Fedex A Global Supply Chain Management Company Commerce Essay

Fedex A Global planning Chain Management Company Commerce EssayFedEx is a planetary logistics and hang on-chain management fraternity Ng Farhoomand, 2002 that began unconscious processs in 1973 as an long package passwords beau monde. Annual revenues exceed $20 meg and 24-48 bit slant is available to well over 200 countries. In 2001, FedEx was named social unitary of the top ten most admired corporations in America (Boyle, 2002).FedEx has been in the fabrication for quite a time now. It has built its system cockeyed that from creation an talk delivery ac follow it has been a return-chain management company. With the table process of novelty and introduction of net income by the twelvemonth 1994, it has been evident that the serve pictured by FedEx be possessed of been better.Though it has tested to integrate the e-commerce system, the Company has been struggle to be more than an express delivery. The competitors for the express delivery industry redeem be en growing only when on that stop have been reports that the rapture volume harvest of FedEx was slowing down. Due to this instance, the FedEx has decided to make a re-organizing the structure hoping that it go out help them finished the betterment of their operations.FedEx started in the year 1973, and UPS, whizz(a) of those that r separately out operate like FedEx, started in the year 1907. They did not compete with separately other for the reason that they have different market places. The competition and rivalry in the midst of the two began in the year 1982. They competed on the market segment, fibre of emolument, and pricing. The precisely solution they thought of was to cut represent without decreasing the reference of guest utility. Because of this, they thought of having an organized logistics operation that go out help reduce the ordinance process.The three master(prenominal) tr annuls that helped the growth of transportation and logistics industry are the globularization of the product linees, advances in the information engineering (IT) and the application of vernal applied science to bring efficiencies in processing, and the extend in demand for more select at wizment of nodes or clients.Speed has been one of the basis of nodes to say that they have been provided with woodland guest service. The advances brought by IT heightened globalization and made the operations fast, decrease cost, and gave quality service.OpportunitiesThreats The cost of cornerstone of express delivery companies are a restraint of entry to new comers FedEx drawing cardship in global express delivery As long as the constitution of our socioeconomic environment exists, in that location will always be a need for express delivery E-commerce is creating an increased need for express delivery Globalization collide withers opportunities for expansion Maintaining the infrastructure of an express delivery company is an exit barrier because o f high exit(p) costs Capitol is acquired through the volume of gross revenue, so the high fixed costs thunder mug accidental injury when touchstone are slow Due to the personality of the industry, it is nearly impossible to become the clear industry leader The nature of the industry shows very low returns on invested capitol The E-tailing industry demands lower tape transport rates and charges to pull clients from the retailing industries Major competitors UPS, the telephone circuitborne DHLQuestion peer slight The express transportation and logistics industryFederal Express was founded in 1971 as the big idea of charter carryplane pilot Fred metalworker. It launched its overnight air express business in 1973, and scarce 10 years later, it was the commencement ceremony U.S. company to top $1 billion in revenues in its start decade. Today, FedEx (its nickname, FedEx, offici sole(prenominal)y became the company name in 2000) is the worlds tremendousst express transport ation company-almost 196,000 employees regard more than 3 zillion items to more than 200 countries to each one business day, up from 110,000 workers and 2 million packages just five years ago In 1990, FedEx became the counterbalance service company to win the Baldrige Award. Since and so, the company has grow its ground delivery business by purchasing both separate Direct ( once a divider of Quad/Graphics, now renamed FedEx SmartPost) and more than 1, cytosine Kinkos locations (now FedEx Kinkos location and Print Centers) in 2004.The survival issue is prominent in the minds of quality leaders. FedExs Fred metalworker compares the awakening to quality to a near-death dwell. A lot of times its brought on by trauma. Leaders often embrace Total feel Management because they see no alternative improve or die. whatever inspires them-the fear of failure, the promise of success, the achievement of other companies, the belief that there must(prenominal) be a better way to manage a company-triggers the leap of faith. Once they are on the quality path, the cultural changes they see all around them frequently breed a missionary zeal close to the need for, and the benefits of, the quality procession process.The first measuring stick for any company president, chairman, or CEO is committing himself or herself, as well as the company, to the process. Jamie Houghton took this step in 1983, shortly after he became Cornings chairman. FredSmith and his top executives founded FedEx on the idea of providing the highest quality of service, then participated in quality training in the first year of the companys existence.At FedEx, Fred Smith has been directly involved in the development of every quality process and system the company has run throughed. He founded the company on a belief that customers would pry a timedefinite express delivery service, then used on-time delivery as the companys primary government note of performance. In the late 1980s, he helped d evelop a more comprehensive, proactive, customer-oriented measure of customer satisfaction and service quality the Service Quality business leader (SQI).As Smith said, We believe that service quality must be mathematically measured. The company tracks these 12 indicators daily, individually and in total, crosswise its inbuilt system. Each indicator is weighted the greater the weight, the greater the impact on customer satisfaction. One of FedExs service goals is to reduce the totals of the SQI every year. Service is one of the companys three overall collective objectives People-Service-Profit. Every manager at FedEx, including Fred Smith and the senior executive staff, has annual benchmarks for each of these three bodied objectives.Smith sets his own personal objectives with input from the board of directors, and the process cascades through the organization from there. Managers are evaluated on how well they achieve their objectives.To develop and implement such broad measures and objectives, Smith and his staff had to understand the companys quality objectives, its customers postulate, and the probable effectiveness of SQI as a measure and motivator. Many other service companies are still trying to figure out what to measure. Smith direct the development of a measure that tells all FedEx employees, every day, exactly how they are doing on customer satisfaction and service quality. Active participation in the quality improvement process doesnt get any better than that. near(a) leaders know that having a customer focus is critical. At FedEx, each officer is assigned responsibility for the study customers in a sales district. Smith and his staff talk to customers continuously at the executive train to make sure their needs are being met.FedEx has three corporate goals People-Service-Profit. As Smith summarizes, when people are placed first, they will provide the highest possible service, and profits will follow. The three corporate goals are translated into measurable objectives throughout the corporation. Progress on the people goal is determined by the Leadership Index, a statistical measurement of subordinates opinions of managements performance. Service is found on the Service Quality Indicators described earlier. The profit goal is a office of pretax margin, determined by the previous years financial results. Success in meeting the objectives for each area determines the annual bonuses for management and professionals. (The bonuses can musical score for up to 40 percent of these employees total compensation.)FedEx Corporation in the fall in States administers variety of advanced factors of production. These are managerial sophistication, logistics know-how, and physical infrastructure. Logistics is one of the main advanced factors which FedEx developed for managing its complex hubs. Physical infrastructure that FedEx uses is not only airports just also roads and ports.Additional characteristic competencies that FedEx have, also work up from firm-specific tangible and intangible resources, namely, FedExs hubs and package handling systems its package tracking and customer support function and its logistics support. Again, the main barrier to imitate these firm-specific resources is the high cost associated with acquiring them. FedExs package tracking ad customer support functions as well as their logistic support are examples of the firms distinctive competencies as well. The barriers to imitate FedExs package tracking and customer support functions are based on the fact that FedEx was the initiator in establishing the first tracking applications website and providing each customer with a unique barcode to individualize each shipment. That allowed FedEx to gain increase at these systems and knowledge about the operative operations.FedExs military strengths in logistics, operations, and technological innovation allow them to pursue a differentiation business level strategy. FedEx flora to stand apart from its competitors by creating a level of service that is hard for competitors to match. FedEx has clearly been identified as an innovator, but what they need to get across to their customers is that they provide a high level of quality service. FedEx charges higher prices for its service than many of its competitors in the industry. This is considered a premium that a customer pays for the quality of service FedEx provides. By differentiating their standard of quality from their competitors, FedEx lets their customers know that if they are uncoerced to pay more, it will be worth it.FedEx is able to meet the needs of all these segments. They have spent an extraordinary amount of capitol developing their infrastructure, just so they can make the best promises to their customers. FedEx transports more than 3 million items to over 200 countries each day. Within each business unit are specific functional units that perform particular functions. The main functional units are l ogistics and operations for its transportation system. These units assure the coordination and smooth flow of FedExs deliveries. The end result is a high level of quality service. Their service overwhelms customer responsiveness and innovations such as its aircraft fleet, its hubs and package handling systems, package tracking, customer support functions, and logistics support. Not only does this help FedEx follow through with their promises, but in some ways that are superior to that of the competition.FedEx has transformed itself into an e-business by integrating physical and virtual infrastructures across information systems, business processes, and organizational bounds. FedExs experience in building an e-business shows how a company can successfully apply its information technology expertise in order to open customercentric innovations with sweeping structural and strategic impacts. It also shows the role of outsourcing, which frees companies to concentrate on their core bus iness.The value chain for FedEx Express can be seen as starting with the pick-up of the packages. FedEx employees gather the packages from various locations such as drop boxes, businesses and residences. shelter is establishd for the customers by making package pick-ups possible just about anyplace or anytime. FedEx has a money back guarantee for those people whose packages do not arrive on time, therefore creating value by assure timely delivery of the packages. aft(prenominal) the packages are initially picked up, they must then be transported to a hub. The hub is a central location where packages are take according to their destinations. The packages will likely pass through many hands before reaching their final destination. The packages stay at the hub until they are picked up and shipped either by truck or plane.FedEx Supply Chain function which synchronize the movement of goods for enhanced customer satisfaction. With all of this evident it can be said that FedEx segmen ts its markets according to the needs of the customers and not by demographic regions.While FedEx is a very large company that occupies a large portion of market share in the express delivery orbit as well as the ground sector we have reason that FedEx does not so much possess distinctive competencies, as it has starchy existing competencies that allow it to compete competitively with industry leader UPS. These competencies involve a very timely customer response time, cutting-edge technology and innovation. With the fact that FedEx does not have a competitive advantage, or distinctive competencies, all the same is still the largest express package delivery service there are many directives that could be followed to attain both. This is obviously a long-run goal, however it can be seen that the undertakings have already begun. Its most youthful endeavor, characterized as a diversification from its usual product offering of unfeigned shipment of goods, is the newer service off ering of consultation. Labeled FedEx dispense Networks, this newest division of the FedEx offerings showcases the companys coarse competence of multinational shipping knowledge to an array of customers. These customers are provided value creation with the knowledge that can greatly increase efficiencys through the supply chain. FedEx Trade Networks offers a full range of international support services, including springer clearance, pack forwarding, Trade Customs Advisory Services (TCAS) and trade technology solutions.Question Two Branding and business structure up until 19 January 2000Another note is the horizontal integration that has recently been carried out by FedEx. Horizontal integration is a way of trying to increase the profit ability of a company by reducing costs, increasing the value of a product offering, managing industry rivalrys, or increasing the bargaining power of a company. These economic benefits are usually the rewards of company mergers and acquirements in an industry. Horizontal integration is predominately characterized by similar companies merging together or acquisitions sought by the industry leaders.The account of mergers and acquisitions for North American-based logistics companies appears dissimilar. North American logistics services sources await to look for acquisitions that increase their position in existing markets, for instance, increasing domestic service routes and toting up critical mass to grasp the benefits of economies of scale. Nonetheless, the comparative strength of European automotive, chemical or other industries including global production and supply chains in opposition to their US counterparts make the necessity to create client interaction in Europe a must-have for US logistics suppliers. given the competitive strong suit of the local European logistics assistance providers, one of the little options to increase market entry or share of market in this global scenery is to vigorously design and track acquisition tactics. This can be done in integration with a intentness on particular niche actions, where scale economies are not as critical. It can also be achieved by means of services where supernumerary resources are desired, for instance, oversized equipment or hazardous merchandise transportation.Project logistics companies, for instance, foreground an exclusive business model with core competencies in global freight transportation-a specific engineering knowledge and can get into a generally blue-chip client base-that make them essential service providers for their customers.By 1994 less than 20% of FedExs revenues came from documents, formerly the primary driver of revenues. The air express industry was in a period of constant flux as firms tried to understand where the next big push was going to originate. Fortunately for Smith, he had already gambled on logistics, a move that would begin to pay off during the next and last rhythm method of birth control of the study. From 1993 to 1996 sales grew from $7.8 billion to $10.3 billion. Decision-making was decentralized out-of-pocket to the disperse nature of domestic and international operations. Structure was divisional, but changes were being planned to reconfigure the organization during the next cycle.The most important strategic moves during this cycle were in the area of information processing, particularly customer information and tracking. that as operations were centralized in 1978 to facilitate growth, the move toward a web-based business began in earnest in 1996 as FedEx became the first company to allow firms to process shipments on the Internet. Also by this time, FedEx was considered a global transportation company, not an airline.In 1998 Caliber Systems, Inc. was acquired by FedEx, which included the transport operation, RPS. Roberts Express and Viking Express helped round out the full offering of services by FedEx in its attempt to become a one-stop shopping experience for supply c hain needs. The company now offered complete interstate transport service, long and short-haul air express service, and integrated logistics and warehouse solutions.Sales grew from $13.25 billion in 1997 to $19.629 billion in 2001. High fuel costs hurt profits during 1999, but the growth in Internet vexation to tune (B to B) was exploding. Sales were also negatively impacted by the lack of indistinguishability in the midst of divisions with their own name, such as RPS and Viking, and operating(a)(a) units of FedEx. A study reorganization announced in January of 2000 by Fred Smith was designed to put this problem.The FedEx Corporation would re-name each of its subsidiary companies, with the exception of the less-than-truckload firm operating in the Western U. S. known as Viking, beginning with the brand identity of FedEx. The chase changes were made FedEx Express formerly Federal Express FedEx Ground formerly RPS FedEx Custom Critical formerly Roberts Express FedEx Logistic s formerly Caliber Logistics FedEx Trade Networks (Ng Farhoomand, 2002).Each subsidiary adopted a different color for its logo, but several strategic moves were made to ensure integration of operations and cooperation between companies. Consolidation was achieved in the sales force so that each division was being represented to each customer, accounting invoices were consolidated to reflect one invoice and one customer account number, and all customer service claims information was consolidated.Once again, Fred Smith centralized some aspects of his vast company to facilitate growth and to take advantage of new opportunities. Again the analyzer strategy was implemented, as it had been for most of FedExs history, to stimulate constant service improvement and growth.By 2001 FedEx had close to 200,000 employees scattered across the globe. A new corporate complex was nearing completion in southeast Memphis in the community of Southwind, home to the St. Jude/FedEx Classic golf tournam ent. And, the top ten ranking in Fortunes most Admired Corporations in America confirms the entrepreneurial and strategic management ability of Fred Smith.From 1984 to 1989 the company maintained a divisional structure, but it was increase by the use of matrix force out in the areas of finance, human resources, and maintenance. Decisions involving strategy, technology, advertising, and budgeting were centralized, yet office staff for operations was decentralized. This was imperative for customer service given the huge international orientation of the company by the late 1980s. Also, in 1989 FedEx leased its first general manager in history, Robert May, to head a new operation known as Business Logistics Services (BLS). From 1984 to 1989 the company maintained a divisional structure, but it was augmented by the use of matrix personnel in the areas of finance, human resources, and maintenance. Decisions involving strategy, technology, advertising, and budgeting were centralized, yet authority for operations was decentralized. This was imperative for customer service given the extensive international orientation of the company by the late 1980s. Also, in 1989 FedEx hired its first general manager in history, Robert May, to head a new operation known as Business Logistics Services (BLS). From 1984 to 1989 the company maintained a divisional structure, but it was augmented by the use of matrix personnel in the areas of finance, human resources, and maintenance. Decisions involving strategy, technology, advertising, and budgeting were centralized, yet authority for operations was decentralized. This was imperative for customer service given the extensive international orientation of the company by the late 1980s. Also, in 1989 FedEx hired its first general manager in history, Robert May, to head a new operation known as Business Logistics Services (BLS).Question trine Events leading up to the January 2000 reorganisationBy the year ending 1999, thirty-first of May, Fedex had out-performed analyst expections and increased earnings by 28% compared to the previous year. scarcely the company had a downturn during August 31, 1999. Due to increase in fuel prices, FedExs financial status was severely affected. Because of this, FedEx had forecasted that they full fiscal year may decrease below analyst expectations. BY the end of November 1999, the operating income dropped down by 10% of the previous year and the net income by 6%.As the increase in fuel price increase, operating income continue to decline. Because of the forecasted loss in income, the company re-think of their business strategy.As internet was introduced to the company, they utilized it to help them with the operations. First, it opened opportunities in re-engineering the supply chain. Second, the express transportation made businesses, such as FedEx, attain opportunities.In January 2000, FedEx had three major strategies. First, extending the FedEx brand to four subsidiary compan ies. Second, major re-organizations making it one point of access to sales, customer services, billing, and automation systems. Third, introducing to the market the low-cost home delivery.After the re-organization, the FedEx was helped through, first, mavin branding system which helped them establish their unique competitive advantage. Second, single and expanded sales force which helped them expand their market reaching the piddling and medium-sized businesses. Third, a single invoice and single account number from FedEx. Forth, streamlined customer automation systems to handle electronic transaction. Fifth, lone customer service which can help the consumers for their inquiries.With the re-organizations that happened, I think that it will help the company build a name that stands for quality, reliable, and fast service. It will help FedEx be more competitive now that the competition is growing. The number marketing is word of mouth, if FedEx can establish their three competencie s, then word of mouth will be easily spread throughout others. It can help increase their market share and income.FedEx has been considered a top performer and a leader in its field almost from its inception. It regularly is included in Fortunes 100 Best Companies To Work For (Levering Moskowitz, 1998), Americas Most Admired Companies (Boyle, 2002), and Fortune 500. Yet, what is most gallant about Fred Smiths leadership and vision for FedEx is even though the company invented the air express industry, it has not clung too tightly to that coattail. As new opportunities have arisen, Smith has not hesitated to position his company to take advantage of those opportunities. Examples include pushing for larger weight limits from Congress, expanding operations internationally, leading the way in information processing, tracking and Internet applications, making key acquisitions, and reconfiguring his business to fit a new systems model for supply chain management.