FedEx: The Cutting Edge

Presented By:
Amritha Kamath H 9005
Anirudh Sonthalia 9006
Logistics & Supply Chain Mgmt 12/8/21
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Agenda
Global Express Delivery Industry
FedEx Corporation
FedEx Transforming the old economy supply chain
Operational Excellence
 IT@FedEx
FedEx – 3PL Provider
Challenges Ahead

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Global Express Delivery Industry
One of the fastest growing industry
Turnover - $145 billion in 2005
Contribution to global GDP - $70 billion
Employment – 1.5 million people
Price sensitive
Dominated by four players
 UPS, FedEx, DHL and TNT

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US Express Industry Market
Share(2005)
Airborne DHL FedEx
8% 1% 26%

UPS
65%

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Global Express Industry’s
Major Clients
Auto-Component Other Services
2% 5%
Engineering
Textile 3%
4%
High-Tech
Pharmaceuticals 40%
6%

Financial Services
15%

Manufacturing
25%

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FedEx Corporation
Established in 1971 by Frederick W Smith

Main Operational hub: Memphis, US

Pioneer to use IT applications in daily operations

‘Parts Bank Service’ – Warehousing services

Unique services- time definite delivery of

consignment, overnight consignment delivery,

internet tracking systems, money back guarantees and
proof of delivery service
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FedEx Corporation contd..
39 hubs across the globe

90,000 vehicles and 677 planes

200,000 employees

Delivering 6 million packages daily in 220 countries

FedEX Edge: Every second is important

Popularized concepts of “just-in-time” and “build-to-order”

Leader in small package and light freight market

Unique ‘hub and spoke model’

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HUB and Spoke Model

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FedEx Corporation contd..
Late 90’s entered 3PL segment
In 2005
 Revenue of $29 billion
 Premier global provider of transportation, logistics,
e-commerce and SCM services

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FedEx Corporation contd..
Business Segment Activity/Function

FedEx Express Time bound delivery of consignments

FedEx Ground Provides low cost home delivery to Us

FedEx Freight Provides delivery to regional and inter-regional

consignments of less than truckload service

FedEx Kinko Offers document solution and business service

FedEx Trade Network Inc. Provides international trade services, specializing in

customs brokerage and global cargo distribution

FedEx Supply Chain Solutions Provides supply chain solutions to companies

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Competitors
UPS

 Largest package delivery company

 First to use bar code technology for tracking

 13 million packages to 1.8 million customers across 200

countries
 88000 vehicles and 600 jets in 2005

 Also provided logistics service consultancy, freight

forwarding and third party logistics service

 Revenue of $42.5 billion and profit of $3.87 billion in 2005
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Competitors contd..
DHL
 Established in 1969
 Pioneer in international air express delivery service
 Leader express delivery company in Europe, North
America, South America, Middle East and Asia
 DHL Connect to monitor consignments
 In 2005, revenue of $44.6 billion and profit of $3.76 billion
TNT
 Three units: TNT Express, TNT logistics and TPG Post
 Delivered 17 million documents to 200 countries
 20000 vehicles and 40 planes
 In 2005, revenue of $21 billion and profit of $1.98 billion

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FedEx: Transforming Old Economy
Supply chain
Express Revolution – Fast and reliable delivery of parts
and components to facilitate production and deliver
final goods to market
‘One Stop Shop’ – Integrate all operational activities of
organization
‘The Third Revolution Service’: Demand-pull solutions
to customer’s SCM practices

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Old Economy Supply Chain

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New Economy Supply Chain

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Supply Chain Outsourcing

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Operational Excellence
Equip all group companies with technologically
advanced infrastructure
 Package tracking
 Communications Systems
 Billing
Enables any person to book consignment
 Lightest packages to heavy freight
 Through any means of transport (land, air, sea)
 To any destination

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Operations’ Flowchart

Consigno Local Country HUB

r Station Gateway (0200
(1900 (Origin) (Outbound) Hrs)
Hrs) (2100 (2300 Hrs)
Hrs)
Airborne
Local Station
Consignee (Destination) Country
(0900 Hrs) (0700 Hrs) Gateway
(Inbound)
(0500 Hrs)

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IT @ FedEx
Customers Operations Service Master Online System
( COSMOS) (1979)
 Tracking of consignments
Global Operations Control Centre (GOCC) (1985)
 Monitor movement of aircraft and vehicles
 Advanced info on weather condition.
Aids in route planning
Digitally Assisted Dispatch System (DADS) (early 1990’s)
 Improved version of COSMOS
 Better control over pick-up & delivery system
 Facilitate 2-way communication (pick up requests of packages by
clients)
Automated Sorting Tracking Routing Aid (ASTRA)
 Specially designed bar code with designated route of consignment
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Advantages of IT
Tracking Consignments
Minimize loss in transit
Increase productivity
Reduce inventory of customer
Eliminate wrong deliveries
Meet promised delivery deadlines
Develop faith among customers – deliver anything to
anywhere, overnight.

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IT @ FedEx (Contd…)
Ahead of UPS and other competitors in terms of
Technology
2006 - US $ 1 Billion budget for technology
improvement
New software, “Insight”
 Counter threat of terrorism
 Scan contents of inbound consignments

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FedEx - 3PL Provider
Requirements
 Manufacturers ---> Secure & Fast delivery
 Retailers ---> Fast & Rapid delivery channels for
distribution network of customers.
What 3PL providers promise – expertise, reach,
reliability, flexibility in terms of transportation,
consolidation, warehousing, distribution, freight
forwarding etc.

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Ex 1: General Motors
FedEx Supply Chain Services
 “Supplier of the Year” for eight consecutive years from
1998 to 2005.

How was this achieved?

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GM Supply Chain & FedEx

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Ex 2 : Fujitsu PC
Problems faced
 Inventory Control
 Late delivery of PC’s
 Delivery time – 10 days(Dell – 1 day; IBM – 2 days)

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Fujitsu’s Supply Chain & FedEx

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Results : Fujitsu PC
Reduced lead time from 10 days to 3 days
Cost savings due to
 90% reduction in Inventory
 Less lead time
 Effective Supply Chain

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Ex 3: Cisco Systems
Problem faced
 Assembling and Delivering Routers.

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Cisco’s Supply Chain & FedEx

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Results : Cisco Systems
Quick & Fast delivery
Reduction in excess inventory
Reduced cost on inventory, logistics & supply systems

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Challenges Ahead
Emergence of 4PL
 Lost GM as a client
 Vector SCM ---> JV Between GM and CNF Inc.
 Cycle time of GM reduced from 60 days to 15 days.

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FedEx Vs. UPS
Similar in
 Speed & Efficiency
 Social responsibility
 Emotional Appeal
 Customer Service
 Ethical Standards
BUT, Corporate Advertising & Communications Recall
rate – UPS (70%); FedEx (55%)

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Challenges (Contd…)
Price sensitive market
4PL and 5PL players stealing market share
Solution:
Equip to foray into 4PL and 5PL
Venture into unexplored business areas to stay ahead
of competition

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THANK YOU

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