fedex corp. review & analysis
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Nurettin Can Karaçengel
Can Bayrak
Heitham Al-Shammari
MSA 644 – Integrated Logistics Support Final Presentation
December 2010
Review & Analysis ofFedEx Corp.
Background Company Variety Logistics Drivers Inventory Transportation Management Packaging Return Services Warehouse Management Rates Information Technologies Innovation Logistics Social Responsibility International Efforts Competition References
Overview
2
Founded in 1971 in Little Rock, AR. 1973 Federal Express began operation with 389 workers “the
modern Air/ground express industry born” 1978 listed on the New York Stock Exchange with the ticker
symbol FDX. 1980 FedEx purchased Roberts Cartage “established in 1947”
and began offering expedited transportation services (now FedEx Custom Critical)
1981 FedEx launched international service to Canada The FedEx Overnight Letter was introduced
1982 • 10 am delivery on time with money back guarantee• American Freightways are established (now part of FedEx Freight)
1984• Began Europe and Asia/Pacific operation after purchasing Gelco
Express International• First PC-based automated shipping system
Background
3
1985 RPS (now called FedEx Ground) is founded in Pittsburgh, PA. and is the first to introduce a bar-code labeling system to the ground transportation industry.
1986 introduction of the SuperTracker®, a hand-held bar-code scanner system to input detailed package information.
1990 the first company to win the Malcolm Baldrige National Quality Award in the service category.
Background
4
1994• Federal Express officially changes its name to “FedEx”• the first to offer online package status tracking• the first global express transportation company to receive
worldwide ISO 9001 quality certification “ ISO 9002 in 2001”
• 1996• RPS (now FedEx Ground) achieves 100% coverage of North
America.• The first company to allow customers to process package
shipments on the Internet with FedEx InterNetShip® (renamed FedEx® Ship Manager)
2000
The company FDX renamed to with independent operating companies that include:
Background
5
Company VarietyFedEx Express Headquarters: Memphis, TN President and CEO: David J. Bronczek Fleet: Air: 669 Ground: 43,000 US Hubs :
Anchorage, AK Fort Worth, TX Indianapolis, IN Memphis, TN Newark, NJ Oakland, CA
6
FedEx Express664 aircrafts, including:
71 Airbus A300-600s53 Airbus A310-200/300s21 ATR 72s26 ATR 42s77 Boeing 727-200s42 Boeing 757-200s58 Boeing MD10-10s17 Boeing MD10-30s59 Boeing MD11s8 Boeing 777Fs10 Cessna 208As242 Cessna 208Bs
Company Variety
7
FedEx Custom Critical
Provides expedited freight services or JIT delivery Headquarters: Uniontown, OH President and CEO: Virginia C. Albanese Established: 2000 Fleet:
Air: Access to any and all on-demand aircrafts in the world Ground: 1,400 cargo vans, straight trucks and tractor-trailers Service Area: United States, Canada, Mexico; Worldwide by air
FedEx Ground Headquarters: Pittsburgh, PA President and CEO: David F. Rebholz Established: 2000 Fleet: Ground: 20,000
Company Variety
8
FedEx Freight
Provides large shipments and basic LTL (less-than-truckload) shipping needs. Headquarters: Memphis, TN President and CEO: Douglas G. Duncan Established: 2001 Fleet: 40,000 Service Area: United States, Canada, Mexico, Caribbean, Central and South
America, Puerto Rico, Europe and Asia.
FedEx Trade Networks
Full-service customs brokerage, trade consulting, information technology, E-clearance solutions and transportation and logistics services President and CEO: G. Edmond Clark Established: February 2000 Service Area: Worldwide from more than 90 locations.
Company Variety
9
Deregulation: The Air cargo Deregulation Act of 1977 opened the market
for carriers and shippers to freely negotiate rates and provide services.
Led to the formation of air express and third-party logistics.Speed and Reliability in the 70’s:
FedEx invented the concept of overnight express delivery The distribution was based on the hub and spoke system
where packages are dropped off at pick-up locations and are then routed to a central distribution center.
Delivery on time came about when the industry in the U.S. utilized the “JIT and lean manufacturing” concepts:
less inventory Fast-cycle logistics
FedEx set the industry standard in delivery speed and reliability.
Logistics Drivers
10
Customer ServiceIn addition to the guaranteed on time delivery FedEx
provides their customers with:• Several delivery times “10am, 12pm , 4pm” • Shipment tracking• Scheduling and routing • Inventory control systems• Warehousing expertise
Geographical locations: Ability to reach all customers Electronic communications
Logistics Drivers
11
Integrated Supply Chain Management: • FedEx provides JIT transportation and delivery for
firms outsourcing their supply chain • FedEx provides customized supply chain services
according to the customers operation and needs • More experts in the Information Technology (IT)
sector not just the physical resources such as trucks and planes
• FedEx introduced the concept of “Virtual Warehousing”• Virtual Warehousing: Other supply chain partner have access
to databases and information such as sales and shipment
• The use of “Demand–Pull” • pulled by customers not pushed by suppliers• concentration on knowledge of what the customers need
and how products can be shipped and packed
Logistics Drivers
12
Critical inventory logisticsServices used to manage the distribution and delivery of the firms
critical parts and inventory using FedEx transportation networks (Critical Inventory Logistics)
Providing storage, delivery and the efficient return of products, if needed, while balancing services and cost
It offers the firms the ability to manage and view their inventory online
How it works? The central stocking location is at FedEx Corp. and the forward
stocking locations FedEx Kinko’s using FedEx Express, FedEx Freight, FedEx Custom Critical, and FedEx Ground
Parts are stored at the right place to be delivered at the right time
Inventory
13
Providing multiple delivery options “24 hours, 8 am, 10 am, same day service as well as hold in locations”
Outflow “from the manufacturer to the FedEx Corp. then to the customer”
Reverse flow “from the customer to FedEx Corp. then either to the manufacturer or housed as stock”
Delivery and shipment options are based on time, location and cost
Inventory
14
Inventory
15
A study conducted by the Center for Science, Technology, and Economic Development indicated that: FedEx has a significant impact on businesses in the United States Inventory carrying cost savings for FedEx clients (domestic
shipments):
1993 = 63,822,544 USD
2000 = 268,268,977 USD
Total = 1,062,029,887 USD
Inventory carrying cost savings for FedEx clients(international shipments):
1993 = 13,851,731 USD
2000 = 56,912,119 USD
Total = 225,633,010 USD
16
Inventory
Transportation Modes Air
669 aircraft Motor carrier (truck)
43,000
Two services for LTL (Less Than Truckload) FedEx Freight FedEx National LTL
FedEx Freight and FedEx National LTL offer: Economical freight solutions. Consistent, on-time reliability. Direct delivery to virtually every ZIP code in the contiguous U.S. State-of-the art information technology with end-to-end shipment
visibility. A dedicated team of professionals to assist with all of your freight needs. Freight forwarding capabilities. Equipment for most shipment sizes or types.
Transportation
17
Transit map comparison of FedEx Freight and FedEx National LTL
Transportation
18
For less than truckload (LTL) freight additional services are: Call before delivery Hazardous material Inside pickup/delivery Liftgate at pickup/delivery Perishable Residential pickup/delivery Freezable protection Oversize length
Bill of Lading (BOL) The Bill of Lading (BOL) is a
required legal contract that verifies that the carrier has received the shipment as described and is obligated to deliver that shipment in good condition to the consignee (person receiving the freight).
Transportation
19
Global Distribution Center (GDC) in Memphis offers 24/7 - 365 day availability
Late night access to FedEx World Hub and location convenient to FedEx Ground and Freight locations
Flexible, scalable multi-client facilities 500,000 sq. ft. facility workspace Fully temperature controlled and monitored
with a compliant temperature recording system
ISO 9001:2000 certified business processes Inventory Administration including visibility of
inbound, outbound, and static inventory within DCs and even web access to your data
Global Distribution Center
20
What is Transportation Management? Outsourced management solution Benefits
Enhance customer service - shipments managed to meet individual distribution requirements
Optimize transportation costs - choose optimal overall transportation solution from FedEx companies and core carrier networks to reduce costs
Reallocate resources - refocus your time and money on core competencies Improve order/shipment management Increase asset and labor efficiency through effective transportation planning Improve inventory management and production planning
Which services FedEx Transportation Management provides to customer? Transportation order acquisition Shipment planning, shipment tendering, shipment monitoring Freight bill audit and pay Visibility via Internet management reporting
Transportation Management
21
Why should I choose FedEx Transportation Management?VisibilitySpeedFlexibilit
y
Transportation Management
22
Correct packing is important to protect your shipment from any trouble during the transportation. Plan it Prepare it Secure it Ship it
FedEx Packaging Service: Let us Pack It for YouSize and Weight Restrictions
FedEx Freight and FedEx National LTL shipments may be up to 20,000 lbs. and 24 feet in length
With FedEx Express U.S. services, you can ship packages up to 150 lbs.; up to 119"in length and 165“ in length and girth
With FedEx Express international services, you can ship packages up to 150 lbs.; up to 108" in length and 130" in length and girth.
Packaging
23
Single-Box Packing Method Ship non-fragile products like soft goods inside a sturdy outer box. Use fillers like crumpled newspaper, loose
fill peanuts or air-cellular cushioning material to fill void spaces and prevent movement of goods inside the box during shipping.
Place goods that might be affected by dirt, water or wet conditions inside a plastic bag.
Use the H taping method for sealing the package
General Packing Methods
24
Box-in-box Packing Method Restrict product movement inside the box using filler like crumpled newspaper, loose fill peanuts or other cushioning
material Close and tape the inner box using the H
taping method. This will help prevent accidental opening
Use a second box that is at least 6" longer, wider and deeper than the inner box
Ship fragile products individually, wrapping them in a minimum 3" thickness of air-cellular cushioning material such as Bubble Wrap
Fill any void spaces with more cushioning material
Use the H taping method for sealing the package
General Packing Methods
25
Proper labeling helps ensure on-time delivery and complete orders.Labels on the freight should match the bill of lading
and clearly show the full name and address of the consignee.
The use of brightly colored labels helps identify special requirements such as:Do Not Break Down PalletDo Not Double StackDo Not ForkliftFragile: Handle with CareFragile: Top Freight OnlyKeep Upright
Labeling
26
Impact Tests
Testing Packaged Products
27
Compression TestCompression Load
(pounds) =0.007 x (108 – H) x L x W x F
Conclude the test when one of these conditions is first detected by the compression tester:The stop force.The yield detection
percentage.The stop deflection.
28
Testing Packaged Products
Vibration TestFedEx distribution
environmentsTruck vibration at 0.52
Grms (root mean square)Air vibration at 1.06 GrmsRepeat truck vibration at
0.52 Grms
Rotary Vibration TestPackages will be
subjected to a total of 14,200 vibratory impacts
29
Testing Packaged Products
Dangerous goods: Aerosol sprays airbags, ammunition, butane, car batteries, cologne,
dry ice, fireworks, gasoline, jet fuel, lighters, lithium batteries, matches, nail polish, nail polish remover, nitrogen-refrigerated liquid, paint, perfume, solvents, some chemicals, and more
Normally dangerous materials are surcharged. However, some of them are do not surcharged. Dangerous goods in Excepted Quantities (IATA 2.7); excepted
package radioactive materials (IATA 10.5.8); Biological Substance, and shipments containing primary (non-rechargeable) lithium batteries and cells that are prepared under IATA Section II of Packing Instruction 968
Some items may not be regulated as dangerous goods if they travel by ground, but are regulated by IATA if they are offered for transportation via FedEx Express services Dry ice
Dangerous and Hazardous Materials
30
Integral part of business“You can focus on your business, while we deliver
the returns expertise”A fast, easy returns process is that key
differentiatorReturn service examples:
Merchandise returnLab sampleSomething for warranty or repairDocuments need to be signed
Helps reducing inventory carrying costsOffers visibility of every step
Return Services
31
New Warehouse Management System (WMS) Newest bar-code Radio Frequency
BenefitsView real-time inventory status at each individual
warehouse location or total at all locations.Search by Part number or Lot number.Track Orders out of each warehouse by Order
Number, Ship to or Date.Review Audit History to see chronological record
of incoming and outgoing products.Print or download query results to a spreadsheet.
Warehouse Management
32
Rates The FedEx
Freight and FedEx National LTL Rating Program (FXF 1000 & FXNL 501 base rates)
Obtain rate quotes even when you are not connected to internet.
Just offer quotes for US, Canada and Hawaii.
33
The first - to install computers in delivery vehicles, providing sophisticated
automation for corporate mailing services and developing tracking capabilities and software.
to offer package-status tracking for improved customer service via fedex.com [‘94]
to offer shipping for improved customer service and convenience via fedex.com
to use of wireless technology for shipping over 25 years ago with the introduction of the Digital Assisted Dispatch System (DADS).
DADS is a two-way data communication system used by the couriers and central dispatch center to communicate daily on the pick-up and delivery job orders.
The FedEx Institute of Technology at the University of Memphis FedEx Innovation Labs
Innovation
34
SenseAware TM
A web-based information platform that transmits sensitive information about the shipment via a sensing device placed in the package.
Approved by the FAA as well. Targeted for a 2010 release to select life sciences companies that
are shipping within the U.S. SenseAware gives the customer the immediate information and
automated tools he needs to respond instantly to unexpected conditions.
With SenseAware, the customer can make smarter decisions and coordinate rapidly with the supply chain partners.
Exposure to light, humidity, air. Exact location at the exact time.
Innovation
35
EnvironmentFuel Sense Program
Collaboration with IATA in educating 30 program teams to assess the overall fuel consumption and searching ways to reduce it.
Replacing 90 narrow-body B727 with B757 that lessen the environmental impact – reducing fuel consumption up to % 36 while providing % 20 more capacity.
Acquisition of 11 B777 that will provide greater payload capacity using % 18 less fuel than planes in current international fleet.
Wide-Body planes with Flight Management System use continuous approach descent, which keeps the plane in idle during the descent, reducing engine thrust and fuel.
Logistics Social Responsibility
36
Environment By the end of 2009, FedEx Express was operating a total of
325 hybrid electric and electric vehicles and more than 1,800 alternative fuel vehicles and equipment around the world.
Trucks are built by Eaton Corp., Isuzu, Azure Dynamics and Iveco.
FedEx is the only transportation company to publicly call for fuel efficiency standards for commercial medium and heavy-duty truck classes.
Logistics Social Responsibility
37
EnvironmentAlternative Energy
Several Rooftop Solar Energy Powered HubsWoodbridge, NJOakland, CACologne – Bonn Airport, Germany
In Geneva, the FedEx station uses a system of pipes running deep into the ground to warm the building’s air in the winter and cool it in the summer.
FedEx Packaging LabFedEx 10kg and 25kg boxes contain a minimum of 70
percent recycled content and are recyclable.Most FedEx envelopes are made from 100 percent recycled
content and are recyclable.
Logistics Social Responsibility
38
CommunityNoise
All FedEx Express aircraft meet all federal noise certification standards and comply with FAA Stage 3 noise requirements.
In 1990, FedEx, working with Pratt & Whitney and Boeing, developed a proprietary noise reduction kit (also known as a "hush kit") for Boeing 727s.
FedEx has taken steps to reduce the use of auxiliary power units when the planes are on the tarmac. This effort has helped drastically to reduce fuel use and noise levels.
Logistics Social Responsibility
39
CommunitySpecial Delivery Program
Supports local organizations by donating transportation services and manpower to help them fulfill their missions.
VolunteerismTeam members volunteer hundreds of thousands of
hours each year to make our local communities better places to live, work and play.
SportsFedEx CupJoe Gibbs Racing
# 11
Logistics Social Responsibility
40
PhilanthropyRelief Support
Heart to Heart InternationalDirect Relief InternationalWater Missions International
Salvation Army Disaster Response ServicesAmerican Red Cross
Logistics Social Responsibility
41
International Efforts
42
Asia – Pacific Region Launched as FedEx Asia One Network in 1995. Headquarters: Hong Kong, China Main Hubs: Subic Bay, Philippines; Guangzhou, China 30+ countries ; 20+ airports
European Region Launched as FedEx EuroOne Network in 80’s Headquarters: Brussels, Belgium Main Hubs: Paris, France; Stansted, UK; Frankfurt & Cologne, Germany 85+ countries ; 35+ airports
Middle East – India – African Region Commenced in ‘98 as a branch of FedEx Express Headquarters & Main Hub: Dubai, U.A.E. 70+ countries ; 4+ airports
Latin America – Caribbean Region Headquarters & Main Hub: Miami, FL 50+ countries ; 20+ airports
Website [http://www.fedex.com/us/]Citizenship BlogSocial Networks [Facebook, Twitter, LinkedIn
etc.]
Information Technologies
43
Major CompetitorsUnited Parcel Service (UPS)Deutsche Post (DHL)Thomas Nationwide Transport (TNT)
Financial AspectsPlant, Equipment, and Other PropertiesTotal Liabilities & EquityTotal AssetsTotal Revenue
Who is focusing on which strategy?Who is taking more risks?Who are utilizing their assets more efficiently?
Competition
44
Competition (cont.)
2010 2009 2008 2007 2006 2005 2004 2003 2002 20010
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
FedEx United Parcel DHL TNT
Property, Equipment & Plant
** amounts in thousands (USD)
45
Competition (cont.)
2010 2009 2008 2007 2006 2005 2004 2003 2002 20010
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
FedEx United Parcel TNT DHL
Total Liabilities & Equity
** amounts in thousands (USD)
46
Competition (cont.)
2010 2009 2008 2007 2006 2005 2004 2003 2002 20010
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
Total Current Assets
FedEx United Parcel TNT DHL
** amounts in thousands (USD)
47
Competition (cont.)
2010 2009 2008 2007 2006 2005 2004 2003 2002 20010
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000
FedEx United Parcel DHL TNT
Revenue
** amounts in thousands (USD)
48
FedEx & UPS are intending to purchase their own facilities and equipment instead of leasing.
DHL is focusing on the idea of increasing liabilities by utilizing more leased assets (Aircraft, Equipment, Warehouses, etc.).
DHL has a more adventurous strategy than FedEx and UPS. Increasing Liabilities, therefore utilizing more assets Increasing risks inevitably (economic downfall affects DHL
more than FedEx & UPS)DHL’s strategy of taking more risks benefits more in
Revenue.FedEx & UPS have a more safe approach, which provides
more protection against fluctuations.
Competition (cont.)
49
Center for Science, Technology, and Economic Development. (2010). Fedex and key industry drivers. Retrieved from SRI International website: http://www.sri.com/policy/csted/reports/economics/fedex/chapter1.pdf
Center for Science, Technology, and Economic Development. (2010). Business impact: Beyond “Business as usual”. Retrieved from SRI International website: http://www.sri.com/policy/csted/reports/economics/fedex/chapter1.pdf
FedEx. (2010). About FedEx. Retrieved November/23, 2010, from http://about.fedex.designcdt.com/
FedEx. (2010). Bill of Lading Online. Retrieved November/19, 2010, from http://www.fedex.com/us/smallbusiness/updates/june2010/bill-of-lading-online.html
FedEx. (2010). Corporate Responsibility. Retrieved November/23, 2010, from http://about.fedex.designcdt.com/corporate_responsibility
FedEx. (2010). FedEx Distribution. Retrieved November/19, 2010, from http://www.fedex.com/us/smartpost/network/
FedEx. (2010). FedEx Help Hub. Retrieved November/19, 2010, from http://mediacenter.fedex.designcdt.com/node/425
FedEx. (2010). FedEx Innovation. Retrieved November/23, 2010, from http://about.fedex.designcdt.com/our_company/fedex_innovation
FedEx. (2010). FedEx National LTL. Retrieved November/19, 2010, from http://www.fedex.com/us/services/freight/national/longhaul.html
FedEx. (2010). FedEx Rate Tools. Retrieved November/19, 2010, from http://www.fedex.com/ratetools/RateToolsMain.do
FedEx. (2010). FedEx Return Solutions. Retrieved November/19, 2010, from http://www.fedex.com/us/returnsolutions/index.html
FedEx. (2010). FedEx Service Guide. Retrieved November/19, 2010, from http://www.fedex.com/us/services/fuelsurcharge.html
References
50
FedEx. (2010). FedEx Services. Retrieved November/19, 2010, from http://www.fedex.com/us/services/options/
FedEx. (2010). Packaging Tips. Retrieved November/19, 2010, from http://www.fedex.com/us/smallbusiness/updates/may2010/packaging-tips.html
FedEx. (2010). Regional Facts. Retrieved November/23, 2010, from http://about.fedex.designcdt.com/our_company/company_information/regional_facts
FedEx. (2010). Transportation Logistics Management. Retrieved November/19, 2010, from http://www.fedex.com/us/supplychain/services/tms/
FedEx. (2010). Transportation Management. Retrieved November/19, 2010, from http://fedex.com/us/customersupport/supplychain/faq/tms.html
FedEx Introduces SenseAware, the Next Generation Supply Chain Information Platform. (17 November). Business Wire. Retrieved October 17, 2010, from ProQuest Newsstand. (Document ID: 1902232291).
FedEx Corporation. (2010). FedEx express. Retrieved from http://about.fedex.designcdt.com/our_company/company_information/fedex_express
FedEx Corporation. (2010). Family of companies. Retrieved from http://www.fedex.com/ca_english/about/overview/companies/index.html?link=4
FedEx Corporation. (2010). Critical inventory logistics. Retrieved from http://www.fedex.com/us/supplychain/services/cil/
FedEx Corporation. (2010). Decades of innovation. Retrieved from http://images.fedex.com/ca_english/about/pdf/ca_english_about_decades_innovation.pdf
Ra0, R., Navoth, Z., Waebker, R., Horwithc, M. (1998, April) The FDX group: Building the electronic commerce backbone for the future. Institute for Technology and Enterprise, New York, NY. Retrieved from http://marketing.byu.edu/htmlpages/courses/490r/chapters/chapter7/chapter7.html#backg
SenseAware. (2010). SenseAware Shipment Conditions Monitoring. Retrieved November/23, 2010, from http://www.senseaware.com/?overview
The Airline Monitor. (October, 2010). Ten Year Traffic, Fleet and Financial Data for 88 Leading Airlines of the World. 23(5). Author
References
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