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"FedEx is a supply chain company. We are very cognizant of trying to make our customers' supply chain more efficient. But, at the same time, we became very focused on our internal supply chain."1

- Edith Kelly-Green, Vice President and Chief Sourcing Officer, FedEx Corporation.

"FedEx's Supply Chain Services represents the best of the best and the organization has set an example ... for other companies to follow."2

- Bo Anderson, Executive in Charge of Worldwide Purchasing, GM.

Introduction

In April 2003, GM3 selected FedEx Supply Chain Services (FSCS), a group company of FedEx Corporation4 (FedEx) as the 'Supplier of the Year'5 for offering excellent logistics and supply chain management (SCM) services. This was the fifth consecutive year FSCS received this distinction.

Commenting on the occasion, Bo Anderson, Vice President, GM Worldwide Purchasing Production Control & Logistics said, "FSCS performance and contributions have been critical in helping GM to become the industry's low-cost producer of high-quality vehicles. They serve as a role model for other suppliers."6


In August 2002, Logistics Management rated FSCS as the best third party logistics provider in the US (Refer Exhibit I).

FedEx started offering SCM services to its customers on a very small scale in 1974. With increasing demand for services such as inventory and warehouse management, in 1989 FedEx established FedEx Logistics Services, a group company specifically focusing on managing the supply chain of corporate customers. Soon, FedEx started building upon its technology intensive SCM service offerings.

By offering world-class SCM services and solving the customers' supply chain problems by customizing its SCM solution according to their specific requirements, FedEx earned significant appreciation from all customers.

FedEx: The Supply Chain Management Solutions Provider- Next Page>>


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CASESTUDY

FEDERALEXPRESS

Thefirsttimeyoutolerateanythingotherthan

a

movementtoward100percentcustomersatisfaction,you'reontheroadtomediocrity.

FrederickW.Smith,FederalExpresschairmanandchiefexecutiveofficer

FederalExpressCorporation(FedEx)wasfoundedin1973byFrederickW.Smith.Aformermilitarypilotwithavisiontocreatetheair-expressindustry,Smithstartedhiscompanywith14smallplanes.Some17yearslater,FedExhadafleetof419planesdeliveringpackagesallovertheworld.Attheendoffiscal-year

(FY)

1990,thecompanyemployed90,000people,processed1.5millionshipmentsdaily,andtotaled$7billioninrevenues.Since1973,FedExhadreceived195awards,butthemostprestigiouswasreceivedonDecember13,1990,whenSmithacceptedtheMalcolmBaldrigeNationalQualityAward(MBNQA)fromthePresidentoftheUnitedStates,GeorgeBush.FederalExpresswasthefirstcompanytowinintheservicecategorysincetheawardwasestablishedin1988.In1990,theU.S.DepartmentofCommercereceived160,000requestsforMBNOAapplications,butonly97companiescompletedtherigorousapplicationprocess.(SeeExhibit1forMBNQAapplicationheadings.)..AsPresidentBushleftthestagefollowingthepresentationoftheaward,SmithcaughthisattentionandpledgedhissupportforthepotentialPersianGulfconflictwithIraq.(FedExflewpersonnelandsuppliesintotheGulf.)TheIraqsituationposedaparticularchallengeforFedEx,becauseoilpriceshadmorethandoubledbetweenAugustandDecember1990.Unlikethecommercialairlines,FedExdidnotvaryitsshippingratesonaregularbasis.Inaddition,overnight-deliverygrowthrateswereslowing,whichmad~competitiveactivitiesfromEmery,theU.S.PostalService'sexpressdivision,andAirbornemorethreateningthaninthepast.Costwasbecomingabiggerfactorintheovernightpurchasedecisionasqualityeffortsimprovedserviceratesacrosstheindustry.Afterthepresentation,Smithwalkedoffstageandjoinedtheother1990MBNOAawardwin-ners(IBMCorporation,WallaceCompany,andtheCadillacDivisionofGeneralMotors)ataround-tablediscussionaboutthechallengesfacingacompanythatfocusesonquality.ThefirstquestionreferredtothechalJengesfacingFedEx.

USAToday

asked,"Intougheconomictimes,isn'tittoocostlytoimplementquality-improvementprogramsthatrequireretrainingtheworkforce?"AsSmith'squotationatthe.beginningofthiscasesuggests,theroadtotheMBNQAwinner'scirclehasarrowspolntedoneway.CompanyPhilosophy

Customersatisfactionbeginswithemployeesatisfaction.Puttingpeoplefirstineveryaction,everyplanningdecision,everybusinessdecisionrequiresatremendouscommitmentfromeverymanagerandeveryemployeeinthecompany.

James

L.

Barksdale,ChiefOperatingOfficer

OM-110

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