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SCM: Fedex

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This presentation is about Supply Chain Management in Fedex

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SCM: Fedex

  1. 1. Presented by:Presented by:Group – 4 , Section - BGroup – 4 , Section - B( MBA IB 2011 ~ 2014)( MBA IB 2011 ~ 2014)Amit KumarAmit Kumar ( 56)( 56)Vijay KumarVijay Kumar ( 102)( 102)Vishal JawaVishal Jawa ( 104)( 104)Vivek MittalVivek Mittal ( 105)( 105)Satendra Singh (93)Revolutionizing global express deliveryA case presentation on
  2. 2. Introduction- FedEx Corporation1Objectives2Experimental3Results and discussion4Future plans5OverviewOverview
  3. 3.  Founded in 1971 by Frederick W. Smith. First Investment-$ 84 Million ($4m-equity,$80m invst) 1980’s:– FedEx reached its maturing stage.– First US company to reach $1 billion inrevenues. FedEx handles 3.3 million packagesHistory
  4. 4. History Founded in 1971 by Frederick W. Smith. First Investment-$ 84 Million ($4m-equity,$80m invst) 1980’s:– FedEx reached its maturing stage.– First US company to reach $1 billion inrevenues. FedEx handles 3.3 million packages
  5. 5. Vision:100 % customer satisfaction after every interaction andtransaction 100 % service performance , ensuring that alldelivery are made within the time commitment for theservice selected by the customerFedEx is committed to our People-Service-Profit Philosophy. Wewill produce outstanding financial returns by providing totallyreliable, competitively superior, global, air-groundtransportation of high-priority goods and documents thatrequire rapid, time-certain delivery."mission:
  6. 6. Introduction-financeIntroduction-financeRevenue : 43 billion▲USD (2012)Operating Income 3.2 billion USD▲(2012)Gross Profit : 2.1 billion USD▲(2012)
  7. 7.  Cost effective. Alternative for small packages. Distance and time are wider. When customers need it now. 24hrs. 7 days a week, including nights,weekends and holidays. Most familiar service. Handles millions of shipments. Delivers in 1 to 2 business days. Heavy weight shipments. Less than truck load (LTL) freight. 600 miles next day delivery. 1,600+ miles second day delivery. Custom brokerage. Electronic custom clearance. Speed shipments across the border.
  8. 8. Fedex companies:1.Express, 2.Ground, 3.office, 4.Freight 5.custom crtical6.trade networks 7. supply chainSource: www.fedex.com
  9. 9. Source: www.fedex.comFedEx Express+ FedEx Ground
  10. 10. InItIalInItIalChallengesChallengesStrategic Location for Office.Strategic Routes to get maximum Business.Managing LogisticsManaging time constraints
  11. 11. New Challenges
  12. 12. Location DecisionsLocation DecisionsCountry DecisionCountry Decision Critical Success FactorsCritical Success Factors1.1. Political risks, government rules,Political risks, government rules,attitudes, incentivesattitudes, incentives2.2. Cultural and economic issuesCultural and economic issues3.3. Location of marketsLocation of markets4.4. Labor talent, attitudes, productivity,Labor talent, attitudes, productivity,costscosts5.5. Availability of supplies,Availability of supplies,communications, energycommunications, energy6.6. Site size and costSite size and cost7.7. Air, rail, highway, and waterwayAir, rail, highway, and waterwaysystemssystems
  13. 13. The Elements ofStrategyTime Horizon Short Term Intermediate Long TermEvaluation Cost Quality Profitability Customer satisfactionFocus Process Technology Market Issues Volume Quality TasksConsistency Professionalism Proliferation Changes in the task Explicit goals
  14. 14. Operation managementSuccess Mantra:COSMOSHUB & SPOKE SYSTEMGOC14
  15. 15. FedEx- InnovationOvernight package delivery;Computerised Package Tracking System-(COSMOS)Hub-and-Spoke System;Just-in-timeBuild-to-OrderFusion of Technology: Use of Handheld;
  16. 16. FedEx- InnovationCentral hub conceptEnables service to more locations withfewer aircraftEnables matching of aircraft flightswith package loadsReduces mishandling and delay intransit because there is total control ofpackages from pickup to delivery
  17. 17. COSMOS[CUSTOMERS OPERATIONS AND SERVICE MASTER ONLINESYSTEM]PARCEL TRACKING SYSTEM-1979 PROOF OF DELIVERY INFORMATIONELECTRONICALLY REPRODUCED AIR BILL FORCUSTOMER.CENTRALIZED DATABASE- @MEMPHIS17
  18. 18. COSMOSDATA ABOUT PICK UPINVOICE AND DELIVERYBARCODE IS ATTACHED TO EVERY PACKET18
  19. 19. BENEFIT:FASTER MOVEMENTCUSTOMER WERE ABLE TO MANAGE THEIRINVENTRY COST MORE EFFICIENTLY REDUCED WRONG DELIVERY-97% correctdelivery * DELIVERY IN TIME-96 % in time*19Source *,#: FedEx Competitiveness through Efficient Logistics, KPMG 2010 report
  20. 20. 20International Overnight - YouTube.WebM
  21. 21. Hub and Spoke NetworkH&S network involves a series of nodes (hubs),connected by arcs (spokes) that represent viabletransportation alternatives between two nodes.
  22. 22. How it WorksPure Hub and Spoke vs. Hybrid Hub and SpokeHubs and Super hub are created on the basis of center of gravity method
  23. 23. Center-of-Gravity Method Finds location of distribution centerFinds location of distribution centerthat minimizes distribution coststhat minimizes distribution costs ConsidersConsiders Location of marketsLocation of markets Volume of goods shipped to thoseVolume of goods shipped to thosemarketsmarkets Shipping cost (or distance)Shipping cost (or distance)
  24. 24. Center-of-Gravity Method Place existing locations on aPlace existing locations on acoordinate gridcoordinate grid Grid origin and scale is arbitraryGrid origin and scale is arbitrary Maintain relative distancesMaintain relative distances Calculate X and Y coordinates forCalculate X and Y coordinates for‘center of gravity’‘center of gravity’ Assumes cost is directly proportionalAssumes cost is directly proportionalto distance and volume shippedto distance and volume shipped
  25. 25. Center-of-Gravity Methodx - coordinate =x - coordinate =∑∑ddixixQQii∑∑QQiiiiii∑∑ddiyiyQQii∑∑QQiiiiiiy - coordinate =y - coordinate =wherewhere ddixix == x-coordinate of location ix-coordinate of location iddiyiy == y-coordinate of location iy-coordinate of location iQQii == Quantity of goods movedQuantity of goods movedto or from location ito or from location i
  26. 26. Center-of-Gravity MethodNorth-SouthNorth-SouthEast-WestEast-West120120 –9090 –6060 –3030 ––| | | | | |3030 6060 9090 120120 150150ArbitraryArbitraryoriginoriginChicago (30, 120)Chicago (30, 120)New York (130, 130)New York (130, 130)Pittsburgh (90, 110)Pittsburgh (90, 110)Atlanta (60, 40)Atlanta (60, 40)
  27. 27. Center-of-Gravity MethodNumber of ContainersNumber of ContainersStore LocationStore Location Shipped per MonthShipped per MonthChicago (30, 120)Chicago (30, 120) 2,0002,000Pittsburgh (90, 110)Pittsburgh (90, 110) 1,0001,000New York (130, 130)New York (130, 130) 1,0001,000Atlanta (60, 40)Atlanta (60, 40) 2,0002,000x-coordinate =x-coordinate =(30)(2000) + (90)(1000) + (130)(1000) + (60)(2000)(30)(2000) + (90)(1000) + (130)(1000) + (60)(2000)2000 + 1000 + 1000 + 20002000 + 1000 + 1000 + 2000= 66.7= 66.7y-coordinate =y-coordinate =(120)(2000) + (110)(1000) + (130)(1000) + (40)(2000)(120)(2000) + (110)(1000) + (130)(1000) + (40)(2000)2000 + 1000 + 1000 + 20002000 + 1000 + 1000 + 2000= 93.3= 93.3
  28. 28. Center-of-Gravity MethodNorth-SouthNorth-SouthEast-WestEast-West120120 –9090 –6060 –3030 ––| | | | | |3030 6060 9090 120120 150150ArbitraryArbitraryoriginoriginChicago (30, 120)Chicago (30, 120)New York (130, 130)New York (130, 130)Pittsburgh (90, 110)Pittsburgh (90, 110)Atlanta (60, 40)Atlanta (60, 40)Center of gravity (66.7, 93.3)Center of gravity (66.7, 93.3)+
  29. 29. Worldwide Distribution ofVolkswagens and Parts
  30. 30. Companies centralize large distributioncenters which essentially do three things– receive goods/information coming from manysuppliers– consolidate goods/information according to thelocation where they are to be shipped– ship them individually to their final destination.
  31. 31. Role of TerminalsA terminal may be defined as any facilitywhere freight and passengers are assembledor dispersedTerminals may also be points of interchangeinvolving the same mode of transportTerminals may also be points of interchangebetween different modes of transportation
  32. 32. Cost Comparison of H&S & P2P  Point to point H&SNo of routes 32 16cost  10000 10000Total Cost 320000 160000Save  160000
  33. 33. Major Hub of Air Ports & Routes of the World
  34. 34.  Super Hub- Memphis International airport Asia pacific: Guangzhou Baiyun Int. airport Canada: Torontopearson Int.airport Central Eastern airport: cologneBonn airport Europe/Middle East Africa: Paris de Gualle airport Latin America/Caribbean: Miami Int. airport United states: Fort worth, Indianapolis,Newark Liberty, Oakland,Ted StevensAnchorage,
  35. 35. 7 -Zoneshttp://www.fedex.com/?location=home
  36. 36. Pros and Cons of H&SPros ConsSpokes are simple, and new ones canbe created easily.Inflexible, changes at the hub, or even in asingle route affects the whole network.Scheduling is convenient since thereare few routes, with frequent service.The hub constitutes a bottleneck in thenetwork.Complicated operations can becarried out at the hub, rather than atevery node.Delays at a spoke can also affect the wholenetwork.Small number of routes generallyleads to more efficient use oftransportation resources.Cargo must pass through the hub beforereaching its destination, results in longerjourney.
  37. 37. Benefits:Transposrtation costCycle timeReduce inventry JIT
  38. 38. GOC :Global operations control CenterTracking of shipment in real timeTracking real time movement & position oftrucks and flight.Monitor wether conditionCosmos & GOC work in tandem.
  39. 39. Fedex GIS TrackInGOperaTIOnS To meet delivery deadlines.The information age. Customers want anddemand informationThe navigation tool connects wirelessly toArcGIS® Server.Weather, traffic and other factors affectingthe routeAccessed online and included in the routecomputation.
  40. 40. The entire system depends on TEAMWORKand meticulous timing. Tiffins areCollected from homes & taken to nearestRailway Station. Then they are sortedout for area-wise distributiuon, so that asingle tiffin could change hands 3 to 4Times in the course of its daily journey.
  41. 41. The Flow LogicGrant Road(12)Churchgate(1-10)Lower Parel(14)237456Zones for destinationDistributionBy Carriersat lunchtimeTo officesPoint ofAggregationAnd SortingCDBA ECollection from home1
  42. 42. Coding SystemVLP : Vile Parle (suburb inMumbai)9EX12 : Code for Dabbawalasat DestinationEX : Express Towers(building name)12 : Floor no.E : Code for Dabbawalaat residential station3 : Code for destinationStation eg. ChurchgateStation (Nariman Point)D’souza
  43. 43. Zero % fuel Zero % investmentZero % modern technology Zero % Disputes99.9999% performance 100 % Customer SatisfactionSIX SIGMA IN SERVICE SECTOR
  44. 44. Working of NMTBSAError Rate : 1 in 16 million transactions Six Sigma performance (99.999999) Technological Backup : Nil. Cost of service - Rs. 300/month ($ 6.00/month) Standard price for all (Weight, Distance, Space) Rs. 36 Cr. Turnover approx.[6000*12*5000=360000000 i.e Rs. 36 crore p.a.] “No strike” record as each one a share holder Earnings -5000 to 6000 p.m. Diwali bonus: one month’s from customers.SIX SIGMA IN SERVICE SECTOR
  45. 45. Presented by:Amit Kumar (56) Vijay Kumar (102)Vishal Jawa (104) Vivek Mittal (105)Satendra Singh (93)

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