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Under the guidance of Prof. Ravi Shankar

-A.Anish

2010SMT6733

Case on FedEx & IT practices

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Company Background Founded in 1973

Current market capitalization of 26 billion dollars.

to fedex something has become synonymous for

sending a package overnight. Intensified international competition and economic

turmoil had resulted in flat profit margins andstabilizing growth rates in FedExs domestic market.

To adapt to these tougher market conditions, FedExhad taken on an expansion strategy. They broadenedand deepened their geographical and productportfolio reach to create four main service lines with

operations spanning the globe

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Service lines

Fedex kinkos office and Print services is aleading provider of document solutionsand business services, operating in morethan 1200 digitally connected locations in10 countries.

Fedex Freight is the leading U.S.regional, less-than-truckload freightcompany, delivering within the UnitedStates and key international marketsusually within one to two businessdays.

Fedex Ground provides cost-effectiveday-definite shipping, specializing insmall-package business-to-business

delivery with convenient U.S. Residentialservice through Fedex home delivery

Fedex Express provides timedefinite shipping to 215 countriesincluding every street address in

the United States, delivering smallpackages and freight usually inone to three business days.

FedExExpress

FedExFreight

FedEx

Kinko

FedEx

Ground

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ase o engagement n e ex xpressEMEA

On the international scene, FedEx had started itsexpress operations in the 1980s with regularintercontinental flights to Europe and Japan

FedEx Express is the worlds largest expresstransportation company.

The FedEx Express service line accounted fortwo-thirds of FedEx Corporations turnover .

By 2004, the FedEx Express service linegenerated approximately one-third of its revenuesfrom international express operations

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FedEx IT milestones

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Role of IT department at FedEx Keep the enterprise systems architecture resilient

and supportive of longer-term enterprise growth.

Keeping the IT development pipeline aligned withthe often unpredictable stream of requests from

empowered business constituents

Need for a Transformation the EMEA region had been developing at break-

neck speed and this had put considerablepressure on the IT departments ability to deliverIT developments, and manage the regions ITenvironment sustainably

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Problems with the existing IT IT development work often had to be executed quickly

for unanticipated requests had also resulted in a verycomplex and disparate systems architecture.

For example, in 2004, FedEx Express EMEA had over30 different systems to deal with customs clearance.This meant that more and more of the IT departmentstime and budget was being allocated to finding ways tointegrate existing systems, perform maintenanceactivities, and basically prevent the whole thing frombreaking down and bringing the business to a halt.

The business increasingly experienced project delaysand high costs in most of its projects due to IT

integration and resourcing problems. In particular, thedelays and problems in highly visible multi-country andregion-wide projects had put the perception of the addedvalue of the IT department under considerable pressure.

From an IT supply point of view, the situation become

unsustainable in the long run.

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6*6 IT transformation

Rob carter, the CIO of FedEx, in 2004 hadchallenged the FedEx IT departments toaccomplish six improvement objectives by theend of 2006:

focus on the FedEx customer;

work as a trusted partner with the business;

create opportunities for every IT employee;

facilitate competing collectively by creating amore consistent FedEx IT environment;

simplify information access across FedExbusinesses

and, finally, increase IT delivery bandwidth

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Plan of action

CIO suggested an architecture basedapproach to tackle the situation.

Developed a vision within the ITdepartment of simplified systemsarchitecture which would be the yardstickfor assessing both current and futurerequests for business solution

Rally the local IT staff, central IT teamsand other business areas around theidea of collectively behaving like co-custodians of the enterprise systemsarchitecture

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The FedEx IT model

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Integrating business processes

FedEx's information infrastructure allows it to extend its

services beyond pure transportation to address othersupply chain service needs of customers.

FedEx markets its front-end services under the banner ofFedEx eShipping Tools. These stand alone shipping and

hardware-based tools connect FedEx with over twomillion customers.

Web- and DOS-based shipping systems allow customersto interact with FedEx's extranet, download software andshipping information, track packages, manage invoicingdata, and integrate their accounts payable applicationprogram with FedEx shipping transaction reporting.

By backtracking along the supply chain to raw materials,FedEx has identified points where it can provide

management services, and has developed expertise in

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Recognizing that customers want to deal with one companyto meet their transportation and logistics needs, FedExrenamed itself the FedEx Corporation in early 2000, andextended the FedEx brand to four of its five subsidiarycompanies, to provide customers with an integrated set ofbusiness solutions.

Additional reorganizations provided a single point of accessto sales, customer services, billing and automation systemsthrough the formation of another subsidiary called FedExCorporate Services. Previously, these services wereperformed separately by the five subsidiary companies.

Knowledge generation and use is at the heart of FedExcorporate services, which pools together the marketing,sales, customer services, information technology, and e-commerce resources of the group.

The reorganization opens up the opportunity for knowledgeintegration between business units within the group and

processes

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Case1: FedEx association with national semi-conductor

In 1992, National Semiconductor wanted to reduce itsorder cycle time from on average of 16 days to less than5, its distribution costs from 3% to less than 2% of sales,and its 800-plus staff to 180 people.

The company faced several operational problems:o Its airlift capacity could not keep up pace with demand.o Its warehouse operations and supplier deliverables

suffered from inconsistent quality.

o Its shipping coordination and tracking, involvingnumerous consolidators and forwarders, was complexand inefficient.

NatSemi formed an alliance with FedEx whereby FedExacted as Nat-Semi's logistics department and wasresponsible for handling all shipping and customsclearance tasks.

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FedEx consolidated NatSemi's three prime distribution centersoutside of the U.S.in the U.K., Japan, and Hong Kongintoone Singapore based global distribution center, which ships atall locations outside the U.S.

FedEx's direct shipping program established tight IT linksbetween FedEx's distribution warehouse in Singapore andNatSemi's information infrastructure.

NatSemi's order processing application, which ran on on IBMmainframe in Santa Clara, Calif., sent daily order batchesthrough a dedicated line to FedEx's Tandem Computersmainframe in Memphis. Once FedEx received an order, it tookover the order management-to-delivery process.

Throughout the supply chain process, NatSemi and itscustomers had immediate access to order status information,through the NatSemi and FedEx Web sites.

By integrating information systems and processes, NatSemieliminated seven regional warehouses in Asia, Europe, and theU.S.

Although the number of wafer fabrication locations andassembly test storage locations remained unchanged,

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Case2: Hpshopping.com

In the late 1990s, HP, having sold the majority of itsconsumer products through traditional retailchannels, recognized the opportunity to capitalizeon the direct distribution model.

HP also wanted to focus on substantially reducingits refurbished product inventories and addressingits customers growing desire to order products viathe Internet.

The creation of a new online sales channel forcustomers, now known as hpshopping.com, wouldenable them to capture a larger share of sales,enhance its relationship with customers, andcomplement its existing network of retail distributors

HPshopping.com asked FedEx to develop a

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FedEx brought in cross-functional teams ofprofessionals to assess HPs supply chainarchitecture and identify critical integration points.

Order management:FedEx integrated criticalinformation systems needed for the new channel,enabling its customers to conveniently orderproducts online. Critical aspect was integrating

order-management system with the credit-cardauthorization system. FedEx also contracted acall center provider to manage the servicesrequired to support HP customers that preferpurchasing products via a toll-free number.

Warehouse management:The fulfillment centersclose proximity to the FedEx SuperHub enableshpshopping.com to enjoy a variety of benefitsassociated with the elimination of the inbound

transportation leg to the FedEx SuperHub

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Inventory management:Through the integration of ordermanagement and inventory management systems, FedExenabled hpshopping.com to proactively monitor andcontrol product inventory levels. By integrating thosesystems from hpshopping.com and the third-party callcenter, FedEx was able to develop a totally seamless

inventory management application.Order fulfillment:In order to help hpshopping.com increase

responsiveness to its customer base, FedEx placed bothrefurbished- and finished-goods inventories in the FedExfulfillment center, located in Memphis. Late cutoff timesenable hpshopping.com customers to order as late as10:00 p.m. (EST) and still have their orders shipped thesame day.

Reverse Logistics:By streamlining the way products arehandled between customers and the returns facility, aspeedier returns management service was implemented.

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Technology at FedEx

Wireless solutions & Bluetooth

Microsoft powerpad Digital pen

RFID(Radio Frequency Identification)

Velcro wristband RFID

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References Susan A. Brown, Viswanath Venkatesh; Building a successful

e-business: The FedEx story, Communications of theACM,2003

Stijin Viaene, Steven De Hertogh, Enterprise-wide business IT-engagement in an empowered business environment: Thecase of FedEx EMEA, Journal of Information Technology,2010.

Soroor, Javad; Tarokh, Mohammad J.; Keshtgary, Preventing

Failure in IT-enbled sytems for supply chain management,International Journal of production research,2009.

Dedrick, Jason; Xu, Sean Xin: How does InformationTechnology shape supply-chain Structure?, Journal ofmanagement information systems, 2008

Stenger, Alan J., Advances in Information TechnologyApplications for Supply chain management, TransportationJournal, 2011.

Andrew McAfee, Erik Brynjolfsson; IT investment that makes adifference, Harvard Business Review, 2008

FedEx annual report

www.wikipedia.org

http://www.wikipedia.org/http://www.fedex.com/http://www.wikipedia.org/

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THANK YOU