This document provides an overview of how Federal Express progressively changed and expanded its business model through the use of information technology. It describes FedEx's hub and spoke model and how it has helped achieve economies of scale. It outlines FedEx's implementation strategy of progressive change as it grew through company expansion, overseas operations, and IT implementations like web-based customer services and tools. FedEx's use of IT helped automate processes, increase customer satisfaction, and partner with other companies to expand its e-commerce offerings.

1. FEDERAL EXPRESS
Describe how the company progressively
changed and extended its business model
through the use of IT?
Presented By: Mukesh Kulal
Team Members: Mukesh, Lalit, Sylvie, Bhumika

2. Agenda
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What is Fedex?
Hub and Spoke Model
Implementation Strategy
Progressive Change in Fedex
Company Growth
Overseas Expansion
IT Implementation
How has IT helped in Business Expansion?
Flow of Virtual Order(example)
Conclusion

3. What is Fedex?(1)
• Provides customers with a broad portfolio of
transportation, e-commerce and business
services
• Founded by Frederick W. Smith in 1971
• Headquarters located in Memphis, Tenn.
• Daily Volume of more than 7.5 million shipments
• Workforce of more than 275,000 team members
worldwide
• Revenue of $35.5 billion for year 2009

4. What is Fedex?(2)
•
FedEx maintains 10 companies, which all provide different services
within the FedEx network. They are :
– FedEx Corp.,
– Express,
– Trade Networks,
– Ground,
– Freight and National LTL,
– Custom Critical,
– Services,
– Customer Information Services,
– Supply Chain Services,
– FedEx Kinko's Office and Print Services.

5. Hub and Spoke Model(1)
• Conceived by Fred Smith and FedEx Express
• Widely adopted by major carriers
• Generates Economies of Scale and Economies
of Flow
• Massive economic impact upon the air cargo and
passenger airline industries

6. Hub and Spoke Model(2)

7. Hub and Spoke Model(2)
Advantages
• All packages can be
sorted at the hub, rather
than multiple locations
• Leads to full utilization of
resources.
• Spokes are simple, and
new ones can be created
easily.
Disadvantages
• Disruption at the hub can
create delays throughout
the system
• Overall operating
efficiency is also limited
by the capacity of the hub
• Day-to-day operations
may be relatively
inflexible

8. Implementation Strategy
• Two strategies for change:
– Big Bang
– Progressive

9. Progressive Change in Fedex
• Company Growth
• Overseas Expansion
• IT Implementation

10. Company Growth
• Fedex became the premier carrier of high priority
goods and standard setter for the industry
• Fedex played a leading role in lobbying for air
cargo deregulation in mid 1970’s.
• Fedex had the world’s largest all-cargo fleet by
the mid 2000’s

11. Overseas Expansion
• International acquisitions and intercontinental
operations began in 1984 with service to Europe
and Asia.
• Initiated direct scheduled cargo service to Japan.
• Obtained authority to serve China through a 1995
acquisition from Evergreen International Airlines
• By 2004, FedEx was delivering to more than 210
countries and handling about 3.3 million
packages and documents every business day.

12. IT Implementation
• Web based customer services started in 1995,
which allowed customers to track their shipments
via reference number.
• Developed a comprehensive set of web based
automated shipping solutions for global
customers.
• Launched Home Services designed for the
booming business to consumer e-tailers in 2000

13. How has IT helped in Business
Expansion?(1)
• Virtual Order
– Helped business to get online by providing software to
setup an online catalogue that resides on a secure
Fedex server.
• Fedex Insight
– Enables customers of any size to view the status of
their inbound, outbound and third party shipments
• Fedex e-business tools
– Allows companies to connect their existing
environment to Fedex Information Systems

14. How has IT helped in Business
Expansion?(1)
• Other third party partnerships
– Orbit Commerce: provide Internet Commerce Services
– Cisco: running End to end Internet Based Network
– AT&T: create wireless internet site for package
tracking and delivery
– E-tailers like eToys, Pro-Flowers, Value America and
LL Bean
– SAP: develop and market the first “one-stop solution”
suite of supply chain services.

15. Flow of Virtual Order(example)

16. Conclusion
• Hub and Spoke model is still considered the best
in the logistics industry
• Due to implementation of IT in Fedex internal
processes were optimized and automated.
• Customer Satisfaction was increased because of
the implementation of new tools.
• Fedex has always been an pioneer of technology
and a trend setter in its industry.
• Internet – a serious threat

17. References
 SRI International (2001) GLOBAL IMPACT OF FEDEX ON THE NEW
ECONOMY [Online]
http://images.fedex.com/us/about/download/economy/sri_exec_summary.pdf
[Accessed 09 November 2009]
 FedEx [no date] FedEx InSight [Online]
http://images.fedex.com/downloads/ebusiness/automation/INS-ENG.pdf?
link=4 [Accessed 05 November 2009]
 ACM Portal (1998) WISs at Federal Express [Online]
http://delivery.acm.org/10.1145/280000/278500/p117-senn.pdf?
key1=278500&key2=6889897521&coll=GUIDE&dl=GUIDE&CFID=62480799
&CFTOKE N=44498399 [Accessed 04 November 2009]