MSA 644 course Final Presentation about FedEx corporation review and analysis

1. Nurettin Can Karaçengel
Can Bayrak
Heitham Al-Shammari
MSA 644 – Integrated Logistics Support Final Presentation
December 2010

2.  Background
 Company Variety
 Logistics Drivers
 Inventory
 Transportation Management
 Packaging
 Return Services
 Warehouse Management
 Rates
 Information Technologies
 Innovation
 Logistics Social Responsibility
 International Efforts
 Competition
 References
2

3.  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
3

4.  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.
4

5.  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:
5

6. FedEx 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

7. FedEx Express
 664 aircrafts, including:
 71 Airbus A300-600s
 53 Airbus A310-200/300s
 21 ATR 72s
 26 ATR 42s
 77 Boeing 727-200s
 42 Boeing 757-200s
 58 Boeing MD10-10s
 17 Boeing MD10-30s
 59 Boeing MD11s
 8 Boeing 777Fs
 10 Cessna 208As
 242 Cessna 208Bs
7

8.  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
8

9.  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.
9

10.  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.
10

11.  Customer Service
In 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
11

12.  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
12

13. Critical inventory logistics
 Services 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
13

14.  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
14

15. 15

16. 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

17.  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.
17

18.  Transit map comparison of FedEx Freight and FedEx
National LTL
18

19.  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).
19

20.  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
20

21.  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
21

22.  Why should
I choose
FedEx
Transportat
ion
Manageme
nt?
 Visibility
 Speed
 Flexibility
22

23.  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 You
 Size 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.
23

24.  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
24

25.  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
25

26.  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 Pallet
 Do Not Double Stack
 Do Not Forklift
 Fragile: Handle with Care
 Fragile: Top Freight Only
 Keep Upright
26

27.  Impact Tests
27

28.  Compression Test
 Compression 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

29.  Vibration Test
 FedEx distribution
environments
 Truck vibration at 0.52 Grms
(root mean square)
 Air vibration at 1.06 Grms
 Repeat truck vibration at 0.52
Grms
 Rotary Vibration Test
 Packages will be subjected to a
total of 14,200 vibratory
impacts
29

30.  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
30

31.  Integral part of business
 “You can focus on your business, while we deliver the
returns expertise”
 A fast, easy returns process is that key differentiator
 Return service examples:
 Merchandise return
 Lab sample
 Something for warranty or repair
 Documents need to be signed
 Helps reducing inventory carrying costs
 Offers visibility of every step
31

32.  New Warehouse Management System (WMS)
 Newest bar-code
 Radio Frequency
 Benefits
 View 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.
32

33.  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

34.  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
34

35.  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.
35

36.  Environment
 Fuel 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.
36

37.  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.
37

38.  Environment
 Alternative Energy
 Several Rooftop Solar Energy Powered Hubs
 Woodbridge, NJ
 Oakland, CA
 Cologne – 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 Lab
 FedEx 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.
38

39.  Community
 Noise
 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.
39

40.  Community
 Special Delivery Program
 Supports local organizations by donating transportation
services and manpower to help them fulfill their missions.
 Volunteerism
 Team members volunteer hundreds of thousands of hours
each year to make our local communities better places to live,
work and play.
 Sports
 FedEx Cup
 Joe Gibbs Racing
 # 11
40

41.  Philanthropy
 Relief Support
 Heart to Heart International
 Direct Relief International
 Water Missions International
 Salvation Army Disaster Response Services
 American Red Cross
41

42. 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

43.  Website [http://www.fedex.com/us/]
 Citizenship Blog
 Social Networks [Facebook, Twitter, LinkedIn etc.]
43

44.  Major Competitors
 United Parcel Service (UPS)
 Deutsche Post (DHL)
 Thomas Nationwide Transport (TNT)
 Financial Aspects
 Plant, Equipment, and Other Properties
 Total Liabilities & Equity
 Total Assets
 Total Revenue
 Who is focusing on which strategy?
 Who is taking more risks?
 Who are utilizing their assets more efficiently?
44

45. 0
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
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
FedEx United Parcel DHL TNT
Property, Equipment & Plant
** amounts in thousands
(USD)
45

46. 0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
FedEx United Parcel TNT DHL
Total Liabilities & Equity
** amounts in thousands
(USD)
46

47. 0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total Current Assets
FedEx United Parcel TNT DHL
** amounts in thousands
(USD)
47

48. 0
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
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
FedEx United Parcel DHL TNT
Revenue
** amounts in thousands
(USD)
48

49.  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.
49

50.  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
50

51.  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
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