FedEx: Question 3

Q3. Discuss the role of IT in FedEx’s Business Strategy.

In a supply chain, there are three flows, Product flow, Money flow and Information flow. IT play an important role in all flows in FedEx.

Product flow
1. Overnight delivery
FedEx’s 24-hour and 7-day operating systems allow customers place the order at every time. With the real-time order processing, FedEx could provide more reliable overnight delivery of time sensitive documents and packages. It seems that without IT , FedEx cannot achieve this superior overnight service.

2. Redefined logistics
With IT, logistics does not only emphasis on the physical transportation, but also on the coordination and control of storage and movement of parts and finished goods. Also, logistics services concerned with both inbound and outbound material flows.


Money flow
FedEx’s website provides various means of payment for its customers. Apart from the traditional payment methods like check and transfer, FedEx is the first big transportation company to launch a website and allow online payment, FedEx Billing Online.


Information flow
1. Keep track of all packages by customers
For customers, as early as 1979, COSCO system allowed customers to keep track of all packages handled by FedEx.They would be able to track the status of the shipment through PowerShip or FedEx Ship later. From 1999, they could build integrated Websites using FedEx Applications Programming Interfaces (API) or intraNetShip and incorporate a link that let them to track packages directly from their own site.

The services above can greater the visibility of FedEx’s services, as a result, FedEx can build up closer relationship with customers, boost the customer loyalty and create customers’ switching cost.

2. Keep track of all packages by employees
For FedEx employees, they could track a package via the FedEx chain at any location at any time. It empowers the employees to access information to enhances the operations and service quality of FedEx.

3. Real-time information
For 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.

Also, FedEx has a Global Operations Command Centre which is a worldwide central nervous system of FedEx’s worldwide system. With 24-hour and 7-day operation, it allows FedEx to provide efficient gathering and dissemination of real-time data, such as information of real-time movement of FedEx trucks and aircraft.

With real-time information, FedEx can predict the amount of inbound traffic more accurately. Customers are enabled to make their order with real time processing, and no lead time is caused by the system so that every order can be delivered in a fast and accurate way. Also, it allows just-in time inventory management that can effectively reduce the inventory and also the inventory costs of customers, as well as improve operational efficiency of FedEx. Overall, the real-time system with current and accurate information can reduce the business failure of FedEx and allow it to provide more superior services.

4. Information sharing within a company
With IT, its enhance the ability of information sharing between operation/departments within a company and between organizations to generate efficiencies, reduce costs and improve customers services.


Other ways to enhance customer services
1. PowerShip Programme
With IT, FedEx provides the most active customers with proprietary online service and additional services to customers , including storing of frequently used addresses, label printing, on-line package pick-up requests or package tracking, thus it can improve efficiency and control of logistics activities.

2. Re-engineeringWith the integration of internet and intranet systems, company could redefine themselves to redefine themselves and re-engineering their selling and supply-chains. It can provide more value-added service like order processing, distribution centre operations, inventory control, purchasing, production and customer and sales service in order to gain competitive advantages.


Other ways to improve operational efficiency
1. Courier’s Route Planner
The Route Planner is an electronic mapping tool that facilitates the pickup and delivery of the order from the customer. Then the product movement planner would schedule the order via the Company’s global air and courier operations.



Reference:

Pauline Ng (2000), FEDEX CORP.: STRUCTURAL TRANSFORMATION THROUGH E-BUSIN, Available from: The Asia Case Research Centre, The University of Hong Kong. [14 March 2014]