Technology at FedEx

Technology at fedex

Introduction

With the breakneck speed of technology being adopted by businesses in all fields of expertise, the need to keep up with the most up-to-date technological systems is top priority for organizations who want to gain competitive advantage over rivals in the industry. The part that technology plays in business has grown in importance within the confines of contemporary organizations from an obscure back-room tool to a dominating feature of the whole organization. Around the globe starting early in the twentieth century, most organizations are set in the context of a market economy. To survive, most organizations demonstrated that they can serve customers’ needs better than others.

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Ultimately the price of failure to compete with other organizations with respect to technology is stagnation and bankruptcy. If customers can obtain similar goods and services at a better price, to a better specification or more conveniently elsewhere, then the organization’s supplies of cash will dry up and it will ultimately cease to exist. Thus the need to achieve competitive advantage through the means of employing useful technology within the business, a firm characteristic that most customers are setting as standard in choosing who will they give their loyalty to. Taking the case of FedEx as an example of a modern business that has tapped into the worthwhile investment of technology for their business, this paper is an analysis of said organization and how technology has contributed to its progress.

Brief Background

Federal Express, the world's leading express delivery organization, is the flagship business of FedEx Corporation based on Memphis, a holding company controlled to proffer an increasing customer base a solitary resource for a diversity of delivery services. It has fifty six thousand drop-off venues, six hundred forty aircrafts, and almost fifty four thousand motor vehicles bringing more than 3,000,000 packages to two hundred ten businesses and areas all through the working day (Birla, 2005). The business concept was the brainchild of Frederick W. Smith, organizer, CEO and chairman. Birla (2005) related that the business concept was originally written as a Yale term paper, it survived his years with the marines in Vietnam and was launched in 1973 in his home town of Memphis. The idea was for a new freight distribution system for a new economy. Air freight was slow, unreliable, and treated as an add-on to passenger service. Smith saw that there was a giant need for an efficient service to move high-priority, time-sensitive packages and documents. Fulfilling that need meant building a totally integrated logistics network, differentiated both from the low end of air freight and from electronic facsimile transmission.

FedEx is the foremost corporation in U.S. business history to spot an unidentified need in the market and, then, to grow a business from zero to over a billion dollars in annual sales through internal growth alone, in less than a decade. Under their CEO’s headship, the company keeps on innovating and building new prospects for growth by way of strategic associations harmonizing the core business. Since its foundation, Federal Express had altered the business from an express delivery venture to a logistics and supply chain management organization which caters to customers worldwide.

FedEx and Technology: Partners in Business

Having more than thirty years of know-how in making available services that are logistics in nature to persons and fellow companies, Federal Express has the advantage of steadfast expertise in the business of delivery. They altered the environment of delivery business by thinking of new ways how outbound logistics can be done and how human resources can best be managed in order to initiate the overnight business of delivering things, which created value in the procedure. Through the years, the business had also devoted a large amount of its financial resources in information technology systems, endowing them with a commanding technical design brought out the prospective of pioneering in doing business over the Internet.

They likewise spend considerable resources in advertising campaigns designed to make the firm more known than it already is. On the trail of customer automation, they have placed a few thousand machines in the customers' space. The machine combines a computer, scale, keyboard, scanner, screen, and phone into the space of a breadbox. In user? friendly manner, the machine, among other things, automatically fills out the invoice and shipping label, updates an internal report, rates the package cost, sorts for charge-back to specific departments, and will track and trace each package upon request. The machine is so cost efficient that FedEx can put it into the hands of customers who process only five packages per day  (Hitt, Ireland & Hoskisson, 2003).

Certain that the clientele would give importance not only on the delivery made overnight but likewise on the capability to track their progress, Federal Express built up a computerized tracking system unique to the needs of the organization, and Birla (2005) related that they called it COSMOS, or Customer Oriented Services and Management Operating System. This introduced the use of the computer technology to the industry which they play in formerly unprecedented methods and eternally changed the competitive environment within the industry. FedEx’s tracking system is perhaps the most sophisticated example of managing space. Imagine being able to locate instantly every one of a million packages, anywhere in the system. They constantly check pairs of an increasing number of scan points to make certain that packages aren't missing or misdirected. The status of packages leaving the Hub for a specific destination, for example, is reconciled with those entering that destination from the Hub. This watches for thefts and losses, and "catches the smoking gun while it is still smoking."

In terms of both service and systems, FedEx consciously manages time, technology and space as key resources with which to serve customers, improve efficiency, and out-do competition. Having redefined the context to create a real-time organization, FedEx has turned to information-processing technology as a key weapon in their skirmishes (it is not truly a war) with bureaucracy. PRISM, for example, is an automated personnel system designed to eliminate paperwork and to make changes in real time. Anyone with the proper identification code can enter the system and make major changes, such as salary and bonus increases, electronically. Managers concur that the system has been a success, and 90 percent of the paperwork has been eliminated.

Another example where technology is evident is in shipping and billing. FedEx created a (2) × (2) of ("Where I Ship It") × ("Where I Pay It"), each being either centralized or distributed. For each of the four segments (e.g., centralized shipping + distributed billing) they develop different systems, and the systems then customize to the client's needs. Their ORBIT system produces a quarter-million billings every twenty-four hours. There are three thousand four hundred FedEx meters on the shipping docks of their largest customers, handling about one hundred thousand packages per night (Leondes, 2005). When the FedEx meter scans the bar code on the package, the information is locked into both their system and the customer's system simultaneously. The customer tracks shipping and billing their way, and FedEx tracks the same packages its way, at the same time. Each uses its own customized system which, at the same time, is integrated with the other. The focus is simultaneously on the customers' needs, the provider's needs, and the relationship between them.

FedEx became conscious that its clientele don’t just want the basic services, meaning the parcel being delivered securely to their particular addresses in a particular time of the day: clients also need to have the ability to discover precisely the progress of the parcel delivery. From then on, the business strove to not simply be a delivery service to its clientele: it now sells assurance that the parcel has been transported securely to its target destination. Consequently, FedEx placed its system of tracking parcels on to the Internet, in order that all customers can trace precisely where in the globe their parcel is. Through making this information available to the clientele, the business is able to provide their clients with the assurance that their parcels have reach their destination. A novel utilization of information has once more showed the means to achieve competitive advantage. Nor is it difficult to imagine additional services that could be provided when competitors started to provide a similar service. Once again, information does not just give a one-off gain but sustainable benefits.

Their website, which was launched prior to many other Internet businesses in late 1994, gained enthusiastic appraisals since it allowed the clients to track their parcels in the comfort of their own homes. Four years later, it was in receipt of a little less than 2 million requests for tracking monthly, cutting back on the company’s cost of managing such requests by way of phone calls (Hitt, Ireland and Hoskisson, 2003). As a Web pioneer in customer service, Federal Express also took part in a noteworthy role in aiding the clients in moving their business ventures online. With the firm’s well-built brand name and lead in technology, the corporation was positioned to obtain a bigger share of the delivery industry than its competitors United Parcel Services (UPS) and Airborne Freight (ABF). Today two-thirds of FedEx’s customers use the Internet or their own private computer networks to arrange their shipping and to track packages (Leondes, 2005). The end result is more than a revolution in logistics or a way for companies to reduce inventory costs, important as all that is.

The shortening of inventory cycles means that manufacturers can better serve customers' rapidly changing needs and preferences. It reverses the trend, prevalent just a decade or so ago, whereby manufacturers got progressively farther away from customers because of all the intermediaries between them, and because of the time lag involved in updating the portfolio of products the customers required. FedEx's e-commerce strategy formed an inherent part of its general strategy in doing business. Still prior to it expected to generate more volume, the company’s strategy in e-commerce aimed to generate firm savings. Toward the end of the decade, some analysts were monitoring the company as a "closet Internet stock," even if many considered electronic commerce prospects highly inflated and insignificant in the short term. Still, value investors bought into FedEx early because of its embrace of electronic commerce; they anticipated the strategy to pay off in long term.

The goal of getting closer to customers is becoming more common. Smith has made it easier for retail and corporate customers to transport everything from letters to equipment -- FedEx handles over 3.2 million daily shipments, utilizing some six hundred aircraft and forty thousand trucks -- faster, more reliably and cheaper (Hitt, Ireland and Hoskisson, 2003). Federal Express was the foremost transportation business to provide software to its corporate customers so that they could fill out their own shipping forms and then later track shipments automatically with a single number. Leondes (2005) noted that with the mid-1996 commencement of FedEx interNetShip, the business’ clients can organize for deliveries via the Internet by way of signing an electronic air bill and producing the client’s own label. In addition to permitting customers to print shipping labels of their own, the program let clients correspond with beneficiaries through emailing and the utilization of a software package that allowed fellow companies to market their goods over the Web which would then be transported by Federal Express.

Conclusion

In coming up with a technology strategy, FedEx makes sure that the technology can compel business revolution, all the while enabling change. The evidence that technology can transform business has been amply documented. Being the impetus that brings about change, technological strategy of the corporation develops into the firm strategy itself, presenting new and aggressively distinguishing systems of carrying out business. Also, Being the impetus that brings about change, technology within FedEx creates and exploits untapped markets, connects clients more closely to the company, and defines new customs of operational superiority for the delivery industry. A case in point of a business that has utilized technology as an impetus for change is the company under analysis, which has instituted the operational process standards through which each and every one of the probable rivals must overcome even considering the rivalry in the industry.

With regard to their organization, FedEx is not atypical, and it is better than most corporations. What is seen is that technology made possible a high-speed integrated logistics system for a consumer business. FedEx put to work the world's fastest and built a real-time business. Doing so was an act of true creation, what the jargon would call proactive. The whole nature of the business is being changed by technology, so will its entire structure. The organization is well run by conventional standards; yet when it comes to applying the new dimensions to technology, they are well ahead of the game. At its most basic, the management of technology in the FedEx organization has been very vital to its growth.

Summary

This paper discussed the importance and benefits of technology to contemporary business, particularly in the Federal Express organization. This document showed that technology played a highly visible part in taking FedEx where it is today. As a company that does not fear the fast advance of technology but rather embrace it, the business has pioneered industry ventures into the technological arena, making it always ahead of the pack. FedEx has shown the many benefits that can be procured from implementing technology wisely within an organization, a strategy that many businesses, even across sectors have emulated within the confines of their own organizations.

References

1. Birla, M. (2005). FedEx Delivers: How the World’s Leading Shipping Company Keeps Innovating. Hoboken, New Jersey: Wiley & Sons, Inc.
2. Hitt, M., Ireland, R. & Hoskisson, R. (2003). Strategic Management. : Competitiveness
   and Globalization. (5th Edn.). Ohio: Southwestern Publishing.
3. Leondes, C. (2005). Intelligent Knowledge-Based Systems: Business and Technology in the New Millennium. Boston: Kluwer Academic Publishers.

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