Fed ex new

نام استاد:
جناب آقاي دكتر كرمانشاه
نام دانشجويان:
سيد محمد نيك سرشت
مينو ميرحسيني

FEDEX
 Inception: 1973
 Federal express corporation (Fedex)
 Transformation:
 from an express delivery company
 to a global logistics and supply-chain
management company

RESOURCES OR MARKET?
 Investing heavily in IT systems
 Best taking advantage of Internet (from 1994)
 Investing in systems infrastructure
 Integrating systems to provide services
throughout its customers’ supply-chains
 Spending US $88 million on acquisition of
Caliber systems, Inc. and building a powerful
technical architecture.
 Spending US $100 million on reorganization

THE EXPRESS TRANSPORTATION AND
LOGISTICS INDUSTRY
 Start in 1973
 The main competitor: UPS (1907)
 Sources of competition: focus on customer
segmentation, pricing and quality of service
 Three main trends:
 The globalization of business
 Advances in IT
 Changing market demand for more value added
services

ADVANCES IN IT
 Promoted the globalization of commerce
 Redefined logistics
 Redesigned warehouses
 Controlled the storage and movement of
parts and finished goods

COMPETITION
 Its next-day delivery service revolutionised the
distribution industry
 Reliable over night delivery of time sensitive
documents
 Applying IT:
 First transportation company to launch a website
 More than 100000 PCs loaded with FedEx software
 The core corporate strategy: to use IT to help
costumers take advantage of international markets
 $10 billion company spending $1 billion annually on IT
and IT workforce of 5000

EXTERNAL FACTORS
 Government deregulation of Airline industry
 Deregulation of trucking industry
 Trade deregulation in Asia Pacific
 Technological breakthroughs
 Rising inflation and global competition

Building the virtual
information infrastructure
 COSMOS (customer, operations,
service, master on-line system): Even
as early as 1979, a centralized
computer system kept track of all
packages handled by the company.
 Placing bar-code on each parcel at the
point of pickup and scanning the bar-code
at each stage of the delivery
cycle.
 POWERSHIP program: aimed at
improving efficiency and control. (a
technological system in 1984. additional services to
the customer including storing of frequently used
addresses, label printing, on-line package pick-up
requests, package tracking, …)

FedEx took
advantage of new
technologies
EDI (electronic data interchange) & Internet:
 Building one-to-one relationships with customers.
 Started to track back along the supply chain to the point of
raw materials.
 Identifying points along the supply-chain where they could
provide management services (often the services include:
transportation, order processing, fulfillment, inventory control, purchasing,
production and customer and sales services.)
 New focus of FedEX’s attention: the ability to interconnect
and distribute information to ally the players in a supply-chain.

FedEx took advantage of new
technologies
 LOGISTICS = key part of strategy formulation:
the key means for differentiation their products
or services from those of their competitors
(Ex.decreasing cycle order).

technologies
 FedEx’s role in providing integrated logistics systems
formed the basis of many partnership arrangements.
 Helping them to redefine sources and procurement
strategies so as to link in with other parties in the supply-chain,
such as raw materials suppliers, customers were
outsourcing their supply their supply chain management
functions to FedEx, functions that were seen as
peripheral to the core of their business.
 By improving, tightening and synchronizing the various
parts to the supply-chain, customers saw the benefits of
squeezing time and inventory out of the system.

Ex. Dell Computers
 Pioneered the direct selling model in the
computer industry and succeeded because it was
able to keep inventory very low (make to order
vs. make to stock).
 FedEx provided the system to track and monitor
the assembly of each PC on order.
 FedEx was a key partner for Dell, allowing
customized, built-to-order products to be
delivered within days of a customer placing an
order, a huge advantage in an industry whose
components become obsolete at the rate of two
per cent per month (IT vs. Inventory).

technologies
 Not only was FedEx pushing its customers for
integration, but its innovative customers were also
demanding greater integration (Cisco).
 By integrating its services within the supply chain of
its customers, and thus generating increase in
customer loyalty and in customers’ switching costs,
FedEx managed to effectively raise the barriers to
entry for competitors.

technologies
 The internet refined the COSMOS system.
Whenever new information was entered into the
system by FedEx or by customers through the
internet, all related files and databases were
automatically updated. (COSMOS system
handled 54 million transactions per day in 1999)
 In 1998 FedEx decided to overhaul its internal IT
infrastructure under project GRID (global
resources for information distribution): replacing
60000 terminals and some PCs with over 75000
network systems.

Other progresses
 At the beginning of 1999, FedEx launched
an enhancement to its package-tracking
service. Customers could query and receive
package status information for up to 25
shipments simultaneously, and forward
this information on to up to three e-mail
recipients.
 In 1999, FedEx signed an agreement with
Netscape to adopt Netscape software as
the primary technology for accessing its
corporate intranet sites. FedEx’s intranet
included more than 60 Websites, created
for its end users and in some cases by its
end users.

Other progresses
 As well as the data centre in Memphis, FedEx
operated other centers in Colorado Springs,
Orlando, Dallas-Fort Worth, Singapore,
Brussels and Miami.
 Users in France, Japan, Italy, Germany,
Netherland and Portuguese and Spanish-speaking
countries could access this
information on-line in their native languages
through www.fedex.com.

FedEx claim
 FedEx claimed to have the largest on-line
client server network in the world that
operated in real-time. Information became an
extremely critical part of its business.

BRANDING AND BUSINESS STRUCTURE
UP UNTIL 19TH JANUARY 2000
In the first 21 years of business: “Federal Express
Corporation”
Its customers came to recognize it as FedEx in short.
Hence in 1994, it seemed natural that the company
should change its brand name to “FedEx”.

Branding and business structure
up until 19th January 2000
 The Parts Bank
 Business Logistics Services (BLS): a division of FedEx
Corporation in 1988
 FedEx Logistics: 1994
 FedEx Logistics and Electronic Commerce(FLEC):
1996

Branding and business structure up
until 19th January 2000
 Acquisition of Caliber Systems Inc.: in 1998
 five separate subsidiary companies:
 Federal Express
 RPS
 Roberts Express
 Viking Freight
 FDX Logistics

FDX Corp.
Federal
Express
RPS FDX Logistics
FDX Supply
Chain Services
Viking Freight
Caribbean
Transportation
Roberts
Express
At the end of 1999

 The holding company: FDX Corporation
 The FedEx brand lived on with no advertising
or promotion of FDX.
 Five different subsidiary companies with
completely unrelated names and logos under
the FDX banner
 The challenge for FedEx was how to bring the
companies closer together to create those
synergies?

Events leading up to the January
2000 reorganization
 FedEx needed to address a number of factors that
would affect the prospects of the company:
 FedEx’s performance
 The internet market and e-tailing
 The competition

FedEx’s performance
 In 1999,rising fuel prices had
severely impacted upon the
company’s net income.
 The company anticipated that
operating income could be
down by more than
150million$ for the year
ending may 2000.
 This called for some
immediate remedial action.

The internet market and e-tailing
 The internet changed the basis for competition
for most business. Its low cost and diversity of
applications made it appealing and accessible.
 The impact of the internet on FedEx was:
1- it opened up opportunities in logistics management
for FedEx as businesses were using the internet to
reengineer their supply-chains.
2-the express transportation needs associated with the
growth in e-tailing presented enormous opportunities
for company.

The competition
 The industry was loaded with companies that
provided a myriad of transportation services
to a wide range of business.
 Although FedEx pioneered the web based
package tracking system, such systems
became the industry norm rather than a
competitive advantage.

The competition
 UPS:
UPS outsourced software developing.
The company shipped more than 55% of goods
ordered over the internet and offered over the full
range of logistics solutions to its customers.

The competition
 DHL:
Investing 1.25 billion $ in handling systems,
automation, facilities and computer technology.
An increase in worldwide turnover of 18% to
5.26billion$.

The competition
 TNT:
In 1998, TNT launched a web collection facility on the
internet. Later launched the world’s first global Price
Checker service on its website.
In 1999, TNT launched Customized Service
environment.

The competition
 While FedEx had pioneered many logistics
solution that had helped it to achieve
economies of scale faster than its
competitors, the advantages were quickly
eroding as newer technologies became even
more powerful and less expensive.

The January 2000 announcement
Three major strategic initiative:
1. A new brand strategy:
‘FedEx Corporation’
 Federal Express  FedEx Express
 RPS  FedEx Ground
 Roberts Express  FedEx Custom
Critical
 Caliber Logistics  FedEx Logistics
 Viking Freight

FDX Corp.
Federal
Express
RPS FDX Logistics
FDX Supply
Chain Services
Viking Freight
Caribbean
Transportation
Roberts
Express
FedEx Corp.
FedEx Express FedEx Ground
FedEx Home
Delivery
FedEx Logistics
FedEx Logistics
Viking Freight
Caribbean
Transportation
FedEx Custom
Critical
FedEx Trade
Networks
At the end of 1999
January 2000

2. Major reorganization:
• Sixth subsidiary (FedEx Corporate Services Corp.): pool
together the marketing, sales, customer services,
information technology and electronic commerce
resources of the Group and combine invoicing function
for all the companies

 Merging of the two logistics operations (Caliber
Logistics and FLEC) into FedEx Logistics
 ‘Carrier-agnostic’: FedEx Logistics would use FedEx
transportation where it fitted, in terms of cost,
geographic coverage, customer preference and the
kind of goods being transported
 Bring together the IT expertise
and the know-how of the
logistics business

3. Introduction of a new low-cost residential
delivery service, FedEx Home Delivery, to be
launched in the US

 The Company anticipated having to spend
US$100 million on these changes over three
years
 The competitive advantage of the company
in the future: collective synergy of solutions

 1. Describe the context of FedEx’s strategy between
1973 and 2000. What were the circumstances that
FedEx encountered?
 2. Describe FedEx’s strategy context between 1973
and 2000. What were the main characteristics?
 3. Describe FedEx’s strategy process between 1973
and 2000. How did FedEx’s strategy come about?
 4. What are the 5 main strategy issues for FedEx in
2000? Why?
 5. Which strategy perspective does FedEx have on
each of these issues? Did it change over time? What
is your perspective on each issue?

Fed ex new

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