Key Hires Supply chain management isn’t just technology and logistics. For Netflix, it’s also about bringing on board the right people at the right time.
When Tom Dillon retired as COO of online DVD rental service Netflix this past April, the list of qualified applicants to replace him at the Los Gatos, Calif., firm was pretty short. During Dillon’s tenure, the company’s U.S. Postal Service (USPS) shipping volume had grown from 3,000 discs a day to more than 1 million a day, amounting to more than 17,000 tons of first-class–shipped DVDs a year. Luckily for Netflix, one of the applicants—and the company’s eventual hire—was Bill Henderson, who had served as COO for USPS from 1994 to 1998 and as postmaster general and USPS CEO from 1998 until his retirement in 2001.
As the 71st postmaster general, Henderson managed arguably the only organization in the world that processes, transports, and delivers more than 650 million pieces of mail to more than 130 million addresses every day. “Clearly, having a former postmaster general on staff speaks to the issue of knowing the post office well, but the reason we hired Bill was less for a relationship with the Postal Service and more for how to handle the scalability of our volume,” says Netflix director of corporate communications Steve Swasey. “We hired Bill Henderson because he is one of the few people on the planet who looks at our daily volume of 1.4 million DVDs out and 1.4 million DVDs in as a trickle.”
Netflix has more than 5 million members now and is forecasting an additional 15 million in the next four to six years. “That quadruples our daily volume right now,” Swasey says. While with the U.S. Mail, Henderson displayed a penchant for supply chain automation that contributed to five consecutive years of operating surpluses during his tenure. His task at Netflix will be the same: managing and evolving the technology, automation, and distribution operations that underpin the company’s Web-based and mail-dependent DVD rental business. “If there’s anyone, he’s the one,” says Swasey. “He’s the guy that can help us continue to automate as we grow to 20 million subscribers.”
