system for the store to pull these movies and send them back to distribution.
Candy orders are filled the same way as movie inventory. The computer keeps track of how much of what candy is being sold and if more needs to be sent. The soda orders are filled differently. A Coca-Cola representative will go to each store and place an order that the manager gives them. The representative comes every 3rd week of the month so when placing the order the manager must make sure that the amount ordered will last for the next 3 weeks. Some stores also sell ice cream and the ice cream orders are ordered the same way that the soda is ordered. The ice cream vender will come once a month and place the order to be shipped the following week.
Blockbuster has a very organized inventory procedure. It is the General Managers job to make sure that all inventory procedures are being followed. They have to make sure that the product is being received into the store properly in order to maintain the inventory in the system. They most always check the receiving reports to make sure they match what the computer says. When it comes to new movie retail every store must check their system to make sure that the computer numbers match with the amount out on the shelf. Every store does these cycle counts every Wednesday, by doing this it helps to see if there are any errors in the receiving or the product is being stolen.

Company Introduction

Blockbuster Video is a video renting giant in their industry. They currently have 5,192 stores across the U.S. and 2,600 stores internationally. It has been claimed that there are more than 43 million U.S. households with Blockbuster memberships. Blockbuster currently employs 128,000 employees to help maintain their stores. Since Blockbuster has many competitors in the rental business, like Netflix, they have also introduced their own online renting program called Blockbuster Total Access online renting. Blockbuster Total Access currently has a little over 2.2 million customers. They also offer other programs geared to their customers needs. They recently have signed a contract with Movielink.com that allows online members to download movies onto their computers as they wait for their online movies to be sent to them. Blockbuster continues to grow as the years go on and with the new appointing of James Keyes as the new CEO they foresee bigger and better things for the company.

links:

Blockbuster Homepage