The Organisational Structure Of Fedex Commerce Essay

The Organisational Structure Of Fedex Commerce EssayLogistics is managing the flow of goods, cultivation and former(a) resources, including energy and people, amongst the point of origin and the point of destination to meet the requirements of consumers. The main functions of logistics acknowl beach purchasing, blood strugglement, exile, and w arehousing.The superman industry cornerstone be identified in three major sectors much(prenominal) as shipping, passenger transport and manufacturing of equipment. In this paper we discuss about shipping which is responsible for transferral of supplies.FedEx has acquired and realigned number of sm all companies and managed synergies in tramp to mold more of the market. Acquisition system of FedEx has given hazard to capture different areas of logistics and transportation assembly line playfulnessh different lymph gland base and locations thereby integrating their operations to discover better synergies and economies of scale.B usiness without b come ins Having their consume fleet enabled them to reconfigure their systems and re channel existing flights in order to take good of the markets. Same way feeding three costly net subject areasair, ground, and information technology is extravagantly expensive.They pop offd in a planetary scale in order to offer nodes limitless opportunities thereby dusting customer base and achieve planetary economies of scale.FedEx involves in many an opposite(prenominal) Corporate Social Responsibility programs as a branding strategy by carrying pandas, penguins and whales across the countries to set aside them with proper living conditions. Though this type of transportation is considered risky FedEx does this with partiality in order to protect them.They maintain a conceptive brand name as a strategy and payoff of its brand image, the name that customers become counted on for reliable service and bangting edge technology.Frederick W. SmithChairman, President a ndChief Executive OfficerFred Smith was a charismatic-visionary leader. He pioneered the transportation field of honor and founded FedEx when he was 27 years of age. He had a desire, a drive to lead the company. He was confident, good for you(p) and also had the job-relevant knowledge in the field.His military background helped him to believe that the FedExs people are more rich than technology. Fred always started thinking outside the normal which make FedEx a great success.Though he was a risk taker and invested highly in IT he succeeded in the business because of his visionary thinking and determination to go ahead.Fred re-shaped the entire transportation industry. FedEx believes in leading through and through accessibility which makes all forms of interaction with customers.(b) Transportation and logistics al-Qaida within FedEx CorporationFedEx acquired its own fleet of transport while competitors were hiring space on commercial airlines and sub-contracting their shipments to third parties. With this, the need for booking space in commercial vessels ceased and FedEx experienced cost advantage over other companies.Landing larger freight planes were imparted after the de-regulation of the airline industry and using these reduced the operating cost. by and by de-regulation of the trucking industry, FedEx established regional trucking system further reduced the cost.FedExs unmatched air route authorities and infrastructure make it the worlds largest express transportation company, providing speedy, reliable and beat-definite transportation with easy access to the locations.To cut graduate cost and quantify, mailboats from all over the country were flown to a central point or hub at night where traffic lanes were comparatively empty. Packages were sorted, redistributed at the hub and again flown to their ultimate destination to reach them close day.Even with the limitations such as adherence to the skyline regulations, ground clearance and administr ative issues, FedEx managed to make this a turning point towards their success. (Please refer annexure page for more details)Value added go such as treble store, scanners given to drivers to capture sheaf information and overnight distribution system were external factors contributed to the ripening in FedEx business.Just-in- epoch inventory direction created demand for speed and accuracy in transportation and shortened the lead time for companiesIntegration amongst FedEx and customers blocked them from going to competitors.How it helped FedExMichael Porters Value twineCUsersvirginiaDocumentsMBAMBA-Second yearGlobal Corporate strategyVIRGI FED EXvalue bowed stringed instrument.pngHow FedEx reduced cost by applying value set up (refer document New FedEx and dragon)Primary activitiesOutbound LogisticsProcessing time at the local offices was reduced since they did not need to fill forms and attend to customers individually. In FedExs point of come across reducing demonstra teing time means reducing labour costs. FedEx has achieved tremendous savings by strategical implementation of IT. Tools such as just-in-time manufacturing and total quality management are adopted for inventory train and enhancing of service quality.Marketing and Sales breeding on customers preferences, geographical data and traffic volumes of each meshing page collected automatically. These data could be used for strategic initiatives, planning and marketing. World Wide blade is a low cost media for advertising in the orbicular market and discovers potential markets. Packaging in a timely fashion was one of the marketing tools they used.Customer ServiceFedEx discovered that its advanced IT systems contract a mother lode of information about the profitability of each lymph gland. They knew which customers create how much profit, which in reality end up costing FedEx.Secondary activitiesProcurementStrategic plans are developed with suppliers to support the process and develop ment of new function. Transactions are managed through Web to achieve greater efficiency. besides they are streamlined through Electronic Data Interchange. FedEx had agreed upon better dealings with the fuel with suppliers.Human ResourcesFedEx ordain strive to develop mutually rewarding relationships with its employees, partners and suppliers. They recruited overcompensate people and top positions were filled with competent managers. Further incentives, profit shares and internal promotions are given to keep the staff moral high in order to make their processes less costly and effective. They motivated the front liners conducted a fair treatment program to all staff.Information TechnologyWhen customers log onto the FedEx system they could place orders to pick up and pay using the conviction cards which made greater convenience. Moving the process to the internet reshaped the transportation industry. In applying systems like Cosmos, PowerShip, EDI and Netscape structured go su pplied to customers are enormous.1 (c) Virtual Information infrastructure at FedEx CorporationHow it helpedFedEx provides its customers supply chain solution from the point of raw materials to end of the product life cycle. Each stage of the supply chain has IT exertions and systems that have been implemented by FedEx in order to fulfill efficient customer solutions.Some of the systems were transportation management solutions, order processing and related distribution centre operations, fulfillment, just-in-time inventory control, purchasing and production which provide peace of mind throughout the entire distribution cycle.COSMOS is a customer oriented services and management operating system. This Centralized data processor system kept track of all packages handled by the company. This was made possible by placing a band-code on each point of pickup making greater dependableness to its customers. Further data package movement, pickup, invoicing and delivering data to central d ata base.PowerShip Features such as Label printing, on-line(a) packaging pickup request, package tracing and stored frequently used addresses of just about active customers.EDI and Internet This allowed companies to bring in one-to-one relationship with customers was the perfect scenario for manufactures. They could match supply and demand without wastage.Agreement with Nescape to adopt their software as the primary technology for accessing its corporate intranet sites. Advantages of the Nescape are mentioned below.Customers would build co-ordinated websites using FedEx applicationFree down load from fedex.com which incorporated a link enabling them to track packages directly from their own site.Enhancement to package-tracking service. Information with regard to 25 shipments can be checked simultaneously and forward same to three e-mail recipients. Some countries are able to access information in their native language.FedEx claimed to have the largest on-line client server net work in the world that operated in real timeWeb found application 1994 (write)FedEx can reach customers in other countries more easily through internet. This will further expand operations at FedEx in the planetary market.A creative alliance with marketplace will allow FedEx to tap into the growing e-commerce market for consumers. Web surfers link different companies web sites, where they can order a variety of products and services.IT infrastructure will support supply chain operations. The FedEx website was launched in 1994 and included a package tracking application and allowed customers to generate their own unique bar-coded shipping labels. The web site provided speedy and customer focused features.OUTBOUND TRANSPORTATION AND DELIVERYORDERMANAGEMENTMANUFACTURINGINBOUND(PURCHASING)SUPPLIERStages of the Supply kitchen stoveFedEx musical arrangements ApplicationsGIVSIMIMultishipCustom Clearance systemTransportation Optimization systemGlobal Inventory visibility System (GIVS) Inventory Management Systems (IMI)GIVSIMIWarehouse management systems (WMS)Transport management systems (TMS)Customer clearance system green light resource planningERPIMI (including invoicing)The FedEx commingled Logistics SolutionFEDEX SOLUTIONS FOR THE ENTIRE SUPPLY CHAINStrategy Bob de wit Ron Meyer (Page 653)(Please refer annexure for detailed explanation of the systems and application of supply chain at FedEx)EvaluationFedEx has developed many innovative services that would not be possible without its strong IT capability. IT expansion at FedEx effectively created a barrier to new entrants in this industry.Even though FedExs coverage to supply chain through integrated systems by tightening, improving and synchronizing the various parts of the supply chain, it was no longer a emulous advantage but a militant imperative as the customers saw the benefits of squeezing time and inventory out of the system.The virtual information infrastructure at FedEx immensely supported to mai ntain the market leadership in the past years. They have forecasted the future in a positive direction and implemented correct decision by funding on IT development. Throughout the years this has helped FedEx to reduce cost, minimize process time and become customer focused and ultimately increased the profit margins which helped in a growth in global GDP and International trade.Even though FedEx has highly invested on IT for upgrading on a occasional basis, technical issues such backup systems, virus protection, handling issues with web hacking have been successfully addressed in order to remain in the market leader position.BRANDING AND BUSINESS STRUCTURE UP UNTIL 19 JANUARY 2000Mergers and acquisitions (MA)Introduction2.0.1. MergersJoining of two or more companies to form a single legal entity can be defined as a merger. The assets of the smaller company are merged in to the larger. per centum holders of the smaller company (or the buttocks company) will be bought over by the a cquiring company.In ecumenic mergers take place in a friendly setting. Executives of the respective companies participate in a cod diligence process to ensure a successful combination of all areas of business.2.0.2. AcquisitionsPurchasing of more than 50% of voting shares of a company by another company is an acquisition. Both companies can continue as separate legal entities. Acquiring company will be the parent company (or holding company) and the target company will be the subsidiary.Acquisition whitethorn take place through a violent takeover by purchasing the majority of shares of the company in the open market.(SourceA Simple M Model for all Seasons by Bu Sam Rovit, David Harding, and Catherine Lemire)2.0.3. Mergers and acquisitions strategiesMergers and Acquisitions are a common strategy in Global Logistics and Transportation industry by which companies in the industry expand geographically and increase the reach and access.2.1 Benefits and limitations of MA strategies in the Global Transportation and Logistics industry2.1.1. BenefitsObtain maximum value and create sustainable competitive advantageIncrease outputObtain new technologies, expertise and provide entire new productsbetter focus on core skills of the firmImprovements in use of the brand namesIncreased consumer upbeat and overall cost reduction from the joint consumption of complementary productsFastest method to achieve growthCreating a broad and deep product portfolioStrength in storage sales and servicesIntegrate technologies and practices across entire product line such as strong capabilities in data archiving, manage products to better address the regulatory compliance and market opportunityCapability to integrate disparate business processes and information into one common frameworkQuicker and cheaper growth of the organization, synergies of market size and distribution channels, easier pay ( tax income and cost synergies), economies of scale, gaining customers, cost efficiencies, i mproved infrastructure.Achieving maximum benefit of synergies by integrationReduction in dealings cost and transportation costFulfilling increasing / complex customers demandsRedesigning of the global supply chainObtain overplus capacity in terms of production and warehousing facilitiesMergers and acquisitions improve market efficiency by capturing synergies between firms.May help in re lamentable inefficient management or to respond to economic shocks2.1.2. LimitationsMost of the studies have shown that mergers have failure rates of more than 50 percentAcquisitions are complex and difficult to coif and manage successfully.The companies should have the ability to integrate the technical know-how and the resources to bring that know-how to market products.In mergers and acquisitions there may be a significant impact on corporate culture. The purchasing company sets the quality bar high for the people in the company to be acquired. The companies cultural norms will be will be reinf orced by the innovation, collaboration and integrity and customer focus of those employees. Generally there are clashes in such a situation.Though companies expect the synergies from take overs, it is found that acquiring companies lose about 10% of their value during the first five years after mergers.2.2. How FedEx Corporation managed the acquisition of tone Systems in 1998- whether it is a success or failureFedEx Acquisition History up to year 2000YEARACQUISITIONOVERVIEW1984Gelco present InternationalFedEx dramatically expands its presence outside of the U.S. with the acquisition of Gelco educe, a world abundant courier with service to 84 countries.1989Tiger International Inc.With the integration of the Flying Tiger Line, FedEx becomes the worlds largest full-service, all- incumbrance airline. The acquisition includes routes to 21 countries, a fleet of cargo aircraft including Boeing 747s, facilities throughout the world and Flying Tigers expertise in international airfreight. 1998Caliber System Inc.FedEx creates FDX Corporation (later renamed FedEx Corporation) and grows its portfolio of services with the addition of ground small-package carrier RPS (now FedEx Ground), Western U.S. less-than-truckload carrier Viking Freight (now part of FedEx Freight), Caliber Logistics (now FedEx Supply Chain Services), Caliber Technology (now part of FedEx Services) and Roberts Express (now FedEx Custom Critical).2000Tower Group International Inc.World duty Ltd.FedEx Corp. creates FedEx Trade Networks. Today, FedEx Trade Networks is one of the largest-volume customs entry filers in North America and provides FedEx customers with end-to-end transportation and customs clearance solutions around the world.acquisitions history.cfm.htm2.2.1 Caliber SystemsFedEx acquired caliber systems in 1998 and five separate subsidiary companies were organize such as Federal Express, RPS (Roadway package Systems), Robert express, Viking freight and FDX Logistics.They focused mainly on t he small package business. Each subsidiary was managed separately and was responsible for its own accounts. Caliber had developed its expertise in moving raw materials, plates of steel bars and managed in work-in-progress. It manufactured cars and fork-lift trucks. After acquisition FedEx started offering other services besides express shipping.2.2.1.1. Federal ExpressFederal Express was the world leader in global express distribution. They offered 24 to 48 hours speech. Also was the leader in overnight package delivery business. Goods shipped ranged from flowers to lobsters to computer components.2.2.1.2. RPSRPS was the second largest ground small package delivery of business-to-business. Also it was a low cost, non-union, technology-savvy company. Shipments were done in one to three days. RPS had the lowest cost models in the transportation industry. With the take-over by FedEx, RPS moved on to business-to-consumer delivery service and took advantage of electronic commerce. They o perated through independent truckers who are contractors and specialized in delivering small packages between businesses at rates lower than UPS.2.2.1.3. Viking FreightThis was the first less-than-truck-load freight carrier in western USA. They shipped 13,000 packages per day.2.2.1.4. Robert ExpressThis was the worlds leading surface-expedited carrier for non-stop, time critical and special-handling shipments. This was the smallest company within the FedEx group. Robert Express Exclusively allowed customers greater control at a price. They had a limited number of aircrafts but they had to pay for use and crew time.2.2.1.5. Caliber LogisticsCaliber logistics was the pioneer in providing customized, integrated logistics and warehousing solutions worldwide. The acquisition of caliber brought over the-road transportation and warehousing capabilities. Caliber Logistics was renamed as FDX Logistics.2.3 Merging of Caliber Logistics and FLECNew company was FedEx Logistics brought together a ll splintered operations of logistics in all the subsidiaries, streamlined costs and presented one menu of logistic services offered to clients. They aligned R D of systems upon common, agreed platform.2.4. HOW FEDEX MANAGED THE ACQUISITION OF CALIBER SYSTEMS?Acquisition contributed to reinforce FedEx commitment to become more than just a delivery company. With the acquisition, company image was transformed to a holding company. Accordingly company changed its name to FedEx Corporation.FedEx managed the subsidiaries by operating independently, each company focused exclusively on delivering the best service for its specific market. They competed collectively. on a lower floor the FedEx banner they offered entirely different services, different customer terms and different sales procedures. Usage of IT resources spread among the group. FedEx introduced a one-stop shopping as solution for all levels of supply chain. This was the ultimate goal of FedEx in order to bring the subsidiari es closer together to create synergy.FedEx brand name had been inculcated in the peoples minds throughout the years. This strong global brand name and the brand image created among the entire world from the inception had sufficient market for FedEx to operate even after acquisition. Operating under the FedEx banner created customer confidence although the companies acquired were operating in their own names.Acquisition improved FedExs non-express delivery capabilities and brought in other new businesses to the company.When UPS had the advantage of promoting just one brand, UPS was to make do the entire company and the services it offered.Acquisition of Caliber Systems enabled FedEx to match UPS in offering a wide variety of delivery options. But, UPSs extensive network for making door-to-door deliveries was far ahead of FedEx. Business at UPS was slightly affected after the acquisition of Caliber Systems by FedEx.Further the strategies adopted by the FedEx management such as enhanc ing business capabilities though IT and building up strong relationships regularly with clients and communication with the global market, created competitive advantage at the time of acquisition of the Caliber Systems.Hence acquisition of the Caliber Systems by FedEx was a success.3.1 DEVELOPMENT OF INTERNET MARKET AND E-TAILINGhttp//media.techtarget.com/searchCIO/images/spacer.gifhttp//media.techtarget.com/searchCIO/images/spacer.gifInternet is the extensive, worldwide computer network available to the public. It is matching to computer networks that are connected by internetworking.E-tailing (electronic retailing) means the selling of retail goods via Internet. E-tailing done mostly with business-to-consumer (B-to-C) transactions.E-tailing began to work for some major corporations and smaller entrepreneurs were started around year 1997.(Source http//searchcio.techtarget.com/sDefinition/0,,sid182_gci212079,00.html)3.2. How internet/e-tailing had been applied to the transportation and logistics industry?At the time when the web based purchases were growing, UPS one of FedEx competitors were ahead of them in terms of ground transport. FedEx identified the comfortable opportunities arising with the growth in internet based purchases. FedEx bought over Caliber System in January 1999 and the aim was to provoke the reach of business to business coverage while catering to increasing demand from internet based buying.FedEx anticipated growth in ecommerce and planned to start FedEx Home Delivery to co-op specializing in business-to-consumer e-tailing. At that time, in 1997 FedEx was handling shipping for only 10% of all goods sold online, compared to the 55% handled by UPS. In 1999 FedEx signed up with CISCO with mission of critical one stop online source for sales tools and client information.Web portals such as Yahoo had been offering store-building services for some time, as did all other Internet service providers. By that time UPS, their main competitor was ha d been offering the same services since 1997 through vendors Harbinger Corp. and IBM Corp. FedEx started to offer its ecommerce Builder Internet platform free to clients later, with e-commerce services.3.3. Non-financial performance at FedEx in the context of use of Internet market and e-TailingInternet was the basis for competition. It opened opportunities in logistics management as most businesses started integration with customer supply chains using the internet. FedEx had the right business model to take advantage of this opportunity.Growth in e-tailing needed assistance of express transportation to fulfill the customer expectations and FedEx already was a giant in the field achieved advantage over the situation.FedEx was the leader in the market and enjoyed a strong brand image in the transport and logistics industry. Even though they identified and anticipated enormous opportunities which came up with the development in e-tailing, UPS was the leader in ground transportation. FedEx made a smart move by buying over Caliber Logistics and later integrating all systems and a powerful technical computer architecture that enabled internet commerce usage.The competition became fierce with the as the major transportation companies were betting big on technology. Even though FedEx were investing millions on IT and introduced internet in 1994, it became the industry norm rather than a competitive advantage.FedEx developed all its software in-house where competitors like UPS formed strategic alliances with Open Market Inc., and worked with IBM. hotshot of main reasons for FedExs successful performance financially and non-financially was that they identify anticipate the changes and adopt themselves accordingly.3.4. Financial performance at FedEx in the context of Internet market and e-tailingOnline holiday shopping, which accounted for $650 million in 1997, grew to rapidly $4 cardinal over the holiday season of 1999.By the end of year 2000, more than 20,000 client Web sites were link to the FedEx Marketplace, and the ecommerce Builder unit had secured around 2,000 customers. Despite the analysts concerns their earnings totaled $688 million on sales of $18 billion.The expected growth associated with e-tailing was USD 7.0 billion in 2000 and USD 327 billion in business-to- business presented enormous opportunities for FedEx.(Source http//ecommerce.hostip.info/pages/444/Fedex-Corp-MOVE-INTERNET.html)Annual declare of 1999 reflects that the growth in revenue as follows.YearGrowth in Revenue19995.67%199811.48%199711.91%19968.5%199513.76%FedExs average revenue growth is around 10%. In year 1999 this has reduced to 5.67% which they claim as a solvent of the high fuel price. FedEx has invsted in IT and wasMarket share growthREFER ANNUAL REPORTS DATA