Case on FedEx & IT practices

Under the guidance of Prof. Ravi Shankar -A.Anish 2010SMT6733

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 and stabilizing growth rates in FedExs domestic market. To adapt to these tougher market conditions, FedEx had taken on an expansion strategy. They broadened and deepened their geographical and product portfolio reach to create four main service lines with operations spanning the globe

Service lines
Fedex Express provides time definite shipping to 215 countries including every street address in the United States, delivering small packages and freight usually in one to three business days.
Fedex Ground provides cost-effective day-definite shipping, specializing in small-package business-to-business delivery with convenient U.S. Residential service through Fedex home delivery

FedEx Express

FedEx Freight

FedEx Ground
Fedex Freight is the leading U.S. regional, less-than-truckload freight company, delivering within the United States and key international markets usually within one to two business days.

FedEx Kinko
Fedex kinkos office and Print services is a leading provider of document solutions and business services, operating in more than 1200 digitally connected locations in 10 countries.

Case of IT engagement in Fedex Express EMEA

On the international scene, FedEx had started its

express operations in the 1980s with regular intercontinental flights to Europe and Japan FedEx Express is the worlds largest express transportation company. The FedEx Express service line accounted for two-thirds of FedEx Corporations turnover . By 2004, the FedEx Express service line generated approximately one-third of its revenues from international express operations

FedEx IT milestones

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 with the 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 considerable pressure on the IT departments ability to deliver IT developments, and manage the regions IT environment sustainably

Problems with the existing IT

IT development work often had to be executed quickly

for unanticipated requests had also resulted in a very complex and disparate systems architecture. For example, in 2004, FedEx Express EMEA had over 30 different systems to deal with customs clearance. This meant that more and more of the IT departments time and budget was being allocated to finding ways to integrate existing systems, perform maintenance activities, and basically prevent the whole thing from breaking down and bringing the business to a halt. The business increasingly experienced project delays and high costs in most of its projects due to IT integration and resourcing problems. In particular, the delays and problems in highly visible multi-country and region-wide projects had put the perception of the added value of the IT department under considerable pressure. From an IT supply point of view, the situation become unsustainable in the long run.

6*6 IT transformation
Rob carter, the CIO of FedEx, in 2004 had challenged the FedEx IT departments to accomplish six improvement objectives by the end 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 a more consistent FedEx IT environment; simplify information access across FedEx businesses and, finally, increase IT delivery bandwidth

Plan of action
CIO suggested an architecture based approach to tackle the situation.

Developed a vision within the IT department of simplified systems architecture which would be the yardstick for assessing both current and future requests for business solution Rally the local IT staff, central IT teams and other business areas around the idea of collectively behaving like cocustodians of the enterprise systems architecture

The FedEx IT model

Integrating business processes

FedEx's information infrastructure allows it to extend its

services beyond pure transportation to address other supply chain service needs of customers. FedEx markets its front-end services under the banner of FedEx eShipping Tools. These stand alone shipping and hardware-based tools connect FedEx with over two million customers. Web- and DOS-based shipping systems allow customers to interact with FedEx's extranet, download software and shipping information, track packages, manage invoicing data, and integrate their accounts payable application program 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

Aligning structure with systems & processes

Recognizing that customers want to deal with one company

to meet their transportation and logistics needs, FedEx renamed itself the FedEx Corporation in early 2000, and extended the FedEx brand to four of its five subsidiary companies, to provide customers with an integrated set of business solutions. Additional reorganizations provided a single point of access to sales, customer services, billing and automation systems through the formation of another subsidiary called FedEx Corporate Services. Previously, these services were performed separately by the five subsidiary companies. Knowledge generation and use is at the heart of FedEx corporate services, which pools together the marketing, sales, customer services, information technology, and ecommerce resources of the group. The reorganization opens up the opportunity for knowledge integration between business units within the group and

Case1: FedEx association with national semi-conductor

In 1992, National Semiconductor wanted to reduce its

o o o

order cycle time from on average of 16 days to less than 5, 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: Its airlift capacity could not keep up pace with demand. Its warehouse operations and supplier deliverables suffered from inconsistent quality. Its shipping coordination and tracking, involving numerous consolidators and forwarders, was complex and inefficient. NatSemi formed an alliance with FedEx whereby FedEx acted as Nat-Semi's logistics department and was responsible for handling all shipping and customs clearance tasks.

 FedEx consolidated NatSemi's three prime distribution centers

outside of the U.S.in the U.K., Japan, and Hong Konginto one Singapore based global distribution center, which ships at all locations outside the U.S. FedEx's direct shipping program established tight IT links between FedEx's distribution warehouse in Singapore and NatSemi's information infrastructure. NatSemi's order processing application, which ran on on IBM mainframe in Santa Clara, Calif., sent daily order batches through a dedicated line to FedEx's Tandem Computers mainframe in Memphis. Once FedEx received an order, it took over the order management-to-delivery process. Throughout the supply chain process, NatSemi and its customers had immediate access to order status information, through the NatSemi and FedEx Web sites. By integrating information systems and processes, NatSemi eliminated seven regional warehouses in Asia, Europe, and the U.S. Although the number of wafer fabrication locations and assembly test storage locations remained unchanged,

Case2: Hpshopping.com
In the late 1990s, HP, having sold the majority of its

consumer products through traditional retail channels, recognized the opportunity to capitalize on the direct distribution model. HP also wanted to focus on substantially reducing its refurbished product inventories and addressing its customers growing desire to order products via the Internet. The creation of a new online sales channel for customers, now known as hpshopping.com, would enable them to capture a larger share of sales, enhance its relationship with customers, and complement its existing network of retail distributors HPshopping.com asked FedEx to develop a

 FedEx brought in cross-functional teams of

professionals to assess HPs supply chain architecture and identify critical integration points. Order management:FedEx integrated critical information systems needed for the new channel, enabling its customers to conveniently order products online. Critical aspect was integrating order-management system with the credit-card authorization system. FedEx also contracted a call center provider to manage the services required to support HP customers that prefer purchasing products via a toll-free number. Warehouse management:The fulfillment centers close proximity to the FedEx SuperHub enables hpshopping.com to enjoy a variety of benefits associated with the elimination of the inbound transportation leg to the FedEx SuperHub

Inventory management:Through the integration of order management and inventory management systems, FedEx enabled hpshopping.com to proactively monitor and control product inventory levels. By integrating those systems from hpshopping.com and the third-party call center, 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 both refurbished- and finished-goods inventories in the FedEx fulfillment center, located in Memphis. Late cutoff times enable hpshopping.com customers to order as late as 10:00 p.m. (EST) and still have their orders shipped the same day. Reverse Logistics:By streamlining the way products are handled between customers and the returns facility, a speedier returns management service was implemented.

Technology at FedEx
Wireless solutions & Bluetooth Microsoft powerpad Digital pen RFID(Radio Frequency Identification) Velcro wristband RFID

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

e-business: The FedEx story, Communications of the ACM,2003 Stijin Viaene, Steven De Hertogh, Enterprise-wide business ITengagement in an empowered business environment: The case 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 Information Technology shape supply-chain Structure?, Journal of management information systems, 2008 Stenger, Alan J., Advances in Information Technology Applications for Supply chain management, Transportation Journal, 2011. Andrew McAfee, Erik Brynjolfsson; IT investment that makes a difference, Harvard Business Review, 2008 FedEx annual report www.wikipedia.org

THANK YOU