Case Study: FedEx ® Express

Profile

FedEx is one of the world’s largest express transportation companies with services covering more than 220 countries and regions, entering, and leaving 375 airports around the world. The global headquarter is located in Memphis, Tennessee, USA, while regional headquarters in Canada, Europe, Asia, and Latin America are located in Toronto, Ontario, Brussels, Belgium, and Hong Kong, Miami, Florida. It has

10 air express transshipment centers
894 land freight transshipment
More than 599 freight terminals
324 freight operation centers

History

FedEx was founded in Little Rock, Arkansas, in 1971 by former U.S. Marine Frederick W. Smith, but moved to Memphis, Tennessee, in 1973 after Little Rock airport officials refused to provide the company with facilities. FedEx moved to Tennessee to serve 25 cities, but it was fraught with difficulties and initially suffered heavy losses; however, business began to improve a few years later, and by July 1975, the company was profitable for the first time.

In 1987, FedEx officially went public. In 2003, FedEx announced the acquisition of Kinko’s, which closed in February 2004. Kinko’s was later renamed “FedEx Kinko’s”. In 2008, FedEx abandoned the “FedEx Kinko” brand and changed its name to FedEx Office. At present, FedEx serves 3 million customers in 210 cities every day, and its main competitors include DHL, UPS, and the United States Postal Service (USPS) as well as TNT in the Netherlands.

FedEx, together with DHL, UPS, and TNT, is known as the world’s four largest express delivery companies. On April 7, 2015, FedEx spent 4.4 billion euros (about 4.8 billion U.S. dollars) in cash at 8 euros per share to acquire TNT Express N.V. to expand it European business.

Organization Culture

FedEx has developed the following business philosophy based on the three principles of immediacy, reliability, and accuracy:

Customer first
- Provide customize service
- Urgent package delivery
- Guaranteed on-time delivery or refund
Technological innovation
- FedEx PowerPad
  
  The wireless express data collector developed by using Bluetooth wireless technology and GPRS connection network allows the courier to input and receive information at any time without having to ga back to the truck to connect to the central computer, which can effectively read the freight. With all the information about the package, such as customs clearance and weather conditions, the PowerPad connects to a printer attached to the belt through Bluetooth technology to print out barcode shipping labels. Using this wireless device can save about 10 seconds of time at each stage of the package change.
- FedEx PowerShip system
  
  Allow customers to install on their own computers and provide customers with multiple package consignments, automated billing and let customers to search package information directly, as well as provide detailed information on international shipping companies. It includes several features and benefits: International Shipping, Daily Invoices, Management Reports, Export Data, Address Book, Package Status and International Thermal Air Waybills.
People-First Philosophy (PSP)

By creating a positive working environment for employees, they will provide better service quality to customers, which would then lead to customers using FedEx products and services. Therefore, when FedEx evaluates employee performance, it will use employee performance, service level and profit evaluation as the standard to measure.

To sum up, FedEx is a customer-oriented business strategy and creates higher quality services through the combination of logistics and technology.

Business Strategy

Differentiation business level strategy

FedEx charges higher prices for its services with high level of quality service than many of its competitors in the industry. In the early days of the business, FedEx founder Frederick W. Smith designed a set of spoke-shaped national air freight service networks and used Memphis, Tennessee as the hub of the spoke using it as the central processing center for a packages. Through this network, FedEx is the first to develop overnight delivery and The World on Time, which subverts the longstanding practice of the express delivery industry also makes FedEx a pioneer in the express delivery industry.
Business integration

FedEx combines air parel, land transportation and IT networks to provide the best logistics and distribution solutions which provides customers with efficient and customized supply chain solutions. Within each business unit are specific functional units that perform particular functions. The main functional units are logistics and operations for its transportation system, making sure the coordination and smooth flow of FedEx’s deliveries. Theses not only help FedEx keeps their promises, also being a superior in the industry competition.
E-business

FedEx invest billion dollars in IT network since its centralized structures have always required, which provided a successful technology for them as a pioneer in the whole industry for e-business. This strategy became an advantage that they used to undermine their competitors’ strengths and localized customer service. FedEx.com is the first transportation website which could accept the one line order for package tracking and allow the customers to transact the business by Internet. Due to the large potential market and lower cost, there are more and more competitors come into this market, in addition, the company paid more than $2 millions to purchase Caliber System which could effectively increase their market share business-to-consumer delivery service. This show the role of outsourcing, which frees companies to concentrate on their core business.

Conclusion and Suggestion

FedEx not only combines the use of capital and Internet perfectly, also fully integrates various logistics methods into its own shipping methods, which not only strengthens the global supply chain but also helps customers to enhance business performance. In terms of development strategy and goals, FedEx will continue to focus on air express services and maintain a leading position, will also strengthen the development of land services, while continuing to expand the global territory through mergers and acquisitions and alliances.

As for suggestion, I think FedEx can partner with local e-commerce companies based on the following points of view:
1. Speed up delivery time
  
  Generally, consumers want to get the goods as soon as possible. Take a well-known e-commerce company in Taiwan as an example: MOMO, itself mainly focuses on placing orders in specific regions within a specific time period, then you can enjoy the service of receiving the package the next day.
  
  In fact, it is not. Basically, it depends on which area of their own warehouse has the goods; if not, it will take about 2-3 days. This will cause consumers to gradually reduce their credit and the number of uses. If it combines the FedEx’s “delivery on time or refund” service, it will be even more powerful.
2. Cross-border retailing sales channels are more convenient
  
  The FedEx Process is as follows:
  
  Created by Author
  
  But once FedEx corporate with local e-commerce, you can skip all the complicated steps above and just simply buy anything you need on the on-line store, will directly deliver to wherever you are. No need to ask your family or friends for help to send the package to you.
3. Speed up transfer for merchandise
  
  According to the problem mentioned in the first point, FedEx can allow local e-commerce to place goods in their warehouses, accelerating the flow of merchandises which will improve the customers’s consumption experience, while leaving the customer with the impression that “this item will not be out of stock”.