1. Background of FedEx.
FedEx Corporation is an American global courier delivery services company headquartered in Memphis which is founded in 1971. It is one of the world's largest express transportation companies which provide a wide range of shipping service for documents, packages, heavy freight shipment and e-commerce services worldwide with annual revenues of $45 billion. Being the world’s most admired and trusted service provider ranked by customers, FedEx now employs over 300,000 workers to offer safety, ethical and professional service to satisfy customers’ needs, for instance, FedEx Express creates a global air-and-ground network to increase the speed of time-sensitive shipments within one to two business days with guaranteed delivery time.
Business Model
FedEx originally focus on B2B business. However, due to situation changed where e-business has became a major trend , it encouraged FedEx to transform into the business focus on B2C .
1. B2B
– Mainly provide the service for organisations, institutions and governments
– Business network includes delivery services, adopted protocols and agreements
2. B2C
– Open to customers who have registered with FedEx.
– People just need to implement a simplified, electronic clearance for e-commerce shipments, and products can be delivered
– E-business operation of FedEx eliminated the geographical limitations, B2C service can be expanded globally.
Customers
• Main targets --> individual express
- Using motor and air to transfer the product
- Transfer the products in 24hrs
• Other targets -->small business
Competitors
• Kerry Logistic --> Main competitor in Asian area
• DHL--> Main competitor in UK market
• UPS --> Main competitor in American (1st in American, 2nd in the world)
• TNT --> Develop new IT to become more effective and efficient
• S.F-express --> Main competitor in express market of Mainland China
2. List the benefits of a virtual supply chain.
Definition of Virtual Supply Chain
• Network connected by electronic links
• Shows the organisational structure
• which can facilitate efficiency and effectiveness of both material flow and information flow
Benefits of a virtual supply chain much like FedEx’s
1. Building one-to-one relationships with customers through Electronic Data Interchange (EDI)
• Matching supply to demand without wastage
• Squeezing time and inventory out of the system
• Identifying and accommodating demand between buyers and sellers electronically
• Hence, providing both efficient gathering and dissemination of real-time data
• Providing integrated logistics systems formed on the basis of many partnership arrangements.
• These logistics systems help them to redefine sources and procurement strategies by linking with other parties in the supply-chain, e.g. raw materials suppliers
-->Increase profitability by reducing costs
• However, huge initial investment is required
• Switching cost of customers and suppliers increase à enhance the customer’s loyalty
2. Improvement of efficiency and control within the company
• Provides incredibly active customers with proprietary on-line services
• Stores frequently used addresses (sort of like speed dial back in the day), label printing, online package pick-up requests, package tracking
3. Keeping track of all packages handled by the Company through an On-line System (COSMOS)
*Customer, Operations, Service, Master On-line System
• Used to manage vehicles, people, packages, routes and weather scenarios on real time.
• Relays data on package movement, pickup, invoicing and delivery to a central database at FedEx Memphis headquarters
• Places a bar-code on each parcel at the point of pickup and the barcode is scanned at each stage of the delivery cycle
4. Coordination of all parties via virtual supply chain
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| The virtual supply chain of FedEx. |
• All parties are connected together by the virtual supply chain
– Stronger coordination leads to a great information flow
– Cost can be greatly cut
3.Discuss the role of IT in FedEx’s Business Strategy.
Create opportunity of Logistic Management
• IT can help to update the backend database in time for packaging and tracking (Internal)
• Not only operates handling, warehousing and transport the goods, but also combines materials management, production distribution together
• By using IT, FedEx shares information within the company and with its consumers to make logistic management more effective and efficiency.(external)
• Just-in-time inventory management model à Information replaces inventory
Provide Value-added activities
• High-tech innovations and developments prompt the customer service, such as customer ordering, package tracking and process monitoring.
• The useful COSMOS system can update the database timely once the new information entered the system.
Development on customer service
• Customers can book the service and track the shipment of products self service
• The system can help customers to quote the price and measure the time by themselves
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