fedex strategy

FEDERAL EXPRESSFEDERAL EXPRESS

Describe how the company progressively changed and extended its business model

through the use of IT?

Presented By: Mukesh Kulal

Team Members: Mukesh, Lalit, Sylvie, Bhumika

Agenda

• What is Fedex?• Hub and Spoke Model• Implementation Strategy• Progressive Change in Fedex• Company Growth• Overseas Expansion• IT Implementation• How has IT helped in Business Expansion?• Flow of Virtual Order(example)• Conclusion

What is Fedex?(1)

• Provides customers with a broad portfolio of transportation, e-commerce and business services

• Founded by Frederick W. Smith in 1971• Headquarters located in Memphis, Tenn.• Daily Volume of more than 7.5 million shipments• Workforce of more than 275,000 team members

worldwide• Revenue of $35.5 billion for year 2009

What is Fedex?(2)

• FedEx maintains 10 companies, which all provide different services within the FedEx network. They are :– FedEx Corp., – Express, – Trade Networks, – Ground, – Freight and National LTL,– Custom Critical, – Services, – Customer Information Services, – Supply Chain Services, – FedEx Kinko's Office and Print Services.

Hub and Spoke Model(1)

• Conceived by Fred Smith and FedEx Express• Widely adopted by major carriers• Generates Economies of Scale and Economies of

Flow• Massive economic impact upon the air cargo and

passenger airline industries


Advantages

• All packages can be sorted at the hub, rather than multiple locations

• Leads to full utilization of resources.

• Spokes are simple, and new ones can be created easily.

Disadvantages

• Disruption at the hub can create delays throughout the system

• Overall operating efficiency is also limited by the capacity of the hub

• Day-to-day operations may be relatively inflexible

Implementation Strategy

• Two strategies for change:– Big Bang– Progressive

Progressive Change in Fedex

• Company Growth• Overseas Expansion• IT Implementation

Company Growth

• Fedex became the premier carrier of high priority goods and standard setter for the industry

• Fedex played a leading role in lobbying for air cargo deregulation in mid 1970’s.

• Fedex had the world’s largest all-cargo fleet by the mid 2000’s

Overseas Expansion

• International acquisitions and intercontinental operations began in 1984 with service to Europe and Asia.

• Initiated direct scheduled cargo service to Japan.• Obtained authority to serve China through a 1995

acquisition from Evergreen International Airlines• By 2004, FedEx was delivering to more than 210

countries and handling about 3.3 million packages and documents every business day.

IT Implementation

• Web based customer services started in 1995, which allowed customers to track their shipments via reference number.

• Developed a comprehensive set of web based automated shipping solutions for global customers.

• Launched Home Services designed for the booming business to consumer e-tailers in 2000

How has IT helped in Business Expansion?(1)

• Virtual Order– Helped business to get online by providing software to

setup an online catalogue that resides on a secure Fedex server.

• Fedex Insight– Enables customers of any size to view the status of

their inbound, outbound and third party shipments

• Fedex e-business tools– Allows companies to connect their existing

environment to Fedex Information Systems

How has IT helped in Business Expansion?(1)

• Other third party partnerships– Orbit Commerce: provide Internet Commerce Services– Cisco: running End to end Internet Based Network– AT&T: create wireless internet site for package

tracking and delivery– E-tailers like eToys, Pro-Flowers, Value America and

LL Bean– SAP: develop and market the first “one-stop solution”

suite of supply chain services.

Flow of Virtual Order(example)

Conclusion

• Hub and Spoke model is still considered the best in the logistics industry

• Due to implementation of IT in Fedex internal processes were optimized and automated.

• Customer Satisfaction was increased because of the implementation of new tools.

• Fedex has always been an pioneer of technology and a trend setter in its industry.

• Internet – a serious threat

References

SRI International (2001) GLOBAL IMPACT OF FEDEX ON THE NEW ECONOMY [Online] http://images.fedex.com/us/about/download/economy/sri_exec_summary.pdf [Accessed 09 November 2009]

FedEx [no date] FedEx InSight [Online] http://images.fedex.com/downloads/ebusiness/automation/INS-ENG.pdf?link=4 [Accessed 05 November 2009]

ACM Portal (1998) WISs at Federal Express [Online] http://delivery.acm.org/10.1145/280000/278500/p117-senn.pdf?key1=278500&key2=6889897521&coll=GUIDE&dl=GUIDE&CFID=62480799&CFTOKE N=44498399 [Accessed 04 November 2009]