EXECUTIVE SUMMARY
The corporate culture of FedEx was based on superior customer service and displayed an attitude of "doing whatever it takes to serve customers" from the top to the bottom. The expansion of the Internet, therefore, was something FedEx could use to enhance its customer base and create a competitive service advantage. "It allowed FedEx to not only let its customers pull real time information and data into their internal systems, but also to become more involved in the internal processes of its customers." which involves the contributing factor in transforming FedEx into an e-business. Although there was no planned strategy to build an e-business, the decisions that the company made to align the organization structure with systems and processes has carved out a model for building a successful business for the 21st century", which lends support to transportation logistics efficiency as well as selling and supply chain logistics solutions management.
FedEx is famous for and known for its absolute dependability and its attention to detail. FedEx accomplishes this by not being a mass of bodies moving in one direction but rather by being the several parts that compose it and working together. FedEx's guaranteed on-time service and complete satisfaction is unconditional. The image the company has so meticulously cultivated helps maintain and extend its market share. FedEx Logistics provides customized, integrated logistics and warehousing solutions worldwide. FedEx Logistics is the parent company of FedEx Logistics and Caribbean Transportation in February 2000 to provide customs brokerage and trade facilitation solutions. FedEx Corporate Services formed in January 2000 to bring together the sales, customer services, public relations and IT resources. "On January 19, 2000, FedEx announced a new branding strategy that involved changing the company's name to "FedEx Corporation", and extending the "FedEx" brand to four of its five subsidiary companies. Providing customers with an integrated set of business solutions was the pivotal reason for the renaming of the company as FedEx Corporation. Customers wanted to deal with one company to meet their transportation and logistics needs. The announcement created to pool together the marketing, sales, customer services, information technology and electronic commerce resources of the group and provide range of business solutions.
Technological development has always been a major way for FedEx to add value since it can cut costs along with creating new ways of finding competitive advantages. Lastly, FedEx's improving and changing of the organizational structure over the last few years has added value. By developing different subsidiaries all operating under the FedEx brand name has organized the company along with improving the communication inside the company from one division to another.
INTRODUCTION
The ability to keep up with e-businesses will depend on how well a company can keep up with new emerging technologies. FedEx has transformed into an e-business by improving several of its core competencies. On January 19, 2000, FedEx announced a new branding strategy that resulted in the change of the company's name to "FedEx Corporation" and extended this FedEx name to four of its five subsidiary companies. FedEx's strategy was to take advantage of its brand image, the name that customers have counted on for reliable service and cutting edge technology. The transformation created an integrated set of business solutions. Customers will only need to deal with one company for all its supply chain, logistics, and delivery needs. This provided a single point of access to customer service, billing, sales and automation systems. Each company under the FedEx umbrella operates independently but competes collectively. The new
organization is geared to help businesses of all sizes in achieving their goals.
DISCUSSIONS
FedEx's business and quality management culture FedEx's vision and goal is "satisfying worldwide demand for fast, time-definite, reliable distribution" (Cisco Systems, 1999). This vision inherently requires that the company operate under a customer focused approach. This is what FedEx has been doing since its founding - the company has emphasized putting customers first in their vision to become a part of the global market. FedEx couriers have one less thing to keep track of these days - their vehicle keys. The company's couriers use an automatic keyless entry and ignition system that has RFID transponders. The system is being tested in 200 FedEx delivery vehicles. FedEx is constantly looking at ways to streamline their delivery processes. The company's couriers drive millions of miles daily in the U.S. alone and each time a courier makes a delivery, he must spend time searching for keys to unlock multiple doors to their vehicle. If a courier misplaces his keys, he must wait for someone from a FedEx station to bring out a spare and the vehicle must be re-keyed at a cost of more than $200 per incident. FedEx delivery personnel are freed from the hassles of juggling their keys while carrying armloads of packages and are more productive along their routes. If a wristband is misplaced, its code can be purged from the system and a new code can be reprogrammed in a matter of seconds.
FedEx vehicle is programmed using a master transponder, and can accept up to ten unique transponders. A single transponder can also be programmed to operate multiple trucks. In an effort to improve its global distribution system and, as a result enhance customer service in its shops around the world, as there entered into a path-breaking strategic alliance with Federal Express Business Logistics Services. Under the terms of a loosely structured partnership, Federal Express takes over the warehouse and distribution activities, the alliance is path breaking due to its informal structure based on trust and mutual benefit than on rules and measures. FedEx Express founder Frederick Smith have the initial conceptualization of FedEx Express as an air cargo firm that specialized in overnight package delivery on a door-to-door basis using its own planes. The goal was to deliver equipment and documents shipped from any location in the United States to any other location within the United States the next day. The logistics was merely the handling, warehousing and transportation of goods. By combining the functions of materials management and physical distribution, logistics took on a new and broader meaning. FedEx capitalized on this transition and aimed at managing all aspects of logistics. FedEx Express invested heavily in IT systems and with the launch of the internet in 1994, the potential for further integration of systems to provide services throughout its customers' supply chains became enormous. FedEx has now built a powerful technical architecture that had the potential to pioneer the Internet commerce.
Mission
FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all
operations. Corporate activities will be conducted to the highest ethical and professional standards.
Problems:
FedEx's strategy was to capitalize on the growth of e-business and aimed at integrating its physical transportation with its virtual information infrastructures to create a large matrix of systems that meets the needs of businesses ranging from transportation services to complete supply chain management solutions. FedEx has taken a customer focused approach and all systems are centered on the customer. The process of building the systems and technology infrastructure was the first step in the transformation. Next, was the integration of business processes into these systems?
This was not an easy task and required expertise in logistics and supply chain management. FedEx was following the technology age taking place in our country at this time and piggy backed on the growing e-business market. The final step is for FedEx to transform its business and make people aware of the innovations and advancement.
Political:
FedEx conducts its business internationally and therefore is required to follow international laws, rules and regulations. FedEx will not carry shipments, which are in violation of any U.S. export laws. As with all shipping companies, they will not assume liability for any loss or expense, including, but not limited to, fines and penalties, due to failure to comply with export laws or regulations relating to the export, import or movement goods at central hub locations, FedEx employees work jointly with U.S. Custom’s officials to prevent contraband and restricted items from entering and leaving the U.S. FedEx has initiated strict shipping guidelines and know your customer rules, in conjunction with law enforcement, to deter and prevent the movement of dangerous and deadly agents into the U.S. They screen packages for illegal currency and monetary instrument shipments in violation of the Bank Secrecy Act reporting requirements.
Economic:
FedEx Corporation has grown from a package mover to the leading transportation provider in the world. It was the first to establish critical factors to transform a conventional business into an e-business. FedEx developed a global network which offers services beyond transportation, including full service management tools and support. FedEx led the way in the deregulation of the transportation industry, which resulted in economic competition and a decrease of transportation costs from 7.4 % of GDP in 1980 to 6% of GDP in 1999. It employed 166,000 full-time and part-time workers in the United States in 2000, with a payroll and benefits of $7.2 billion. The direct and indirect employment impact of FedEx operations is over 550,000 jobs, or around 1 in every 270 jobs in the United States. The company's revenues exceeded $18 billion in fiscal year 2000 while the combined direct and indirect output produced by FedEx activities
totaled approximately $53 billion. The number of export packages transported by FedEx has been growing steadily over 15 percent. FedEx has tripled its market share over the last seven years. The value of these exports has also increased 300 percent, an annual average of over 22% while during the same period U.S. exports only increased 50%, a 7% annual increase. The evolution and success of FedEx has had a multiplier effect on the U.S. economy. It continues to make technological and operational advances that are impacting on global markets as well.
Socio-cultural:
FedEx has demonstrated that it cares very much about the global community. It uses its resources to help thousands of organizations throughout the world. Their aircraft and vehicles deliver tons of aid to disaster sites. Employees volunteer countless hours to make their communities better places to live, play, and work. FedEx gives financial support to help ensure children's safety and improve
education. FedEx is committed to all their employees and the communities in which they live. They show this by offering financial support and volunteer support for charities that promote educational, artistic and cultural, civic and humanitarian well being.
Technological:
The FedEx Corporation has made enormous strides in technology and is setting the industry standard for efficiency and customer service. FedEx has sought technological advances in response to customer needs, and has excelled in anticipating and projecting demands of an environment that would depend and thrive on information. The technology FedEx has developed enables customers and support personnel to have wireless access to essential information system's networks anytime and anywhere. FedEx was the first to integrate wireless technology more than two decades ago, and continues to develop and lead the industry in developing innovative wireless solutions.
FedEx has long been in the forefront in recognizing the potential of the Internet to provide fast, easy and convenient service options for its customers. In 1994, the FedEx Web site was launched with a bold package tracking application that was no doubt one of the first true corporate Web services. FedEx became the first transportation company with a web site offering a feature that allowed customers to generate their own unique bar-coded shipping labels and contact couriers to pick up shipments. The web site today handles over 1.1 million package-tracking requests daily. More than 2.5 million customers connect with the company electronically everyday, and electronic transactions account for two-thirds of the five million shipments FedEx delivers daily. The web site is acclaimed in the business community for its speed, ease of use and customer-focused features.
Global:
The international market place is by far the company's most prominent growth opportunity. The FedEx global story began with the growth of FedEx Express, which today covers more than 210 countries with quick, reliable express transportation. FedEx has been a leader in the global economy, offering customers more choices and more places. The family of companies representing FedEx operates hubs all over the world, giving customers limitless opportunities to expand their customer base.
FedEx Trade Networks provides global e customs clearance in the U.S. and Canada, offers freight forwarding services that connect the U.S. and Canada with Asia, Europe, Latin America and other major international regions. FedEx Supply Chain Services leverages the global transportation and information networks of the FedEx companies and their affiliates to provide international supply chain management solutions to customers in North America, South America, Europe, and Asia.
Competitive Environment
The competitive environment is made up of the life cycle stage, competitors, key success factors, and Porters 5 forces. FedEx is still in the growth stage of the life cycle. There are few competitors in the postal service and delivery industry.
Top Competitor:
UPS
The United Parcel Service was founded in 1907 within the United States. Today UPS is a $30 billion company that focuses on enabling commerce around the planet. UPS is one of the most recognized and admired brands in the world on top of express carrier and package delivery. UPS is a leading provider of specialized transportation, logistics, capital, and e-commerce services. UPS is involved in more than 200 countries worldwide.
UPS Internet Shipping is your fastest and most convenient shipping solution on the Web. Access the industry's widest array of shipping options right from your computer. UPS Internet Shipping provides many key benefits including:
Ø Store up to 300 addresses in Address Book
Ø Access shipment details and tracking data for up to 90 days
Ø Customize preferences for fast, easy shipping
Ø Shipping software not required - nothing to install
Strategic Analysis:
Most carrier firms emphasize the same strategic dimensions and use similar strategies and that once common strategy that is the carrier business is the high investment in research and development in order to develop better technologies. In the business, firms with the best technology tend to have a higher market share and this can be seen as a competitive advantage.
Key Success Factors:
The key success factors for FedEx business is technology. This is what makes a company run and ultimately makes the money for the company. Another key success factor is marketing. People need to be familiar with the carrier's names and services so they have trust in the quality of the service provided. The more a
parcel carrier is globalization; the better success it will have when it comes to international deliveries. International deliveries are costly and there are only a few carriers that can provide total global delivery services and this could be a competitive advantage. Customer service is very important, carriers need to keep the customers satisfied with the service so they continue to come back and use the service.
Value Chain Analysis & Identification of Core Competence
Primary activities:
Ø Inbound logistics- handling and storing of products to be shipped.
Ø Operations- shipping products, logistics, value chain analysis, financial analysis, handling orders, checking orders.
Ø Outbound logistics- delivery of the products, receiving payment.
Ø Marketing and Sales- develop a positive image of the company making people feel comfortable and satisfied with the product.
Ø Service- Concentrates on customer satisfaction, doing anything that satisfies the customers.
Support Activities:
Ø Procurement- purchasing, trucks, planes, gas and other assets
Ø Technology development- investments in systems innovation, research and development and information technology
Ø HR management- hiring, training, developing and compensating employees from truck drivers to top-level management
Ø Firm infrastructure- General management, planning, accounting, legal support, government regulations, required to support the value chain
Global distribution involves managing not only the movement of goods, but also the flow of information and finance that moves with the goods. A FedEx supply chain solution is a streamlined organization and that one core competency leads to another it is a continuous flow.
SWOT Analysis
Strengths:
Ø Market Leader
Ø Number one in the International Air Express Industry
Ø They had a head start in the business
Ø Can clear customs faster allowing shipments to avoid delays
Weakness
Ø Major competitors and its operations
Ø Growth demand
Opportunities
Ø Expand into more countries
Ø Buy more planes and trucks to deliver more packages faster
Ø Start delivering more heavy weight cargo
Ø Improve ground delivery
Ø Upgrading distribution and logistic services
Threats
Ø Competitors that offer better prices, faster travel time
Ø Customers stop buying products
Ø Gas Prices can rise that will have an impact on the prices
Five Forces Model:
Threat of New Entrants:
The threat of new entrants is low in the parcel industry. It is low because it is very expensive to get involved in the industry. Starts up costs are high. It is expensive to have the services that are equal to that of FedEx and the other competitors.
Bargaining Power of Suppliers:
The bargaining power of suppliers is high. It is high because when looking at the items that the parcel industry use such as, planes, computers, and vehicles. If FedEx is not on good relations with these people, the costs can increase drastically.
Bargaining Power of Buyers:
The buyers have a very strong bargaining power. They have the ability to switch their user to one of the other members of the industry at any time. It is the job of FedEx to make sure that the customer is always happy. It comes as no extra cost to the buyer to switch their parcel delivery company. The only lose that is really suffered comes at the expense of the company for losing a client.
Product Substitutes:
It is very easy to substitute a delivery service. There are not many out there but the ones that are well established in the eyes of the customer and the industry. It would not be a complex task to switch one company for another. Since this is the case, FedEx has to maintain good customer relations with their clients.
Intensity of Rivalry:
The parcel industry is an intense industry. There are five main players in the industry competing for market share. The features that they are competing on are the speed of delivery, the efficiency of the delivery, and prices. If you can
create a successful mix of the three of those factors, you will hold
the greatest market share.
FedEx has become a major technology user. The use of IT to its business enabled FedEx to surpass the rest of the industry and acknowledge Fred Smith as "the visionary who forced his and other companies to think outside the proverbial one." He rationed that the company "should acquire its own transportation fleet while competitors were buying space on commercial airlines and sub-contracting their shipments to third parties, reliable on its overnight delivery commitments, "an image that has become fundamental to FedEx's overall success." The introduction of new technology allowed FedEx to install more than 100,000 sets of PC's with its software allowing customers to be linked and logged into their ordering and tracking system. The emergence of PC's loaded with FedEx software transformed the customer base into an electronic network. "Information enables corporate customers to tighten their order-to-delivery cycle, exercise just-in-time (JIT) inventory management and synchronize production levels to market demand." FedEx's quality of service became synonymous with the quality of the information provided to its workforce.
FedEx has enhanced information management in terms of being able to identify the critical factors involved with success of an e-business. It has successfully transformed from a conventional business into an advanced e-business in its network economy. FedEx has succeeded in several areas including: visionary leadership in the application of new technologies, defining the information infrastructure, integrating internal processes, and aligning the organizational structure for maximum benefits. FedEx's key strategy was customer service and for its customers to adapt into its new information technology. FedEx harnessed its new technologies and extended the electronic business to all of its customers. FedEx has developed this technology and made it possible for its customers to connect with them in any way the customer chooses. The restructuring of FedEx addressed many processes but in particular the integration of logistics as well as supply chain management proved to be most successful. The enabled FedEx to cut inventory levels, reduce costs as well as shortening order-cycle time. This is a key for FedEx to improve the quality of service they provided to their customers.
FedEx has laid out a vast matrix of transportation and information networks that will provide them with a huge competitive advantage for some time. To function as e-business Company will need to become increasingly customer/solutions focused. All processes must be integrated to ensure a unified customer centered front that provides services throughout the value chain, logistics, and parcel carrier business. FedEx's new restructuring will serve their customers and apply new technologies constantly to improve their response time and the value of the information they provide. FedEx will continue to build, innovate, and exploit technologies from the successful base they have created and will be on top of the industry for a long time to come. FedEx can be classed as an innovator in its field, being the first company to introduce many of the technologies and processes that are used in the courier business today. Innovation can be seen as a context-specific process of invention, diffusion, adoption and implementation (Galliers & Swan, 1999). FedEx management understands the strategic importance of innovation and has forged links to create the FedEx Technology Institute. .FedEx has also shown a strong trend for technological innovation. This means that the company is not always reactive to competition; rather they often force the competition to follow their lead. This gives FedEx a competitive edge, and also continues to ensure that the "FedEx" brand-name is well respected.
RECOMMENDATIONS
FedEx Corp. shall have as its basic function the obligation to bind the Nation together through business correspondence of the people. It shall provide prompt, reliable and efficient services to patrons in all areas and shall render good services to the community. FedEx can be a continued success in terms of: Keeping costs down to compete against competitors such as UPS, DHL and TNT. This includes using the latest technology to increase the speed of transactions. Focusing on customers is always important, as keeping the customers happy will allow for brand loyalty in not switching to other competitors. FedEx has to understand what it is going to take to be competitive, to meet the needs of the marketplace and then to try and exceed those and set tough targets. They should listen to their customers very well and try to diversify in an area where competitors are close in operations. Technology is important because it allows the companies to compete and be better than one another. It helps attract customers and helps to create the revenue for the companies. FedEx competes in this area by having at racking system and is available online for customers. Marketing also plays an impotent role in the industry. Marketing need to portray the company as one they can trust. Plus the customers need to be aware of the company name and the services they provide. To help build the brand name, FedEx offers an on time guarantee.
APPENDICES
Business ChallengeFedEx, the world's largest express package delivery and Freight Company, transports more than 5.3 million items to 215 countries each working day. FedEx maintains a fleet of more than 638 aircraft and 70,000 vehicles with schedules maintained and updated 24 hours a day, 7 days a week in an integrated global network. The company's continued growth and the logistics surrounding millions of packages per day, meant constant adjustments to operations and coordination among many operating groups. The existing legacy systems were adequate for individual business unit objectives, but could not coordinate the many functions of the Global Operations Center, the nerve center of the FedEx transportation system. FedEx needed a system that would efficiently provide contingency plans in the event of a problem. Any break in the flow of packages creates a backlog throughout the system. The company had to accomplish the system changeover while accessing the exist-ing IMS system as well as a relational database. To keep development and maintenance costs down, FedEx wanted a solution that enabled their project staff of mostly IMS system veterans to quickly and efficiently transfer application knowledge into the new system as well as incorporate new features.
Solution
FedEx chose DataXtend CE for C++ to help create an infrastructure for the Service Recovery Application (SRA) and integrate the IMS system into the multi-tier component based application. The SRA provides recovery options and contingency plans when pack-ages are at risk of being delayed.
As events continuously stream in, each group that could be affected and each potential option is reevaluated. FedEx was able to implement near instantaneous response times using the DataXtend CE for C++ object caching features. With the object cache, data that would normally be retrieved from IMS or an RDBMS is already available in memory saving the system seconds for each data access operation.
BenefitsThe new object component framework, built with DataXtend CE for C++ as a foundation, enables previously unattempted projects to be built. FedEx is no longer limited when considering possible projects because DataXtend CE enables capabilities that were not available in IMS. Establishing functional relationships between aircraft, maintenance and ground stations was practically impossible before, but DataXtend CE makes these cross-functional relationships possible. Furthermore, because DataXtend CE development tools integrate seamlessly with Rational Rose modeling tools, FedEx's system developers transitioned smoothly to an object-based environment. DataXtend CE's code generation capabilities significantly sped up development time. SRA performance demands and response expectations were achieved using the DataXtend CE technology server. Without the caching and pre-calculations done by the DataXtend CE server, the time required to compute a list of recovery options would have been prohibitive, making the application unusable.
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Technology Overview:
http://www.fedex.com/us/about/overview/technology.html
FedEx Family: http://www.fedex.com/us/about/overview/fedexfamily.html
Mission Statement:
http://www.fedex.com/us/about/corporation/mission.html
Corporation Facts:
http://www.fedex.com/us/about/corporation/facts.html
International Chamber of Commerce (UK) Business to Business Directory (2002), "FedEx Corporation"
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