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

Agenda

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

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

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.

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

Hub and Spoke Model(2)

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

Implementation Strategy
Two strategies for change:
Big Bang
Progressive

Progressive Change in Fedex

Company Growth
Overseas Expansion
IT Implementation

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 1970s.
Fedex had the worlds largest all-cargo fleet by
the mid 2000s

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.

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

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

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.

Flow of Virtual Order(example)

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

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]