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 FedEx’s 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

delivering small packages and freight usually in one to three business days. .S.S. Residential service through Fedex home delivery FedEx Express FedEx Freight FedEx Ground • Fedex Freight is the leading U. specializing in small-package business-to-business delivery with convenient U. regional. • Fedex Ground provides cost-effective day-definite shipping. operating in more than 1200 digitally connected locations in 10 countries. delivering within the United States and key international markets usually within one to two business days. FedEx Kinko • Fedex kinko’s office and Print services is a leading provider of document solutions and business services.Service lines •Fedex Express provides time definite shipping to 215 countries including every street address in the United States. less-than-truckload freight company.

 By 2004.Case of IT engagement in Fedex Express EMEA  On the international scene.  The FedEx Express service line accounted for two-thirds of FedEx Corporation’s turnover . FedEx had started its express operations in the 1980s with regular intercontinental flights to Europe and Japan  FedEx Express is the world’s largest express transportation company. the FedEx Express service line generated approximately one-third of its revenues from international express operations .

FedEx IT milestones .

and manage the region’s IT environment sustainably .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 department’s ability to deliver IT developments.

in 2004.  The business increasingly experienced project delays and high costs in most of its projects due to IT integration and resourcing problems. This meant that more and more of the IT department’s time and budget was being allocated to finding ways to integrate existing systems.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. and basically prevent the whole thing from breaking down and bringing the business to a halt. 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. In particular. FedEx Express EMEA had over 30 different systems to deal with customs clearance. . the situation become unsustainable in the long run.  For example.  From an IT supply point of view. perform maintenance activities.

increase IT delivery bandwidth . 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. finally.6*6 IT transformation Rob carter.  simplify information access across FedEx businesses  and.  create opportunities for every IT employee. the CIO of FedEx.  facilitate competing collectively by creating a more consistent FedEx IT environment.

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

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. track packages.  FedEx markets its front-end services under the banner of FedEx eShipping Tools. manage invoicing data.  Web. and integrate their accounts payable application program with FedEx shipping transaction reporting. FedEx has identified points where it can provide management services.and DOS-based shipping systems allow customers to interact with FedEx's extranet. These stand alone shipping and hardware-based tools connect FedEx with over two million customers.  By backtracking along the supply chain to raw materials. download software and shipping information. and has developed expertise in .

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

. The company faced several operational problems: Its airlift capacity could not keep up pace with demand. It’s shipping coordination and tracking. Its warehouse operations and supplier deliverables suffered from inconsistent quality. and its 800-plus staff to 180 people. its distribution costs from 3% to less than 2% of sales. 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. involving numerous consolidators and forwarders.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. was complex and inefficient.

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

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and complement its existing network of retail distributors  HPshopping.  The creation of a new online sales channel for customers. 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.Case2: Hpshopping. now known as hpshopping.com.com  In the late 1990’s. HP.com asked FedEx to develop a . enhance its relationship with customers. would enable them to capture a larger share of sales.

Order management:FedEx integrated critical information systems needed for the new channel. enabling its customers to conveniently order products online. FedEx brought in cross-functional teams of professionals to assess HP’s supply chain architecture and identify critical integration points. Warehouse management:The fulfillment center’s close proximity to the FedEx SuperHub enables hpshopping. 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.com to enjoy a variety of benefits associated with the elimination of the inbound transportation leg to the FedEx SuperHub .

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

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

International Journal of production research. 2008 Stenger. Alan J. Andrew McAfee. Javad. Communications of the ACM. IT investment that makes a difference. Viswanath Venkatesh. Preventing Failure in IT-enbled sytems for supply chain management.. Mohammad J. Journal of management information systems. Journal of Information Technology. 2011..2010. Tarokh. Dedrick. Enterprise-wide business ITengagement in an empowered business environment: The case of FedEx EMEA. Sean Xin: How does Information Technology shape supply-chain Structure?.org . Soroor. Erik Brynjolfsson. 2008 FedEx annual report www. Transportation Journal. Building a successful        e-business: The FedEx story. Jason.2003 Stijin Viaene. Steven De Hertogh. Harvard Business Review. Brown. Keshtgary.2009.References  Susan A. Xu. Advances in Information Technology Applications for Supply chain management.wikipedia.

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