FedEx The Leading Supply Chain Management Solutions Provider (OPER029) Name: K Lakshmi Narasimha Moorthy Roll No:

: 6010090901255 Background Fedex is the leading provider of supply chain management services to corporate customers. Fedex started in 1971, to facilitate overnight delivery of document through airfreight system directly to the customers at affordable costs. Fedex over a period of years differentiated itself by having state of the art infrastructures with technologically advanced automation that will ship the goods from supplier to the end customer in a shorter period of time. Fedex offered variety of services including warehouse management, inventory management, transportation and logistics managements to name a few. Fedex goal is to offer to customize supply chain services to corporate customers to help them reduce costs, improve customer satisfaction. a. Emergence of Fedex as the leading global provider of supply chain management services to corporate customers is attributed largely to the state of the art infrastructure facilities and its vast network spread across the world. Explain how FedExs infrastructure facilities and network facilitated better management of customers supply chain. Fedex offered customer specific supply chain management services to their corporate customers. As the requirement varies from one customer to another it was absolute necessary to have the right infrastructure and network to facilitate better management at the customer side. The success ingredients of Fedex can be broadly classified to the following three: 1. Infrastructure facilities to help handle customer processes 2. Technology supporting to stream line operations 3. Network to interface between the customers (Shipper and Receiver) and Backend 1. Infrastructure facilities to help handle customer processes Fedex infrastructure consists of operations hub at Memphis, a 644 fleet of aircrafts and 48000 vehicles for land transport. The operations at Memphis hub is streamlined with fixed time for unloading the aircraft, sorting and then reloading to the destination aircraft. Every night the process will start by 10:30 pm with 150-160 aircrafts landing in the Memphis airport and within 3 hours all the processes are completed the aircrafts took off to the destination. If there are any delays the operations teams were to explain the reasons and proper measures to be taken. After unloading, the packages go through series of steps through which they sorted, and dispatched to respective destinations. These sorting are automated on conveyor belts equipped with infrared scanning. The scanning information

is integrated directly integrated with Fedex website so that customers can track the location of their shipments. By implementing and executing consistent processes, Fedex was able to deliver the packages rightly with less delivery time and costs. 2. Technology supporting to stream line operations Using variety of technology tools to streamline operations in Fedex complements infrastructure. Fedex used Customer Operations Service Master Online System (COSMOS) to track packages. This system used by employees, customers to track the shipments online. This is the backbone of many other systems to handle millions of transactions and smooth operation execution. To ensure safety of the packages and timely delivery for the customers, Global Operation Control Centre (GOCC) was used to trace trucks and aircraft movements. In addition, GOCC provided weather information to trucks and aircrafts so that accidents are avoided and reliable services are provided Digitally Assisted Dispatch System (DADS) provided information to the delivery and pickup agents information about the exact delivery and pickup locations. It helped them to plan their route and ensured shorter time duration for the activity Automated Sorting Tracking Route Aid (ASTRA) provided accurate information of delivery information so that it can be sorted and dispatched to the right destination. These technology and IT initiatives coupled with state of the art infrastructure facilities helped Fedex innovatively design and deliver supply chain services to their customers. 3. Network to interface between the customers (Shipper and Receiver) and Backend Fedex implemented hub and spoke model for dispatch and delivery system. Each city had customer service agents, cargo handlers and couriers who collect the packages or deliver to the customers. These, network were connected to the regional hub to co-ordinate the dispatch and delivery. Unmanned drop boxes were put in high traffic areas. Wherever its not economically viable for Fedex, they have partnered with global service participants to provide dispatch and delivery activity. Fedex was able to differentiate itself by the combination of these infrastructure facilities and strong network of dispatch and delivery supported by advanced technology and automation in the industry. These facilities help Fedex to deliver 3.3 MN packages across 211 countries every day.

b. Fedex offered different value added services to its corporate customers. Describe each service in detail and their benefits to the customers. Discuss in detail the manner in

which Fedex help Fujitsu and Cisco in solving their SCM problems. According to you, what other SCM Services can Fedex offer its corporate customers? Over a period of years Fedex was able to have consistent success and maturity in their supply chain processes. Services Offered by Fedex were customized specific to each customers specific problems and bring in the benefits. Fedex provided services on the following areas: 1. Transportation Management: Fedex provided door-to-door shipping of goods from manufacturer to the customer place within same country/across the globe. Fedex pioneered the use of multi-modal transport combining air and land transport. Fedex also provided additional related services like custom clearance, insurance, trade consulting through their subsidiary companies. Based on the nature of package Fedex worked out the best and economical transport mode through which it can be delivered. Benefits: Eliminated need to have higher inventory as Fedex can replenish the inventory reliably in less time. Savings in transportation costs through efficient transport and routing planning. 2. Integrated Order Fulfillment: Inbound and outbound order fulfillment services including, picking, packing, shipping and delivering the goods. Online catalogue design and online marketing initiatives to promote new sales. Fedex handled the inventory of the customers in secure way at their hub by identifying separate place per customer. Benefits: Increased flexibility of the customers to quickly adapt to market changes. Significant reduction in warehousing related costs as the processes are outsourced to Fedex while ensuring security and privacy. 3. Returns Management: Under this services, Fedex offered returns management of picking from the dispatcher to delivering to the manufacturer, an online portal to access information of pickup on delivery details, technology APIs so that the customer can publish the returns information on to their own website using Fedex information. Fedex also provided consolidated return service to handle large volume returns for online retailers. Benefits: Returns management helped customers improve their customer satisfaction by timely collection of returns, reduced the returns cost by consolidating returns there by reducing costs 4. Orchestrated Delivery Management: Through orchestrated delivery management Fedex consolidated bulk shipments, multiple consignees thereby the custom clearances were got in single lot. After this the consignment is shipped to respective customers. Benefits: This reduced total lead-time of custom clearances, the cost reduction due to processing them in single lot

Fedex SCM Services to FUJITSU PC Problems: FUJITSU had a subsidiary office in California with head office in Japan. The delivery time for notebook computers to its customers in US took more than 10 days though inventory was available, whereas other vendors offer much lesser time. The company used two shippers, Nippon Express from Japan to US and Circle Air Freight within US. Poor co-ordination between these two shippers delayed the material arrival and some time even missing components. The Portland facility was not strategically located to server US increasing transportation time and costs. Fedex Solution: 1. Fedex relocated the assembly and distribution functions to its Memphis hub. Fedex stored the components received from the Asian vendors in their warehouse in Memphis. Fedex started providing their infrastructure to be used as warehouse and assembly for FPC. 2. The order schedules were managed by FPC and given to Fedex. Fedex based on the schedules requested materials and provided to the FPCs assembly team or their subcontractors. Loading and Testing were also done at Fedex facility by FPC team 3. The assembled notebooks were shipped different destinations by Fedex 4. Fedex provided Warehouse management, shipping and transportation, Infrastructure to manage the assembly operations to FPC. Benefits: FUJITSU through engagement with Fedex was able to reduce the delivery time to 3 days. Fedex strict adherence to inventory accuracy, return and fill rates ensured less finished goods inventory for FPC. For FPC total cost of logistics reduced to amount. FPC had flexibility to maintain right inventory hence faster inventory turns and shorter shelf time helping them to protect from price changes and market changes CISCO Systems: Problems: CISCO for their routers sourced components from suppliers stored them in regional warehouses and then shipped them to assembly warehouses. The finished goods were stored in CISCO warehouse and shipped to the end customers based on the orders. CISCO had to manage large no.of warehouses, inventory of components, finished goods, longer delivery time and increased logistics costs. Fedex Solution: Fedex provided Merge-In-Transit, a unique service to CISCO by utilizing their facilities and distribution network. Through this service, CISCO identified the assembly warehouse of Fedex closest to the customer based on the order. Then, the suppliers nearby to these warehouses were asked to supply these components to assembly warehouse. The router got assembled at Fedex warehouse and shipped

directly to the customer through the distribution network. Fedex later expanded their service portfolio to complete order fulfillment through E-Merge. Benefits: CISCO was able to reduce the costs of inventory and transportation through this service. Merge-in-transit helped CISCO to respond quickly to the customer s orders without having to have huge inventory. Total operating costs reduced for Cisco through these services. New SCM Services Recommendations Fedex has established itself has leader in shipping, logistics, warehousing and inventory management related services. Through their experience they can move up the supply chain and manage the collaborative demand management services thereby to receive, plan and execute a customer demand from a specific and optimal location and then finally ship it to the respective customer. Fedex over a period of many years established strong and consistent SCM processes, excellent infrastructure facilities and huge IT investments, helped itself position as strong tactical logistics providers in the SCM services industry. It can move up to add strategy part of the SCM services and provide 4PL (4th party logistics) provider and become true partner for their customers. 4PL normally doesnt own assets and do more consulting and coordinating work and engage many 3rd Party logistics providers. AS 4 PL, Fedex not just have to look for its own assets but also use the best of breed logistics provider based on customer situation.