Case Study 3 - Fedex

Company Background:

FedEx ,found in 1971, provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. FedEx inspires its more than 300,000 team members to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities.

Fedex's Business Model:

• Business-to-Business
• Business-to-customer
• Bricks and Clicks
• Physical Stores
• There are currently more than 1,900 FedEx Office locations in the United States and abroad. More than 400 centers are open 24 hours a day, seven days a week
• Online Platform
• Online tracking 
• Web Integration Wizard

Fedex's competitors:

• UPS
• there are nearly 4,700 independently owned The UPS Store locations in the U.S., Puerto Rico and Canada.
• DHL
• a division of the German logistics company Deutsche Post DHL providing international express mail services.
• TNT Express
• an international courier delivery services company with headquarters in Hoofddorp, Netherlands. 

Services and customers:

• Express delivery services: 
• provides fast and reliable delivery to every U.S. address 
• more than 220 countries and territories around the world.
• Internet service (shipment)
• Prepare Shipment
• Find locations
• Pick up  schedule
• Get Rates and Transit Times
• Predict the transit times
• Customs Tools
• Internet service (Tracking)
• Monitoring the shipments
• Online tracking
• FedEx Desktop
• FedEx mobile
• Shipping Process 
• Get Shipping rates and Transit Times
• Packing
• Online Shipping with FedEx Express
• Documentation required for international shipments
• Schedule a Pickup

Definition of logistic terms:

• Virtual Value Chain
• an information flow & cash flow
• Any chain or network connected through electronic links can be considered virtual.
• Represents an organizational structure that facilitates efficient and effective flows of both physical goods and information in the supply chain management.
• Basic Flow
• differs from the physical value chain of manufacturing/sales of traditional companies. 
• begins with the content supplied by the provider
• which is then distributed and supported by the information infrastructure
• the context provider supplies actual customer interaction
• Benefits 3
• Keeping track of all packages handled by the Company On-line System (COSMOS)
• manages everything on real time
• vehicles, people, packages, routes and weather scenarios
• COSMOS relays data on package movement, pickup, invoicing and delivery so as to send to a central database at Memphis headquarters.
• places a bar-code on each parcel at the point of pickup, the bar-code can be scanned at each stage of the delivery cycle
• COSMOS system
• manages on-time information to different stakeholders,  such as vehicle, people, package, routes, etc.
• integrates information flow of shipped goods and transportation mode
• uses bar code to improve the delivery cycle efficiency, shorten the cycle time and evaluating customer service level

The role of IT in FedEx’s Business Strategy  

  l   Expand the global business

   ◦   Information sharing

–          More information flow between department and companies

–         Tools for training new employee

  ◦  Enhance efficient and effective

–         More accurate

  ◦    Reduce cost

  ◦      Multiple language

–            Common language in global

l   Interaction with customer

   ◦      Just-in-time inventory management system

–  Reduce inventory cost

  ◦      RFID for check the inventory anytime

  ◦      E-tailing

  ◦      Improve CRM

–            Directly contact with customers

  ◦      Interact with supply chain partners

–  Reduce bullwhip effect

l   FedEx Home Delivery

  ◦     B2C EX market

  ◦     Using the advanced technology to achieve the same leadership market

  ◦     Expand the residential delivery business

Discuss the virtual integration of supply chains without ownership

Definition

 — l Uses information technology to eliminate the boundaries in the value chain among its suppliers,                       manufactures, and customers which has another term of seamless by applying virtual integration

           l   A business engaged in virtual integration owns only their brand and their clients. 

           l eliminates the need to physically produce, ship or handle any products as they are now outsourced.

PowerShip programme

l introduced in 1984

— l improve efficiency and control with proprietary on-line

 lprovided additional services to the customer

—   including storing of frequently used addresses, label printing, on-line package pick-up requests, package tracking

CISCO

—  —  ldevelop an extranet that allowed its customers to order FedEx services without leaving the Cisco Website

 —l  By integrating its services within the supply-chain of its customers, and thus generating increases in customer loyalty and in customers

 — lFedEx managed to effectively raise the barriers to entry for competitors.

—      lIn the past

—  take care all of the works ranging from designing, marketing to transportation.

 —lNow

—  outsources some of the production process to other factories and With the assistance of faster

 information flow through the internet

—  Role of coordinator

Advantages of the virtual integration of supply chains without ownership

— lIncrease accuracy

— lEnhance efficiency

— lPositive effect of division of labor

—  lReduce Cost

— lReduce risk of initial investment

—  lDecrease length of order cycle

—  lBetter control movement of goods

What are the factors that put pressure on FedEx to consolidate its operations, while remaining customer-focused?

 Factors

1. Demand for quality service by customers
2. Reduce Customer confusion
3. Intensive increase in competition
4. Soaring Costs

Demand for quality service by customers

— lIn order to attract all the customers with different size of transaction

—  lA streamlined customer automation platform are provided

—  With one toll-free telephone number, one Website, one invoice and account number, one sales team, one customer service team

Reduce Customer confusion

l— Some resources may be duplicated

—  since the information is spread among the groups of FedEx

— lProvides collective synergy of solutions

—  to meet customers’ logistics needs

Intensive increase in competition

— lGlobalization 3.0

—  Focus on individuals and groups to collaborate and compete globally

—lDevelop global systems for worldwide implementation

—  to overcome the difficulties of different languages, currencies and cultures

Soaring Costs

—l  Fuel cost

— lLabor cost

— lInventory cost

— lTransportation cost

— lPut pressure on Fedex to re-think its business strategy