Supply Chain Management at FedEx

Group 5
Arun Maithani (11A)
Course: Supply Chain Navneet Sharma (26A)
Management Nitesh Singh (29A)
Sahil Taneja (39A)
Shobit Mahajan (48A)
Background: About FedEx
The journey
• Started in 1971, to facilitate overnight
delivery of document through
airfreight system directly to the
customers at affordable costs
• FedEx over a period of years
differentiated itself by having state of
the art infrastructures with
technologically advanced automation
• Offers variety of services including
warehouse management, inventory
management, transportation and
logistics managements to name a few
• Serves more than 220 countries
• Delivers ~3.6m shipments each day
Headquarter: Memphis, Tennessee
FedEx Services integrates the technology
and services customers need. It includes
solutions for global supply chains, e-
commerce, or any of today’s business
challenges
FedEx Express covers every U.S. street
address and services more than 220
countries and territories. Provides time-
sensitive, air-ground express service
through 375 airports worldwide
FedEx Ground gives customers
dependable business-to-business delivery
or convenient residential service. Also
includes FedEx Smart Post
With extensive coverage in U.S., Canada,
Mexico, and Puerto Rico FedEx Freight
provides LTL choices based on customers’
shipping needs
FedEx Portfolio
FedEx Model
Customers take packages to a FedEx Office where the package is weighed and labelled. Alternatively, they can print out
smart labels from fedex.com and schedule a pickup when a delivery truck is in the area or drop the package in a local drop
box

At designated times, all of the accumulated packages from a given location travel, usually by truck, to a local or regional
sorting/distribution facility. If packages are destined further than 200 miles, they travel by air. Otherwise they travel by truck
to the local receiving sorting facility
Key Question: 1

Emergence of Fedex as the leading global provider of supply chain management services to
corporate customers is attributed largely to the state of the art infrastructure facilities and its
vast network spread across the world. Explain how FedEx's infrastructure facilities and network
facilitated better management of the customer’s supply chain
FedEX: Key ingredients of success
Robust Network + Strong Infrastructure + Technology Support = Win
FedEx: Robust Network
750 Worldwide delivery centres

1775 Office Drop-off Locations

6300 Authorized Shipping Centres

38,500 Drop Box Locations

10 Express Air Hubs

Operations at more than 375 Airports

Operations at more than 1,240

647 Aircraft in use

47,500 Motorized vehicles

Hong Kong, China, Toronto, Ontario,

Brussels, Belgium, Dubai, United Arab
Emirates and Miami (Florida)
FedEx: Hub and Spoke Model
Pickup - 3 In addition to the superhub hub in Memphis, there are
Delivery - 3
nine other air hubs serving for particular zones of the
world with similar infrastructure to the Superhub

City - 3 International
City - 4 • Guangzhou International Airport in China operates for
Asia Pacific
HUB • Toronto I. A. for Canada
• Paris Charles de Gaulle Airport and Cologne Bonn
Airport for Europe, Middle East and Africa
• Miami I.A. for Latin America-Caribbean area
• Ted Stevens Anchorage in Alaska for a part of Asia
Pickup - 1 City - 1 City - 2 Pacific
Domestic
• Oakland International Airport (CA)
• Newark Liberty International Airport (NJ)
• Fort Worth Alliance Airport (TX)
Pickup - 2 Delivery - 1 Delivery - 2 • Indianapolis Airport (IN)
Memphis Super hub: Infrastructure and operations
Infrastructure facilities to help handle customer processes:
• Fedex infrastructure consists of operations hub at Memphis, a 647 fleet of aircrafts and 48000 vehicles for land transport
• The operations at Memphis hub is streamlined with fixed time for unloading the aircraft, sorting and then reloading to the
destination aircraft
• Every night the process will start by 10:30 pm with 150-160 aircrafts landing in the Memphis airport and within 3 hours
all the processes are completed the aircrafts took off to the destination. If there are any delays the operations teams were to
explain the reasons and proper measures to be taken
• After unloading, the packages go through series of steps through which they sorted, and dispatched to respective
destinations. These sorting is automated on conveyor belts equipped with infrared scanning
• The scanning information is integrated directly with Fedex website so that customers can track the location of their
shipments
• By implementing and executing consistent processes, Fedex was able to deliver the packages rightly with less delivery
time and costs
Technology supporting to stream line process
FedEx uses a variety of technology tools to streamline operations and complement infrastructure

• Fedex used Customer Operations Service Master Online System (COSMOS) to track packages. This system used by
employees, customers to track the shipments online. This is the backbone to handle millions of transactions and smooth
operation execution
• To ensure safety of the packages and timely delivery for the customers, Global Operation Control Centre (GOCC) was used
to trace trucks and aircraft movements
• GOCC also provided weather information to trucks and aircrafts so that accidents are avoided and reliable services are
provided
• Digitally Assisted Dispatch System (DADS) provided information to the delivery and pickup agents’ information about the
exact delivery and pickup locations. It helped them to plan their route and ensured shorter time duration for the activity
• Automated Sorting Tracking Route Aid (ASTRA) provided accurate delivery information so that packages can be sorted and
dispatched to the right destination

These IT initiatives coupled with state of the art infrastructure facilities helped FedEx innovatively design and deliver supply chain
services to their customers.
Key Question: 2

FedEx solved the SCM related problems of its customers by offering an innovative customized SCM
offering.Discuss in detail the manner in which Fedex help Fujitsu and Cisco in solving their SCM problems
Fedex SCM Services to FUJITSU PC
 FUJITSU had a subsidiary office in California with head office in Japan. The delivery time for notebook computers to
its customers in US took more than 10 days though inventory was available, whereas other vendors offer much
Business lesser time
Challenge  The company used two shippers, Nippon Express from Japan to US and Circle Air Freight within US and poor co-
ordination between these shippers delayed the material arrival and some time even missing components.
 Further, the Portland facility was not strategically located to serve US’ increasing transportation time and costs.

 FedEx relocated the assembly and distribution functions to its Memphis hub
 FedEx stored the components received from the Asian vendors in their warehouse in Memphis
 FedEx started providing their infrastructure to be used as warehouse and assembly for FPC
Solution  The order schedules were managed by FPC and given to FedEx
Proposed  FedEx based on the schedules requested materials and provided to the FPC’s assembly team or their subcontractors
 Loading and Testing were also done at FedEx facility by FPC team
 The assembled notebooks were shipped different destinations by FedEx
 FedEx provided Warehouse management, shipping and transportation, Infrastructure to manage the assembly
operations to FPC.

 FUJITSU through engagement with FedEx was able to reduce the delivery time to 3 days
 FedEx strict adherence to inventory accuracy, return and fill rates ensured less finished goods inventory for FPC
Key Benefits  FPC had flexibility to maintain right inventory hence faster inventory turns and shorter shelf time helping them to
protect from price changes and market changes
Fedex SCM Services to CISCO
 CISCO for their routers sourced components from suppliers stored them in regional warehouses and then shipped
them to assembly warehouses
Business  The finished goods were stored in CISCO warehouse and shipped to the end customers based on the orders
Challenge  CISCO had to manage large no. of warehouses, inventory of components, finished goods, longer delivery time and
increased logistics costs

 Fedex provided “Merge-In-Transit”, a unique service to CISCO by utilizing their facilities and distribution network
 Through this service, CISCO identified the assembly warehouse of Fedex closest to the customer based on the order
Solution  Then, the suppliers nearby to these warehouses were asked to supply these components to assembly warehouse
Proposed  The router got assembled at Fedex warehouse and shipped directly to the customer through the distribution
network
 Fedex later expanded their service portfolio to complete order fulfillment through E-Merge

 CISCO was able to reduce the costs of inventory and transportation through this service. Merge-in-transit helped
Key Benefits CISCO to respond quickly to the customer s orders without having to have huge inventory. Total operating costs
reduced for Cisco through these services
Key Question: 3

FedEx offered different value added SCM services to its corporate customers. Describe each service in detail
and their benefits to the end customers. According to you, what other SCM Services can Fedex offer its
corporate customers?
FedEX: Transportation management services
• FedEx Transportation Management is an outsourced solution that offers end-to-end transportation management:
optimized, multi-modal, and door-to-door
• A single point of contact for all transportation needs
• It leverages the FedEx family of companies (along with a select group of core carriers) to help customers improve
operational efficiencies and customer service
• Transportation Management works with the customer to determine optimal shipping modes, minimize recovery needs,
facilitate claims management, and provide consolidated reporting and invoicing
• Fedex also provided additional related services like custom clearance, insurance, trade consulting through their
subsidiary companies
• Suitable for large, complex transportation projects that require orchestrated worldwide deliveries.

FedEx makes diverse shipping modes available Benefits

• Express — same day or next day.
• Standard — surface transportation.
• Domestic.
• Dedicated and time-critical.
• Commercial airfreight.
• Ocean freight.
• Saturday collections and deliveries.
• Value-added collections and deliveries.
• Enhance customer service - shipments managed to
meet individual distribution requirements
• Optimize transportation costs - choose optimal overall
transportation solution from FedEx companies and core
carrier networks to reduce costs
• Reallocate resources - refocus your time and money on
core competencies
• Improve inventory management and production
planning
FedEX: Integrated order fulfillment services
• Inbound and outbound order fulfillment services including, picking, packing, shipping and delivering the goods
• Fulfilment Services is an integrated, end-to-end, supply chain offering. Incorporating turnkey solutions, these services
are modular and scalable - allowing the customer to design and configure solutions to meet specific needs

• Online catalogue design and online marketing initiatives to promote new sales
• Inventory Forward Stocking Location replenishment
• Order picking by serial number, lot number and expiration date
• Order consolidation
• Customs clearance
• Cross-docking and kitting
• Preparation of international paperwork
• Specialized packaging and labelling
• Customized Web solutions for end customer order entry and
• Visibility

Benefits to the Customer

• Helps cut overhead costs by outsourcing warehouse and software needs and providing a variable fee structure
• Limits investment and risk if you're entering new market segments
FedEX: Returns Management
Fedex offered returns management of picking from the
dispatcher to delivering to the manufacturer, an online
portal to access information of pickup on delivery details,
technology APIs so that the customer can publish the
returns information on to their own website using Fedex
information

Key Aspects
• Consolidated return service to handle large volume
returns for online retailers
• Multiple transportation legs supported, for the collection
of a broken unit and return after repair
• Automatic selection of optimal shipping mode based on
the requested delivery time and or SLA with end
customers
• End-to-end management of returns providing greater Orchestrated Delivery Management: Through orchestrated
control delivery management Fedex consolidated bulk shipments,
• End of life solutions — recycling and disposal multiple consignees thereby the custom clearances were got in
• Try and buy/Consolidated returns single lot. After this the consignment is shipped to respective
• A single point of contact for all return service needs customers
Recommendations

Courier
Service  Fedex has established itself has leader in shipping, logistics, warehousing and
inventory management related services
 Through their experience they can move up the supply chain and manage the
Customized collaborative demand management services thereby to receive, plan and
Services execute a customer demand from a specific and optimal location and then finally
ship it to the respective customer
Complete  Fedex over a period of many years established strong and consistent SCM
4PL Services processes, excellent infrastructure facilities and huge IT investments, helped
itself position as strong tactical logistics providers in the SCM services industry
 Thus, It can move up to add strategy part of the SCM services and provide 4PL
(4th party logistics) provider and become true partner for their customers
 4PL normally doesn’t own assets and do more consulting and coordinating work
and engage many 3rd Party logistics providers;
 AS 4 PL, Fedex not just have to look for its own assets but also use the best of
breed logistics provider based on customer situation
THANK YOU!