Cecille Crisostomo

Lu Li
Owen Mathys
Objective(FedEx):
The purpose of the business paper is to address how Information System is
incorporated in FedEx’s business process. FedEx is known to be one of the largest
leaders in the global transportation sector and provides an array of services such as
overnight delivery, ground delivery, customer brokerage, supply chain management and
many more. Today, FedEx uses one of the world's largest computer and
telecommunications networks. The company's couriers operate SuperTracker hand-held
computers (HHC), to record the transit of shipments through the FedEx integrated
network. This has been key to the company’s success, in which it continues to keep
customers informed about package whereabouts and keeps employees up to date on
information they need to speed up package and delivery. Below is the outline of our final
Business Paper:
I. Introduction
A. Company Background: FedEx
1. Fred Smith, founder of FedEx, had concepts that later culminated
into the basis for Federal Express [1]
• The driving concept of speed and reliability were to
become the hallmark of the air express industry that
Smith pioneered [2]
2. As early as 1978, just five years after it began operations, the
company pioneered the first automated customer service center [3]
3. Fedex is organized into operating units, each of which has its own
version of the world mark [11]
• FedEx Express
• FedEx Ground
• FedEx Freight
• FedEx Trade Networks
• FedEx Supply Chain Services
• FedEx Corporate Services
• FedEx Customer Information Services
• FedEx Office

B. Industry Profile: Air Delivery and Freight Services

1. Porter's theoretical framework allows us to determine the overall
profitability and sustainability within the industry
2. Fedex’s Competitors
• Primary: UPS and USPS; Others: TNT, DHL Express, and
Aramex [11]
3. In 2004, FedEx acquired Kinko's and renamed it the FedEx Kinko's,
which is the office and document-based retail branch of the
 corporation. In June 2008, FedEx Kinko's was rebranded as FedEx
Office (New Industry). [9]
4. Possible New Entrants into the logistic services:
• FedEx has successfully differentiated its product from
other offerings in the market, with advertising, technology
improvements and its desire to achieve full customer
satisfaction. [4]
• For a new entrant to overcome these obstacles they would
have to spend dearly. An example of this is the 30 million
dollar ad campaign by UPS aimed at competing with FedEx
in the overnight delivery market. A second example of a
barrier to entry in the overnight delivery market relates to
capital requirements. To purchase even half of the airplanes
flown by FedEx would require a substantial cash outlay[4]
5. FedEx Corporation is the 21st largest campaign contributor in the United
States according to the Center of Responsive Politics. Those strong ties with the
Capitol Hill help FedEx to gain access to international trade and special tax cut
rebates. [10]

C. Leadership
1. Key Leader: Fredrick Smith- Chairman, President, and CEO of the
FedEx Corp.
• Attended Yale University; wrote a paper on the need for
reliable overnight delivery in a computerized information
age.
2. The decisions made by Smith relating to the deployment of IT
include centering FedEx as an Information Business:
• Origin, present whereabouts, destination, estimated time
of arrival, price and shipment cost of his cargo was as
important as its prompt delivery [12]
• In the 1990s, the company installed computer terminals
in the offices of over 100,000 customers and gave
proprietary software to more than half a million more,
enabling shippers to label their own packages. [12]
• Today, more FedEx customers print their own labels
directly from the FedEx web site. FedEx receives electronic
notification to pick up the cargo, then ships and delivers.
[12]
2. Opportunities that FedEx identified that helped create a successful
company:
• In 1997, Smith acquired the $2.7 billion Caliber System,
whose trucking subsidiary RPS ranked second in ground
shipments, exceeded only by UPS. The RPS fleet of 13,500
trucks increased FedEx's profit margin, because ground
fleets are cheaper to operate than airplanes. [12]
 • In 2001, FedEx made an unprecedented deal with the
USPS, contracting to transport large mail shipments for the
Post Office, while installing FedEx drop boxes in U.S. Post
Offices. Three years after, FedEx also took on international
express shipments for the Post Office. [12]
• Smith believes that fair treatment instills company loyalty,
and that company loyalty always pays off at time of crisis.
[12]
II. BODY (LOGISTICS)
A. Information Technology (IT)
1. FedEx used IT to support its business process and
competitive strategies
 FedEx was the leader in automating the customer service center
process [3]
 Tracking systems were created to keep packages in
route, on time and accounted for [3]
 Focuses technology on improving the customer
experience then to merely remain competitive [3]
 Developed technologies that followed the importance of
customer satisfaction: "People-Service-Profit" [3]
 On request of the U.S. government, FedEx was able to
create an online Tariff/Customs database
 FedEx was the first to:
 Introduce an integrated technology network in
transportation [13]
 Equip couriers with hand-held microcomputers and optic
scanners used to track packages [13]
 Launch Point-of-Sale computer terminals to allow
customers to process shipments (10 years before the
Internet opened to commercial use)[13]
 Develop functional online online customer services, such
as shipment preparation and package tracking on the
web. [13]
3. Technologies FedEx uses:
 Hand held computers developed for recording the transit
of shipments along the FedEx integrated network [3]
 COSMOS® Real-time package tracking
 Command & Control satellite based system that ensures
the fastest, safest, surest routes [3]
 APEC Tariff Database, May 1997
 SenseAware- ground breaking sensor based logistics
service [5]
4. FedEx’s success was attributed to its use of IT
• FedEx would not exist if it weren't for its adoption of IT
 • It has become a leader in using IT to improve customer
service, delivery times, and to establish a competitive
outlook on the industry [3]
o It is used both to enhance their services and customer satisfaction as well
as make an efficient profitable business

B. Market and Financial Performance

1. FedEx Profits [7]:
 As of year 2010, FedEx Corporation had a net revenue of
$35,497 million.
 From 2006 to 2009, the revenue trend for FedEx
Corporation increased steadily.
 From 2006 to 2009, FedEx's revenue increase from
$29,363 million in 2006 to $37,953 million in 2009.
 Yet, in 2010, FedEx experienced a $2,456 million loss
from the previous year.
 Like its net revenue, FedEx Corporation's profit enjoyed a
positive trend from 2006 to 2009.
 In 2006, the FedEx reported a profit of $1,449 million,
then it increased to $1806 million in 2007, and finally
$2,016 million in 2008.
 In 2010, FedEx recorded a profit of $98 million, a drastic
drop from the $1,125 million in 2009.
2. FedEx vs Competitors:
 FedEx Corporation is being outperformed by its main
competitors such as UPS and USPS.
 The most recent record showed that FedEx Corporation
has a market capitalization of $29.75 billion comparing to
UPS' $72.46 billion.[8]
 Both UPS and USPS have outshined FedEx's revenue with
revenues stated at $48.5 billion and $68.09 billion
respectively.[8]
 However, FedEx has being operating on a positive net
income of $1.32 billion while USPS is operating on a loss
of -$3.47 billion.[8]
 At the same time, FedEx's gross margin of 25.1% has
exceeded UPS' 23.07% and the industry average of
18.54%.[8]
 In 2010, Yahoo! Finance ranked FedEx Corporation 6th
place by sales among transportation companies.[8]
 USPS came in first and UPS came in fourth.[8]
3. Other industry-specific measures of performance
• Each Year, FedEx invests about $1.5 billion in its
information network, constantly improving their
performance [13]
 C. Trajectory
1. FedEx continuously integrate new technology into their
business process
 SenseAware powered by FedEx will be a groundbreaking
sensor-based logistics service that pairs a multi-sensor
device with a web-based shipment monitoring and
collaboration application. SenseAware enables customers
to monitor their shipments in near real-time — with
information like temperature, location and exposure to
light — and share this information continually with their
supply chain partners. [5]
2. FedEx postured for the future
 FedEx will continue to be a role model in the future
direction of business and IT strategies because of its
ability to embrace IT-enabled technologies. FedEx’s ability
in identifying current business goals and aligning internal
processes and business groups will continue to allow
FedEx to be a competitive driving force in the global
marketplace [6]
III. CONCLUDING STATEMENTS
1. Fedex continues to strive for new way to make their business
more efficient by integrating new ideas and technological
innovations to their everyday services.

References
[1]http://about.fedex.designcdt.com/our_company/company_information/fedex_hi
story/fedex_timeline

[2]http://www.sri.com/policy/csted/reports/economics/fedex/appendixb.pdf

[3] http://fedex.com/ma/about/overview/innovation.html

[4] http://www.caseforest.com/case-study-Analyze-Ups-And-Fedex-Using-The-
Competitive-Forces.aspx

[5] http://about.fedex.designcdt.com/our_company/fedex_innovation

[6] http://www.garyclarke.com/documents/CLARKE873-3.html

[7]http://www.uspages.com/companyID78.htm
[8]http://finance.yahoo.com/q/co?s=FDX+Competitors

[9]
http://www.businessweek.com/innovate/content/jun2008/id2008069_075908.htm

[10] http://www.opensecrets.org/orgs/summary.php?
ID=D000000089&Name=FedEx+Corp

[11]
http://about.fedex.designcdt.com/our_company/company_information/fedex_histo
ry

[12]:http://www.achievement.org/autodoc/page/smi0bio-1

[13]
http://www.fedex.com/us/about/news/pressreleases/archives/pressrelease202440
058.html