Fed ex new

FEDEX CORPORATION

نام استاد:

جناب آقاي دكتر كرمانشاه

نام دانشجويان:

سيد محمد نيك سرشت

مينو ميرحسيني

FEDEX

Inception: 1973 Federal express corporation (Fedex) Transformation:

from an express delivery company to a global logistics and supply-chain

management company

RESOURCES OR MARKET?

Investing heavily in IT systems Best taking advantage of Internet (from

1994) Investing in systems infrastructure Integrating systems to provide services

throughout its customers’ supply-chains Spending US $88 million on acquisition of

Caliber systems, Inc. and building a powerful technical architecture.

Spending US $100 million on reorganization

THE EXPRESS TRANSPORTATION AND LOGISTICS INDUSTRY

Start in 1973 The main competitor: UPS (1907) Sources of competition: focus on

customer segmentation, pricing and quality of service

Three main trends: The globalization of business Advances in IT Changing market demand for more value

added services

ADVANCES IN IT

Promoted the globalization of commerce

Redefined logistics Redesigned warehouses Controlled the storage and

movement of parts and finished goods

COMPETITION

Its next-day delivery service revolutionised the distribution industry

Reliable over night delivery of time sensitive documents

Applying IT: First transportation company to launch a website More than 100000 PCs loaded with FedEx software The core corporate strategy: to use IT to help

costumers take advantage of international markets $10 billion company spending $1 billion annually

on IT and IT workforce of 5000

EXTERNAL FACTORS

Government deregulation of Airline industry

Deregulation of trucking industry Trade deregulation in Asia Pacific Technological breakthroughs Rising inflation and global

competition

Building the virtual information

infrastructure COSMOS (customer, operations, service, master on-line system): Even as early as 1979, a centralized computer system kept track of all packages handled by the company.

Placing bar-code on each parcel at the point of pickup and scanning the bar-code at each stage of the delivery cycle.

POWERSHIP program: aimed at improving efficiency and control. (a technological system in 1984. additional services to the customer including storing of frequently used addresses, label printing, on-line package pick-up requests, package tracking, …)

FedEx took advantage of

new technologies

EDI (electronic data interchange) & Internet: Building one-to-one relationships with customers. Started to track back along the supply chain to

the point of raw materials. Identifying points along the supply-chain where

they could provide management services (often the services include: transportation, order processing, fulfillment, inventory control, purchasing, production and customer and sales services.)

New focus of FedEX’s attention: the ability to interconnect and distribute information to ally the players in a supply-chain.

FedEx took advantage of new technologies

LOGISTICS = key part of strategy formulation: the key means for differentiation their products or services from those of their competitors (Ex.decreasing cycle order).


FedEx’s role in providing integrated logistics systems formed the basis of many partnership arrangements.

Helping them to redefine sources and procurement strategies so as to link in with other parties in the supply-chain, such as raw materials suppliers, customers were outsourcing their supply their supply chain management functions to FedEx, functions that were seen as peripheral to the core of their business.

By improving, tightening and synchronizing the various parts to the supply-chain, customers saw the benefits of squeezing time and inventory out of the system.

Ex. Dell Computers

Pioneered the direct selling model in the computer industry and succeeded because it was able to keep inventory very low (make to order vs. make to stock).

FedEx provided the system to track and monitor the assembly of each PC on order.

FedEx was a key partner for Dell, allowing customized, built-to-order products to be delivered within days of a customer placing an order, a huge advantage in an industry whose components become obsolete at the rate of two per cent per month (IT vs. Inventory).


Not only was FedEx pushing its customers for integration, but its innovative customers were also demanding greater integration (Cisco).

By integrating its services within the supply chain of its customers, and thus generating increase in customer loyalty and in customers’ switching costs, FedEx managed to effectively raise the barriers to entry for competitors.


The internet refined the COSMOS system. Whenever new information was entered into the system by FedEx or by customers through the internet, all related files and databases were automatically updated. (COSMOS system handled 54 million transactions per day in 1999)

In 1998 FedEx decided to overhaul its internal IT infrastructure under project GRID (global resources for information distribution): replacing 60000 terminals and some PCs with over 75000 network systems.

Other progresses

At the beginning of 1999, FedEx launched an enhancement to its package-tracking service. Customers could query and receive package status information for up to 25 shipments simultaneously, and forward this information on to up to three e-mail recipients.

In 1999, FedEx signed an agreement with Netscape to adopt Netscape software as the primary technology for accessing its corporate intranet sites. FedEx’s intranet included more than 60 Websites, created for its end users and in some cases by its end users.

Other progresses

As well as the data centre in Memphis, FedEx operated other centers in Colorado Springs, Orlando, Dallas-Fort Worth, Singapore, Brussels and Miami.

Users in France, Japan, Italy, Germany, Netherland and Portuguese and Spanish-speaking countries could access this information on-line in their native languages through www.fedex.com.

FedEx claim

FedEx claimed to have the largest on-line client server network in the world that operated in real-time. Information became an extremely critical part of its business.

BRANDING AND BUSINESS STRUCTURE UP UNTIL 19TH

JANUARY 2000In the first 21 years of business: “Federal Express Corporation”Its customers came to recognize it as FedEx in short.Hence in 1994, it seemed natural that the company should change its brand name to “FedEx”.

Branding and business structure up until 19th January 2000

The Parts Bank Business Logistics Services (BLS): a division

of FedEx Corporation in 1988 FedEx Logistics: 1994 FedEx Logistics and Electronic

Commerce(FLEC): 1996


Acquisition of Caliber Systems Inc.: in 1998

five separate subsidiary companies: Federal Express RPS Roberts Express Viking Freight FDX Logistics


FDX Corp.

Federal Express RPS FDX Logistics

FDX Supply Chain

Services

Caribbean Transporta

tion

Viking Freight Roberts Express

At the end of 1999


The holding company: FDX Corporation

The FedEx brand lived on with no advertising or promotion of FDX.

Five different subsidiary companies with completely unrelated names and logos under the FDX banner

The challenge for FedEx was how to bring the companies closer together to create those synergies?

Events leading up to the January 2000 reorganization

FedEx needed to address a number of factors that would affect the prospects of the company: FedEx’s performance The internet market and e-tailing The competition

FedEx’s performance

In 1999,rising fuel prices had severely impacted upon the company’s net income.

The company anticipated that operating income could be down by more than 150million$ for the year ending may 2000.

This called for some immediate remedial action.

The internet market and e-tailing

The internet changed the basis for competition for most business. Its low cost and diversity of applications made it appealing and accessible.

The impact of the internet on FedEx was:1- it opened up opportunities in logistics

management for FedEx as businesses were using the internet to reengineer their supply-chains.

2-the express transportation needs associated with the growth in e-tailing presented enormous opportunities for company.

The competition

The industry was loaded with companies that provided a myriad of transportation services to a wide range of business.

Although FedEx pioneered the web based package tracking system, such systems became the industry norm rather than a competitive advantage.

The competition

UPS: UPS outsourced software developing.The company shipped more than 55% of goods ordered over the internet and offered over the full range of logistics solutions to its customers.

The competition

DHL:Investing 1.25 billion $ in handling systems, automation, facilities and computer technology.

An increase in worldwide turnover of 18% to 5.26billion$.

The competition

TNT:In 1998, TNT launched a web collection facility on the internet. Later launched the world’s first global Price Checker service on its website.

In 1999, TNT launched Customized Service environment.

The competition

While FedEx had pioneered many logistics solution that had helped it to achieve economies of scale faster than its competitors, the advantages were quickly eroding as newer technologies became even more powerful and less expensive.

The January 2000 announcement

Three major strategic initiative:1. A new brand strategy:

‘FedEx Corporation’ Federal Express FedEx

Express RPS FedEx Ground Roberts Express FedEx

Custom Critical Caliber Logistics FedEx

Logistics Viking Freight

FDX Corp.


FDX Supply Chain

Services


tion


FedEx Corp.

FedEx Express

FedEx Ground

FedEx Home Delivery

FedEx Logistics

FedEx Logisti

cs

Caribbean

Transportation

Viking Freight

FedEx Custom Critical

FedEx Trade Networks

At the end of 1999

January 2000

The January 2000 announcement2. Major reorganization:

• Sixth subsidiary (FedEx Corporate Services Corp.): pool together the marketing, sales, customer services, information technology and electronic commerce resources of the Group and combine invoicing function for all the companies

The January 2000 announcement Merging of the two logistics operations (Caliber

Logistics and FLEC) into FedEx Logistics ‘Carrier-agnostic’: FedEx Logistics would use

FedEx transportation where it fitted, in terms of cost, geographic coverage, customer preference and the kind of goods being transported

Bring together the IT expertiseand the know-how of the logistics business

The January 2000 announcement

3. Introduction of a new low-cost residential delivery service, FedEx Home Delivery, to be launched in the US

FDX Corp.


FDX Supply Chain

Services


tion


FedEx Corp.

FedEx Express

FedEx Ground

FedEx Home Delivery

FedEx Logistics

FedEx Logisti

cs

Caribbean

Transportation

Viking Freight

FedEx Custom Critical

FedEx Trade Networks

At the end of 1999

January 2000

The January 2000 announcement The Company anticipated having to

spend US$100 million on these changes over three years

The competitive advantage of the company in the future: collective synergy of solutions

1. Describe the context of FedEx’s strategy between 1973 and 2000. What were the circumstances that FedEx encountered?

2. Describe FedEx’s strategy context between 1973 and 2000. What were the main characteristics?

3. Describe FedEx’s strategy process between 1973 and 2000. How did FedEx’s strategy come about?

4. What are the 5 main strategy issues for FedEx in 2000? Why?

5. Which strategy perspective does FedEx have on each of these issues? Did it change over time? What is your perspective on each issue?

Documents

Fed ex new