Key Questions

FedExs
Infrastruc
ture

FedExs
Value
Added
Services

FedExs
Customiz
ed
Solutions

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 FedEx's infrastructure facilities and
network facilitated better management of the
supply
chain?value added SCM services
customers
FedEx offered
different
to its corporate customers.
Describe each service in detail and their benefits to
the end customers. According to you, what other
SCM Services can Fedex offer its corporate
customers?
FedEx solved the SCM related problems of its
customers by offering an innovative customized
SCM offering.
Discuss in detail the manner in which Fedex help
Fujitsu and Cisco in solving their SCM problems.

FedEx Overview
Started in 1973, FedEx is the worlds largest express transportation and
delivery company covering more than 220 countries
It is part of the global triad (DHL, UPS and FedEx) that operate in the over
~300bn logistics industry
However, FedEx is mostly associated with express delivery service FedEx
Express, that it started to take care of overnight and faster delivery across the
US
FedEx cargo industry consists ofthree market segments: Express or time definite
packages (weighing less than 100 lb.), Heavyweight freight shipments (packages
greater than 100 lb.) and Mail transport through its sub-companies

Moreover, FedEx holds the record of world'slargest airlinein terms of freight

International Express Delivery Market Size
Revenue (bn,
tons flown and the world's fourth largest in terms of fleet size
2014)

FedEx Portfolio of Solutions

FedEx Services
integrates the
technology and
services
customers
need. It
includes
solutions for
global supply
chains, ecommerce, or
any of todays
business
challenges

FedEx Express
covers every U.S.
street address
and services
more than 220
countries and
territories. The
global network
provides timesensitive, airground express
service through
375 airports
worldwide

FedEx Ground
gives customers
dependable
business-tobusiness delivery
or convenient
residential
service

With extensive
coverage in U.S.,
Canada, Mexico,
and Puerto Rico
FedEx Freight
provides LTL
choices based on
customers
shipping needs

FedEx Express Network Design

750 Worldwide delivery centres

1775 Office Drop-off Locations
6300 Authorized Shipping Centres
38,500 Drop Box Locations
10 Express Air Hubs
Operations at more than 375
Airports
Operations at more than 1,240
647 Aircraft in use
47,500 Motorized vehicles

Other Headquarters: Hong Kong, China,

Toronto, Ontario, Brussels, Belgium, Dubai,
United Arab Emirates and Miami (Florida)

FedEx Express Model

Customers take packages to a FedEx Office where the package is weighed and
labelled. Alternatively, they can print out smart labels from fedex.com and
schedule a pickup when a delivery truck is in the area or drop the package in a
local drop box

At designated times, all of the accumulated packages from a given location travel,
usually by truck, to a local or regional sorting/distribution facility. If packages are
destined further than 200 miles, they travel by air. Otherwise they travel by truck
to the local receiving sorting facility

FedEx Express Multiple Hub and Scope Model

Packages that travel by air are placed into cargo containers that often weigh more
than one ton, and then they head to the SUPER HUB Memphis for further sorting.
In addition to the superhub hub in Memphis, there are nine otherair hubsserving
for particular zones of the world with similar infrastructure to the Superhub
International

Domestic

Guangzhou International Airport in China operates for Asia

Oakland

Pacific
Toronto I. A. for Canada
Paris Charles de Gaulle Airport and Cologne Bonn Airport for
Europe, Middle East and Africa
Miami I.A. for Latin America-Caribbean area
Ted Stevens Anchorage in Alaska for a part of Asia Pacific

International

Airport (CA)
Newark

Liberty

International Airport (NJ)

Fort Worth Alliance Airport
(TX)
Indianapolis Airport (IN)

At the sorting facilities, humans touch each package only twice once to unload and once
to load the package to/from the aircraft
During unload, employees scan the package labels and place them on one of three
conveyors with the labels facing in any direction except down towards the belt
An array of lasers scans barcodes on all sides of package while dividing them according to
their destination points

FedEx Express Memphis Super Hub

Memphis superhub processes approximately half of FedExs shipments, 3.5 million
packages per day. It resembles a city of its own, employing more than 15,000 people, while
maintaining a fleet of 75,000 trucks and 684 jets

FedEx Express The Strategic Location of Memphis

The Memphis Super Hub is strategically located as a key distribution point for
both central North America and the east coast
The infrastructural facilities of the city
good as it is at the intersection of 7
highways and adjacent to Interstate 240 in
north, Interstate 69 in the west and
Burlington Northern Santa Fe Rail Depot in
east

are
US
the
the
the

This makes 75 per cent of the country within

reach with
an overnight
drive
the city
Since
express
delivery
is from
based
on air
transportation, the other effective reason to
locate the main hub in Memphis is due to the
sitesweather conditions
It is far south to escape winter weather and far
enough north to be spared tornados and
hurricanes in summer
In Memphis, the airport seldom shuts down,
other location
cities in in
thethe
region
significant
while
The hubs
USshad
Central
Time
problems
during
winter
months
zone

FedEx Express Technology Initiatives

FedEx uses a variety of technology tools to streamline operations and
complement 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 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

GOCC also 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 delivery information so
that packages can be sorted and dispatched to the right destination

These IT initiatives coupled with state of the art infrastructure facilities helped FedEx
innovatively design and deliver supply chain services to their customers.

Customized Services: Transportation Management

FedEx Transportation Management is an outsourced solution that offers end-to-end

transportation management: optimized, multi-modal, and door-to-door.

It leverages the FedEx family of companies (along with a select group of core carriers) to
help customers improve operational efficiencies and customer service

Transportation Management works with the customer to determine optimal shipping

modes, minimize recovery needs, facilitate claims management, and provide consolidated
reporting and invoicing.

Optimized management of domestic and international shipments for all modes of

transportation.

A single point of contact for all transportation needs.

Suitable for large, complex transportation projects that require orchestrated worldwide
deliveries.
Express same day or next day.

Standard surface transportation.

Domestic.

Dedicated and time-critical.

Commercial airfreight.

Ocean freight.

Saturday collections and deliveries.

Value-added collections and deliveries.

FedEx makes diverse shipping modes available

10

Customized Services: Fulfilment Services

Fulfilment Services is an integrated, end-to-end, supply chain offering. Incorporating

turnkey solutions, these services are modular and scalable - allowing the customer to
design and configure solutions to meet specific needs

As a worldwide leader in shipping, FedEx offers the operational expertise to create

a streamlined, automated, integrated stocking system
Inventory Forward Stocking Location replenishment.
Order picking by serial number, lot number and expiration date.
Order consolidation.
Customs clearance.
Cross-docking and kitting.
Preparation of international paperwork.
Specialized packaging and labelling.
Customized Web solutions for end customer order entry and
Visibility

Benefits to the Customer

Helps cut overhead costs by outsourcing warehouse and software needs and providing a
variable fee structure.
Limits investment and risk if you're entering new market segments.
Increases customer loyalty and retention by improving the overall customer experience

Customized Services: Returns Management

FedEx Global Supply Chain Services EMEA (Europe, Middle East and Africa) works
with the customer to determine the right return program options and optimal
shipping modes, and it provides consolidated reporting and invoicing as well

Key Aspects

Multiple transportation legs supported, for the collection of a broken unit and return after
repair

Optimized management of returns using various modes of transportation

Return shipment authorization

Configuration of FedEx European Central Stocking Locations to match a wide range of

distribution patterns.

Automatic selection of optimal shipping mode based on the requested delivery time and
or SLA with end customers

End-to-end management of returns providing greater control.

End of life solutions recycling and disposal.

Try and buy/Consolidated returns

A single point of contact for all return service needs

Fedex SCM Services to CISCO

Business
Challeng
e

Solution
Proposed

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 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

Key
Benefit
s 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

Fedex SCM Services to FUJITSU PC

Business
Challeng
e

Solution
Proposed

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. There was poor co-ordination between these two shippers delayed
the material arrival and some time even missing components.

Further, the Portland facility was not strategically located to server US increasing
transportation time and costs.

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.
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
The assembled notebooks were shipped different destinations by Fedex
Fedex provided Warehouse management, shipping and transportation,
Infrastructure to manage the assembly operations to FPC.

Key
Benefit
s 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

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

New SCM Recommendations

4PL
services

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
Thus, 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.