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  1. 1. ERP & BPR at FedEx Presented by Harish Kumar Electronic market Suppliers Buyers
  2. 2. <ul><li>History </li></ul><ul><li>In 1971, Frederick W. Smith raised funds and purchased a used aircraft company in Little Rock, Arkansas. </li></ul><ul><li>He began using the aircraft to provide overnight delivery services for envelopes and small packages being shipped within the United States. </li></ul><ul><li>Smith eventually named his business-Federal Express. </li></ul><ul><li>FedEx generates over $35 billion annually. Uses 48,000 vehicles global to deliver goods. Also utilizes another 30,000 vehicles at its airport operations. </li></ul><ul><li>Fedex has over 370 facilities in US and Canada alone and operates more than 210 countries currently. </li></ul><ul><li>It is the world's largest airline in terms of aircraft, operating 672 planes. It is the 3 rd Largest commercial Airline. </li></ul>
  3. 3. <ul><li>FedEx’s IT Initiatives </li></ul><ul><li>Initiatives at FedEx started in the late 1970s </li></ul><ul><li>Smith introduced sophisticated combination of laser scanners, bar codes, software and electronic connections to support its increasingly complex and widespread networks. </li></ul><ul><li>By late 1970s, FedEx had become the industry leader in the usage of information technology </li></ul><ul><li>FedEx’s 65 % of the total volume was processed using an automated shipping system. </li></ul>
  4. 4. <ul><li>FedEx IT Infrastructure </li></ul><ul><li>Introduces UNIX based client/server system replacing main server system </li></ul><ul><li>By mid 90’s implemented a new ERP system and expanding its use of the web and e-commerce. </li></ul><ul><li>The entire ERP, CRM and data management system across the FedEx organizations was built on HP-UX platform. </li></ul>
  5. 5. <ul><li>Purchasing & Procurement </li></ul><ul><li>FedEx spends annually $7 billion on indirect purchase such as subscription, cell phones, pagers, parts etc. </li></ul><ul><li>FedEx had a centralized purchasing even though initially they relied on inefficient paper based process. </li></ul><ul><li>FedEx identified e-procurement strategy as the key to automate and streamline the entire procurement process. </li></ul><ul><li>E-procurement systems is a collaborative procurement of goods, works and services using electronic methods in every stage of bringing in the efficiency & transparency </li></ul>
  6. 6. <ul><li>FedEx’s E-procurement Objectives </li></ul><ul><li>To act as a catalyst for procurement reform </li></ul><ul><li>To do a complete BPR to have a refined process </li></ul><ul><li>To reduce cost of doing business for both government and suppliers. </li></ul><ul><li>To establish level playing field and fair competitive platform for the suppliers. </li></ul>
  7. 7. <ul><li>E-Procurement Implementation </li></ul><ul><li>In June 1999, FedEx began a pilot implementation of the Ariba e-procurement solution for ‘personal computers.‘ Later included other products as well to the list. </li></ul><ul><li>They focused on 3 areas mainly, a) Technology (Ariba, People Soft, Inacom) BPR(With KPMG for internal MRO process practices) and Logistics </li></ul><ul><li>FedEx had the advantage of having Unix plat form helped integrating Ariba since it runs on HP-Ux platform </li></ul><ul><li>Currently the system is accessible to the 145000 employees of FedEx worldwide. </li></ul>
  8. 8. Ariba Buyer – Flexible Configuration End-User Buyers Firewall Application Service Providers ERP, HRMS End-User Buyers Firewall Ariba B2B Commerce Services Information & Analysis Services Logistics & Fulfillment Services Payment & Financial Services Sourcing & Liquidation Services Supplier & Content Services Transaction Routing Services Directory & Interoperability Services Ariba Buyer Enterprise Edition ERP, HRMS Ariba Buyer ASP Edition Internet Internet
  9. 9. Ariba Marketplace Network Application Architecture Ariba Commerce Services Network Marketplace Administration Commerce Process Framework Dynamic Trade Buyer Buyer Market Maker Supplier Supplier
  10. 10. Ariba Marketplace <ul><li>Graphical marketplace administration </li></ul><ul><li>Decentralized user and permission management </li></ul><ul><li>Virtual internet procurement rules </li></ul><ul><li>Comprehensive buyer-seller relationship management </li></ul><ul><li>Advanced pricing routines </li></ul><ul><li>Flexible billing rules </li></ul>Marketplace Administration Member Management Relationship Management Revenue & Billing Mgt Catalog Administration Configurable management of marketplace activities
  11. 11. <ul><li>Scalable Component-based Application Layer </li></ul><ul><li>Customizable JSP enabled Interface </li></ul><ul><li>Open APIs </li></ul><ul><li>Transaction Management </li></ul><ul><ul><li>cXML, EDI, fax, e-mail </li></ul></ul>Network Application Architecture Application Architecture User Interface Services Transaction management Scalable marketplace foundation designed for internet deployment LDAP HTTP:80 SSL/2&3 Browser Firewall Web Server Application Server Database Server
  12. 12. <ul><li>E-Procurement Process </li></ul><ul><li>Sourcing 40000+ supplies starting from computer servers to staple pins flows through ORMS on the company intranet. </li></ul><ul><li>FedEx did an awareness campaign on its entire supplier circle and invited them to use Ariba. </li></ul><ul><li>All the Vendors took it positively and implemented the process knowing the exposure they are going to get worldwide </li></ul><ul><li>FedEx’s E-procurement systems reduced unauthorized spending and administrative costs which in turn help them to track spending patterns and boost internal efficiency. </li></ul>
  13. 13. <ul><li>Achievements after Ariba installation </li></ul><ul><li>Overall purchasing cycle time has been reduced from 70 to 20 percent. </li></ul><ul><li>Number of suppliers got reduced more than 50 percentage. </li></ul><ul><li>The company was able to achieve more competitive pricing from suppliers and in turn provide good benefits to its employees. </li></ul><ul><li>The full ROI achieved within 3 months. Today the major portion of the FedEx's yearly requisitions goes through Ariba system. </li></ul><ul><li>Still its expanding the e-procurement activities in terms of users and suppliers to have more savings </li></ul>
  14. 14. <ul><li>FedEx's Benefits after Ariba installation </li></ul><ul><li>Prevents maverick buying. </li></ul><ul><li>Aggregating all of the spend to get a deeper benefit. </li></ul><ul><li>Aggregating the demand to create competition. </li></ul><ul><li>Streamlining, some process reduced half of the total steps. </li></ul><ul><li>Re deploy manpower talent for value added services </li></ul><ul><li>To enhance transparency, monitoring and control in procurement process </li></ul>
  15. 15. <ul><li>-Thank you- </li></ul>