FedEx case e-procurement


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It has our FedEx case study of its E-procurement journey using Ariba.

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FedEx case e-procurement

  1. 1. By Prasoon Shekhar-P51042 Rajneesh Kumar-P51048 Samta Mishra-P51054 Saurabh Saini-P51060
  2. 2. Company Summary <ul><li>Leading transportation, logistics and supply chain company started by Fredrick W Smith in 1971 </li></ul><ul><li>Trend setter in the express delivery industry </li></ul><ul><li>Posted 40% CAGR and crossed $1 Billion revenue mark in 1983 itself . </li></ul><ul><li>The following year began its overseas operations with services to Europe and Asia. </li></ul><ul><li>Also acquired Tiger International Inc. in 1989 to become worlds largest full service all cargo airline. </li></ul><ul><li>In 1995 acquired Evergreen International Airlines that facilitated its entry into China through its all cargo route authority and thus became sole US based integrated logistics company with aviation rights to china. </li></ul>
  3. 3. Company Summary <ul><li>FedEx Corporation was founded as FDX Corporation in January 1998 that happened to be the newly formed holding company of Federal Express. </li></ul><ul><li>Headquarters: Memphis, TN </li></ul><ul><li>Scope of services: Transportation, e-commerce ,supply chain management services and offices supplies </li></ul><ul><li>It is credited to be a torch bearer to start over night package and letter delivery services as well as money back guarantees and free proof of performance to customers. </li></ul><ul><li>Corporate Type: Public </li></ul><ul><li>Number of Employees: 252,000 Total Worldwide </li></ul>
  4. 4. Company Summary <ul><li>FedEx Corp. Operates Under Four Segments </li></ul><ul><li>FedEx Express </li></ul><ul><li>FedEx Ground </li></ul><ul><li>FedEx Freight </li></ul><ul><li>FedEx Kinko's </li></ul><ul><li>Scope of Company Distribution Network </li></ul><ul><li>FedEx services more than 220 countries </li></ul><ul><li>Operates a fleet of 669 +/- aircraft </li></ul><ul><li>More than 75,000 vehicles </li></ul>
  5. 5. Key Issues <ul><li>Inefficient paper based processes for managing indirect purchase requisitions, ordering and delivery fulfillment. </li></ul><ul><li>Extremely labour intensive and manual process. </li></ul><ul><li>Need to hire thousands of additional employees. </li></ul><ul><li>Need for a appropriate systems to keep all levels of operations in working order. </li></ul><ul><li>Need for implementation of ERP based web and E-Commerce system as the volume of Business grew. </li></ul><ul><li>Why Introduction of E-Procurement solutions ? </li></ul>
  6. 6. Solutions <ul><li>A sophisticated combination of laser scanners, bar codes, softwares and electronic connections to support its increasingly growing widespread air and vehicles network. </li></ul><ul><li>65% of total volume was as a result started to be processed using an automated shipping system which also helped FedEx reduce cost to a large extent. </li></ul><ul><li>Unveiled 2 internet based application programming interface(APIs) that enabled its business partners in Europe, Middle East and Africa to improve their internal productivity, streamline SCM and facilitate commerce with customers. </li></ul>
  7. 7. Cont’d <ul><li>Various IT based Initiatives were introduced to streamline entire business operations like COSMOS, DADS, ASTRA, CAGA, CSW, PRISM, EDR, CERPS, FEECC </li></ul><ul><li>Replacing mainframe systems with UNIX based client server systems to expands it’s logistics and transportation services to all parts of the world by automating and streamling the procurement process. </li></ul><ul><li>Selection of ARIBA B2B as e-commerce platform (ORMS) because of it’s ability to integrate with diversified computing environment, and ability to facilitate spend analysis and purchasing pattern of identification. </li></ul>
  8. 8. Cont’d <ul><li>ARIBA network a global B2B electronic commerce network for operating resources enabled FedEx to automate transactions on the internet and facilitate ESM(enterprise spend management). </li></ul><ul><li>It also integrated the internal and external commerce processes of buyers, suppliers, net market makers and value added service providers. </li></ul><ul><li>It Improves operating efficiency and enables direct cost savings. </li></ul>
  9. 9. Analysis <ul><li>With introduction of e-procurement and various IT based initiatives taken by FedEx the processing of purchase request time came down dramatically to 2 days from earlier 17- 19 days. </li></ul><ul><li>Number of suppliers was reduced from 90,000-110,000 to 40,000-50,000. </li></ul><ul><li>E-procurement platform ARIBA enabled FedEx cost saving in tunes of 40% </li></ul><ul><li>Implementation of ERP based system helped FedEx save 2 billion pieces of paper annually. </li></ul>
  10. 10. Cont’d <ul><li>Helped FedEx to reduce manual applications, thereby reducing chances of error in operations. </li></ul><ul><li>Limited spending activities and inability to move e-procurement beyond inexpensive ,indirect goods purchases however will have negative implications too. </li></ul><ul><li>Integration of technology with inventory processes still remains the biggest challenge for e-procurement solutions. </li></ul><ul><li>There also may be threat to system security and data integrity. </li></ul>
  11. 11. Conclusion <ul><li>FedEx Corp. had everything to gain by automating its procurement practices – money saved in processes, products purchased, and better times to the day-to-day requests that keep the overnight leader in business. It was able to recover the money invested in ARIBA technologies quickly , and the savings are poised to grow, as it exemplifies what disciplined purchasing and well informed sourcing can be. With just one-fifth of its procurement spend being automated and tracked through the system, FedEx should continue to expand its e-procurement activities in terms of users, suppliers, and deployment footprint worldwide to garner even more buying benefits. </li></ul>