FedEx grew to be a
multibillion–dollar company by providing reliable overnight delivery of high-priority,
time sensitive packages and documents. Its 590 airplanes, 40,000 trucks, and
137,000 people deliver over 2.9 million packages a day. After the parcels are
picked up at the customer’s site or dropped off at a FedEx hub where they are
sorted by destination, loaded on planes, and shipped to the destination
airport. Packages designated for overnight delivery are delivered to their
destination within 24 hours.
To maintain a high degree of
reliability in its shipping process, FedEx tracks each package through each
step on its path from the shipper to recipient. When the driver picks up the
package, it is logged immediately using Supertracker, a portable handheld
computer containing a bar code reader for capturing the bar code identification
on the package and a keyboard for entering additional information such as the
destination’s zip code. Upon returning to the truck, the driver inserts the
Supertracker into a small computer that transmits the data by radio waves to
the local dispatch center, which has a link to the corporate database.
Within five minutes of initial pickup,
the Fedex database contains the package’s identification, location, destination
and route. The location data is updated automatically (using the package’s
barcode) as the package moves through each step on its way to the destination.
Although package pickup and delivery involve a series of steps in different
places, the combination of telecommunications and computing permits FedEx to
know the location of every package at any time and to make sure that procedures
are followed throughout. Any deviation would become obvious quickly.
Package tracking information is
used in many ways. Information about pickups and deliveries is the basis of
customer billing. Detailed tracking information supports customer service by
permitting customer service agents to tell customers where there packages are.
Customers can access the FedEx website to obtain the same information. As a
method for managing their own internal operations, FedEx developed a service
quality index based on 12 types of events that disappoint customers, including
late delivery, damaged or lost packages, and complaints. Even a delivery at
10:31 for a package promised for 10:30 is considered a problem. So that they
will learn from past problems and mistakes, people throughout the company
receive daily feedback reports identifying problems that occurred the previous
day.
As the major package delivery and
shipping companies built similar systems. FedEx decided to expand from a package
delivery company to a fully integrated corporate partner that picks up,
transports, warehouses and delivers all of a company’s finished goods from the
factory to the customer’s receiving dock – with status data available every
step of the way. For example, when orders are sent from Omaha Steaks central
computer to its warehouses, a FedEx tracking label is generated automatically.
Omaha Steaks delivers the warehouse- fulfilled orders by trucks to a FedEx hub,
and FedEx delivers the steaks to the customer. As a result of a five- year
project, FedEx performs most of the warehousing and distribution for National
Semiconductor, which manufactures most of its products in Asia and ships them
to a FedEx distribution warehouse in Singapore. National Semiconductor’s
mainframe sends a daily batch of orders over a dedicated line directly to a
FedEx inventory management computer in Memphis. FedEx sends the order to its
warehouse in Singapore where they are packaged and shipped. This system reduced
the average customer delivery cycle from four weeks to seven days, and reduced
distribution costs from 2.9% of sales to 1.2%.
FedEx has also tried to extends
its reach through a set of what it calls e-business tools that include, in
FedEx terms e-shipping tools, e-Commerce tools, e-Commerce Builder and FedEx
Global Developer program. The e-Shipping tools include a number of ways to
initiate and track shipments directly from a desktop, such as creating FedEx
shipping labels, tracking package status and finding drop off locations and
rates. The e-Commerce tools include capabilities related to controlling
shipping and managing returns from customers. The e-Commerce Builder provides
methods for building and managing a small online store. The Global Developer
program provides methods for integrating shipping and tracking capabilities
directly into a merchant’s website.
1.
Identify the following components of Business
System for the above case study
a. Customers
b. Products
/ Services
c. Business
processes
d. Participants
e. Information Technology
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