The Express Transportation And Logistics Industry Commerce Essay

The persuade conveying And Logistics Industry Commerce EssayUsing examples from FedEx Corporation and your receive look for on the Global expat and Logistics Industry, critic each last(predicate)y evaluate the Strategic visual sense and visionary Leadership behind FedEx Corporation national mouth is a orbiculate stub out conveyancing and logistics community that spins customers a single offset for global shipping, logistics, and picture chain solutions. It was founded in 1973 by Frederick W. metalworker. Since its inception FedEx pi atomic number 53ered the speak actors line pains. The familiarity aire on the core art of articulate actors line and pass ond overnight delivery divine function to the customers globally. How constantly, the transformation of worryes and customers from old rescue to the smart economy forced FedEx to re specify itself from overnight delivery renovation to a unity-stop-shop for the entire logistics requirement of the credit line. The follow became the logistics servicing of process provider of leash organizations, like, General Motors.Back maroonDuring the former(a) 1960s, Frederick Smith (Smith) chanced upon an idea to start an respiratory tract courier telephoner. During this period, it was common practice to send packets as cargo on commercial carriers like Ameri goat, United or Delta Airlines. This practice had a follow of drawbacks because passenger airlines usually operated during the day date and were grounded at night. In summariseition, fr viii forwarders (the family responsible for carrying the packages from the airport to the destination address) usually did non offer interior(a) delivery. Smith felt the lease to start an airline courier comp all that would address all these problems. During his college years, he recognized that the United States was becoming a value-oriented economy and needed a reli adapted, overnight delivery service comp both(prenominal) designed to solely transport packages and documents. He wrote a Yale term idea on this idea, and received C grade. His professor thought it would never work. fortuitously for Frederick Smith, he didnt take it to heart and ended up building that party he dreamed of.Smith found investors forgeting to contribute $40 one thousand thousand, used $8 million in family money, and received bank financing. He started national Express with over $80 million, making it the largest community of its measure ever funded by venture capital.In the last 36 years, FedEx has billowed horizontally with its five subsidiaries to include FedEx Express (formerly federal Express), FedEx Ground (formerly Roadway softw ar program governance), FedEx Custom Critical (formerly Roberts Express), FedEx Logistics (formerly gauge Logistics), and Viking Freight. As a result, the FedEx family has been up to(p) to debate jointly in the express emigration and logistics industries. FedExs outline is to corroborate on sel ling and synergies for all FedEx companies, but run trading operations separately and fall out all(prenominal) companys strengths and commercializes separate. right away, services offered by FedEx include planetary express delivery, ground small-parcel delivery, less-than-truckload encumbrance delivery, and global logistics, planning chain discernment, and electronic commerce solutions. federal Express is the worlds largest package delivery company today.FedEx began its operations with the sole focus of improving customer segmentation, pricing and tincture of services for the overnight delivery market in the United States. Since then, it has gr cause to provide leading document and freight services for the entire North America and for over 212 countries abroad.federal official Express Corporation had the visionary leadership to become the first proposer in the express transportation and logistics industry leaving FedEx with one etymon of differentiation their ability to help in the swear of the entire furnish chain management.FedEx FirstsCompany dedicated to overnight package delivery tenderize next-day delivery by 10h30Offer Saturday deliveriesOffer a time authorised service for freightMoney-back guarantees and free proof of execution of instrument services that instanter extend to its worldwide ne twainrkThe companys ability to use engineering and get its stand supply of resources has made it difficult for competitors to match the companys standards for service.FedEx has been flourishing chiefly because of their technological advancements. Technology has allowed them to relieve oneself superior customer service and smell that was unparalleled by any company. No company was able to offer overnight delivery of packages with the speed and precision that federal official Express did.FedExs mannikin capability gave them a competitive advantage as they implemented new methods and engineering. They currently nurture a SuperHub with severa l regional hubs and packages be managed and track by a arrangement called COSMOS. COSMOS customers, Operations and service of processs overshadow Online System, a centralized computer dodging to manage people, packages, vehicles and weather scenarios in real time. This governing body allowed customers to know where their packages are at all propagation and was later integrated for web use, allowing customers to track packages over the meshing. In addition, the customized delivery service of the company is unique in the market. accusation StatementThe Mission Statement of FedEx is to produce superior fiscal returns for stockholders, by providing high value-added logistics, transportation and related culture services through with(predicate) rivet operational companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually honor relationships with its employees, partners and suppli ers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.This rush argumentation shows that FedEx has a clear focus. (1) The main focus is to bring returns to stockholders. (2) They will accent adding value in a higher place and beyond just their service of transporting an object from one place to an other. (3) Their focus of operations will be logistics, transportation, and related nurture. This mission statement is focused enough to keep FedEx from diversifying into for example, food harvest-tides yet shady enough to allow ontogeny in all of those areas.Philosophy federal Express holds a People-Service-Profit philosophy. The People goal is the continuous mendment of managements leadership. The Service standard is atomic number 6 percent customer satis occurrenceion. The Profit goal is a great deal like any other companys goal, and is essential to semipermanent viability. This philosophy governs how FedEx runs its business, and defines strategies.federal official Express Five-Point StrategyFederal Express has five strategies that govern business tactics. These are to improve service levels, lower unit cost, establish multinational leadership and sustain profitability, get closer to the customer, and exercise the People-Service-Profit Philosophy.The unique FedEx operating strategy works circular-knitly and simultaneously on three levels.Compete collectivelyby standing as one brand worldwide and speech with one voice.Operate sovereignlyby foc using on our free networks to meet distinct customer needs.Manage collaborativelyby working unitedly to sustain loyal relationships with our workforce, customers and investors.ValuesPeople We value our people and get ahead diversity in our workplace and in our thinking.Service Our absolutely, positively sum puts our customers at the heart of everything we do. variation We invent and inspire the services and technologies that improve the way we work and live.Integrity We manage our operations, finances and services with honesty, dexterity and reliability.Responsibility We champion safe and healthy environments for the communities in which we live and work. obedience We earn the respect and confidence of our FedEx people, customers and investors every day, in everything we do cargo ships and logistics groundwork within FedEx CorporationFedEx started its operation by sending eight packages on the first night, of which 7 were trial run addresses from one employee to another. The company has since grown to handling an astonishing 9.8 million onuss per day.An overview of FedExs Infra mental synthesisHandling 9.8 million shipments per dayMore than 700 aero planes,Daily lift capacity of 12 million kilogramsServicing more than than 220 countries through 375 airportsWorkforce of more than 140,000 permanent employees worldwide500,000 calls are dealt with professionallyWith this Infrastructu re and new ones being added over time , the Purple Promise of I will make every FedEx encounter smashing is achieved with the collection and delivery of each shipment.Physical goods when transported over trucks on a highway usually travel the most frequented routes. But as more vehicles start traversing that highway, and as the trips become longer, packages get delayed, go astray, experience spoiled, or dont arrive at all. To solve this problem, faster, more attentive carriers with their own hardware and infrastructure came into being FedEx, UPS, Airborne Express, and so on. These new carriers even out attention to speed, tracking, billing, quality of service and automation. They similarly devised systems that didnt travel through the midsection of town, except for final delivery, and didnt change hands en route. And finally, they offered lots of optional services to make life easier for both shipper and recipient.Home delivery infrastructureAs part of Infrastructure expansion plans of its U.S. delivery network, FedEx Corp. will add another 9 distribution hubs, bringing its total number of hubs to 39. In addition, a new home-delivery facility planned for Florida will be able to process more than 10,000 packages per hour.The three hubs that are under construction are in Dallas, Cincinnati and Hagerstown, MD, the fourth hub in Memphis, TN. The hub expansion project will also expand the 30 existing hubs this will n beforehand(predicate) double the companys comely daily hub package volume capacity by the end of its 2010 financial year.The expansion project will support a sharp growth in FedExs shipments to consumers on behalf of online retailers. The new Florida satellite distribution center, in Pompano marge near Fort Lauderdale, will be three times the size of it of the two existing facilities combined, and will open with a workforce of nearly 356 employees and independent contractors, an increase from the current combined figure of 200 employees and independent contractors.FedEx Smart Posts best-of-breed engine room ensures swift package processing and delivery. This technology provides shipment visibility throughout the delivery process of the packages tour they are en route to their destinations. This changes to know of all time where the packages are and where theyre going next.Advanced comprise systems, sophisticated automated sorters, and state-of-the-art data-collection devices enable FedEx to collect detailed information about every package. And the highly proficient logistics team is fully weaponed to sort hundreds of thousands of packages each day.The client tools are housed on a promise meshing site, customized to meet the unique needs of each client. These tools provide seasonably access to package delivery information, logistics analysis, manifest detail, and billing statements, as swell as the ability to create necessary reports needed in cooking the package delivery strategy.As a leader in the package de livery industry, FedEx provides with data and reporting needed to examine and enhance logistics operations on an ongoing basis.Virtual information infrastructure at FedEx Corporation.though FedEx began as an express air delivery company in the early 1970s, it has successfully transformed itself into an integrated transportation and logistics service provider. A major part of FedExs success is directly attributed to its committed use of information technology (IT). IT has not only facilitated its business processes like operations, customer service and employee training but also integrated its information network with that of its clients to provide them with seamless logistic and supply chain solutions.Dennis Jones, former Chief Information officer (CIO) of FedEx says IT (information technology) is a function that has a strategic value because the essence of our business is taking a basic service and adding information technology services to transform into a value added product. An d that is very important. Any company lot move freight from point A to point B. But the way you make it a valuable product to your customer is to wrap it with intensive information technology capabilities.Leveraging Information TechnologyIn the late 1970s, FedEx saw a great benefit in using IT to change its business processes. Smith had very early on understood that speed, reliability and customer service was an essential factor for success in the global transportation industry.IT in Human ResourcesFedEx had in place Interactive idiot box Instructions (IVI) that allowed employees to take advantage of slack periods to train themselves at any time of the day. The program was used for training and test preparation (Customer service employees at FedEx were tested twice a year on origin knowledge).IT in Customer ServiceFedEx also used IT to improve upon its customer service, by monitoring various aspects of a customers transaction. The goal was to achieve 100% accuracy, quality, and customer satisfaction on all transactions. One such system that FedEx used was the Service Quality index (SQI) that quantified every part of a transaction like Was the package undamaged? Was the customer billed right on?Using the InternetThe widespread use of the Internet from the early mid-nineties threw open significant opportunities for FedEx. Since the company already had an EDI base system on which it had spent a lot of money, FedEx decided to use a conclave of Internet and the EDI. One example was the implementation through for the purchasing of products. FedEx purchased a product from a company called Ariba. Ariba was a requisitioning system that was housed on the FedEx intranet. The system was set up so that suppliers could maintain a database of catalogs that could be accessed by any FedEx employee.The company website hosts more than 6.3 million unique visitors per month and handles on an average over 2.4 million package tracking requests daily. More than 2 million cust omers connected with the company electronically every day, and electronic transactions accounted for almost two-thirds of the more than five million shipments FedEx delivered daily. FedEx operates one of the worlds largest computer and tele conversations networks- more than 75,000-networked computers and thousands of hand-held computers that recorded and tracked shipments. FedExs data center processes more than 20 million information management system transactions daily, more than any other US company.The company is involved in connecting 39 hubs crossways the globe, operating 677 planes and 90,000 vehicles, monitoring 200,000 employees and delivering six million packages daily in 220 countries where every second was important. This is the FEDEX EDGE, for which the company is known for. FedEx transformed both customer and business transportation model with higher speed, reliability, application of information technology, improved somatic handling system and streamlined logistics n etwork. The company popularized the concepts of just-in-time and build-to-order which reduced customers lead time and increased productivity. Apart from venturing into logistics solution provider the company was able to maintain its leadership position in small package and light freight market through its unique hub and spoke model.The role information technology has played in FedExs strategy is exciting. By using IT as a major part of its business, FedEx has reached an almost entirely new group of people. It has keep its reputation and increased its business at the same time. IT has created a greater opportunity for customers in the global market. They can now request service, support for that service, and track the package online. Customers no longer need to speak to FedEx. They are now free to order as they need, twenty-four hours per day, seven old age per week. Because of this, FedExs strategy has changed. It is now focused on the use of the Internet and other technological a dvances. Because this is such a critical aspect of the strategy, the implementation of the strategy had to be almost immediate. To compete with other major businesses in the industry, FedEx had to provide a service to customers that could be accessed using technology. They also had to provide a package tracking service. As they developed this service, their reputation and business grew.FedEx has done several things with its value chain to develop new business. First they engage always recognized the need to have technology and IT work to announce the logistics that they run. They have developed internet technologies that work simply and efficiently to enable customers and sellers to use FedEx as a go amongst. This has enabled many companies to integrate FedEx technology into their own web sites for customers to use. nous Two Branding and business structure up until 19 January 2000Using information from the case study and your own re front, critically evaluate the benefits and li mitations of uniting and Acquisition (MA) strategies in the Global Transportation and Logistics Industry.Discuss how FedEx Corporation managed the acquisition of quality Systems in 1998, and determine whether or not the acquisition of Caliber Systems was a success or tribulation?Mergers acquisitions in the Transportation Logistics industryThe Transport and Logistics (TL) sector is characterized by a significant level of privatisation, finance-raising and merger and acquisition activity. Transactions are practically complex and impacted by the regulatory environment, competition issues, or need for contracted subsidies to support operations.We have witnessed many privatizations of bus companies, ports and airports which have created successful private sector groups that have continued to grow via further acquisitions. In other segments there is ongoing global consolidation within and between operators from the courier, parcel, freight forwarding and contract logistics arenas. P ostal organizations and railway companies that have historically been more nationally oriented are now seeking opportunities to expand into cross-border markets driven by a more commercial focus and escaped regulatory regime.Transportation LogisticsThe Transportation Logistics (TL) industry forms the backbone of global supply chains. Postal operators as well as large logistics providers play a dominant role as key stakeholders in the TL industry. In recent years some former national Posts have undergone an extensive transformation to emerge as multinational providers of complex logistics and financial services. These evolved entities baptistry new competition in their core markets of ring armor delivery through the liberalization of markets and privatization.At the same time, former Posts whitethorn be able to leverage their years of experience in collecting, processing, transporting and delivering national and international mail in order to develop and provide a broader palett e of logistics based services, upstream with direct mail activities and downstream with package delivery and fee services. Further, many existing logistics and express companies have expanded well beyond simple delivery services and are now managing all aspects of the supply chain. These ongoing trends have changed the face of an industry which has become change magnitudely focused on serving customers in all parts of the world.Mergers and Acquisitions Three typesMerger A transaction where two firms agree to integrate their operations on a relatively coequal basis because they have resources and capabilities that together may create a stronger competitive advantage.Acquisition A transaction where one firm buys another firm with the intent of more effectively using a core competence by making the acquired firm a hyponym within its portfolio of businesses.Takeover An acquisition where the target firm did not solicit the bid of the acquiring firm.Problems inAchieving SuccessIntegrat ionDifficulties/Culturesinadequateevaluation of targetToo muchdiversification declamatory or supererogatoryordinary debtInability toachieve synergyManagers overlyfocused on acquisitionsToo largeIncreasedmarket powerOvercome ent adit barriers trim down riskcompared to developing new productsCost of newproduct developmentIncreased speedto marketIncreaseddiversification evacuate excessivecompetitionAcquisitionsReasons forAcquisitionsBenefits of AcquisitionsIncreased Market Power Acquisition intend to reduce the competitive balance of the industryOvercome Barriers to Entry Acquisitions quash costly barriers to entry which may make start-ups economically unattractiveLower Cost and Risk of New Product Development Buying effected businesses reduces risk of start-up venturesIncreased Speed to Market Closely related to Barriers to Entry, allows market entry in a more timely fashionvariegation Quick way to move into businesses when firm currently lacks experience and prescience in industry Reshaping Competitive Scope Firms may use acquisitions to take a hop its dependence on a single or a a couple of(prenominal) products or marketsProblems with AcquisitionsOnly a financial team assembled and they make the finis (should have two teams one financial and one organisational where the organizational Team says Yes or NoIntegration Difficulties Differing financial and control systems can make integration of firms difficultInadequate Evaluation of Target Winners oath bid causes acquirer to overpay for firmLarge or extraordinaire(postnominal) Debt Costly debt can create onerous burden on bullion outflowsInability to Achieve Synergy Justifying acquisitions can increase estimate of pass judgment benefitsOverly Diversified Acquirer free energysnt have expertise required to manage unrelated businessesManagers Overly Focused on Acquisitions Managers may fail to objectively assess the value of outcomes achieved through the firms acquisition strategyToo Large Large bureaucra cy reduces innovation and flexibilityFedEx Corporation has made 31 acquisitions succession taking stakes in 3 companies. FedEx Corporation has 22 divestitures during this period.FedEx-Caliber MergerReason for Merger FedEx and Caliber believe that the combination of the two companies will permit their customers to take advantage of a broader portfolio of services and choices at a level of excellence unmatched by any competitor. Stockholders of both companies will become stockholders of a $15 billion powerhouse in global transportation and logistics.When FedEx announced in October 1997 that it was buying Caliber System for $2.4 billion, observers warned that the merger could disrupt FedExs already profitable express shipping business. Observers were wrong. FedEx finalized its Caliber System merger in January 1998, and by the end of that year, the new company, FDX, was plug-in a seven percent increase over the same draw the year before. Domestic income grew 30 percent that period, f rom $168 million to $217 million. The company claimed that its lens hood cost controls and low fuel prices contributed to this short-term growth. FedEx subsidiaries that came from Caliber Systems also grew. RPS, the largest subsidiary besides FedEx, grew 14 percent for the period, while Viking Freight grew seven percent.In the long-run, the merger strengthened FedExs overall health. UPS largely rebounded from a crippling 15-day act in 1997, and now the two companies compete head-to-head for the express-shipping business in most markets. While FedEx does battle, several smaller companies continue their reliable service for niche markets, such as logistics operations, business-to-business transportation, overseas shipping, and small package delivery. FedEx has ensured its long-term survival by buying several of these smaller companies. After the Caliber System merger, FedEx included six operating divisions FedEx RPS, the second-largest small-package shipping business Roberts Express , the worlds largest express trucking firm Viking Freight, a leading regional trucking company Caliber Logistics, a logistics outsourcing firm and Caliber Technology, an order fulfillment operation.Question Three Events leading up to the January 2000 reorganisationUsing appropriate examples from FedEx Corporation, critically evaluate FedExs financial and non-financial performance in the context of developments in the Internet market and e-tailing up to the January 2000 reorganisation.Financial Performance AnalysisFedEx has an impressive performance record. In 1998 they had revenues of $15.9 billion grown 15 percent from 1997. Sales have been growing steadily for the past five years. The net income, though, isnt that impressive. It even declined in 1997, from the rising fuel costs during that year. However, in 1998 it grew from $200,000 to $500,000. That could be from reduction in operating costs, or from the acquisition of the subsidiaries which had lower operating costs compared t o Federal Express.FedExs financial statements shows that its assets have not been utilized as well as other firms in their industry, but their profitability is better than other industry firms. Still they must decrease selling and administrative expenses while increasing sales. Many of their technological advancements have been financed primarily with internal cash, which decreases long-term debt. approaching assets possibly and should be invested in the international market and new businesses, while still investing a decent percentage for technological advancements. Today FedEx has a competitive advantage over other firms and if they continue the practices that they have in the past, while also opening up to new ideas, FedEx will proceed a powerhouse in the package delivery industry.The financial ratios for FedEx clearly show that it is the market leader in this industry, have outstanding sales, a healthy profit, and a safe amount of debt. These ratios over time show a steady inc rease, except for year 1997, where fuel costs hurt FedEx deeply.Company AnalysisIn this section we shall discuss FedExs strengths and weaknesses as a company, opportunities and threats.S.W.O.T. AnalysisCompany Strengths and Resource CapabilitiesGlobalism Federal Express operates on a global scale in 211 countries. They provide services that conjure up to most of the world, realize tremendous revenues and also achieve global economies of scale.Innovation Federal Express took airplanes and trucks and used them differently than any other company before them. This is innovation. They have first-mover advantage in name recognition because of this innovation. This has helped them to remain the industry leader since 1973.Technology and Communication Federal Express uses and continues to search for new technology. They allow spending of $1billion a year, 10% of total revenues, for information technology. That commitment keeps customers from switching to other providers. Federal Express als o has beautiful communication with their customers. They use tracking devices on all shipments, and customers can let on out where their shipment is through many different avenues including a user-friendly Web site. Federal Express customers are assured that FedEx will always be on top of technology.Strategic Vision Federal Express will always have competent top managers in indicate of strategic direction. Frederick Smith built an industry leader, and kept it in that position since 1973.First-Mover Advantage Federal Express has had first-mover advantage in several areas. (1) existence a global express transportation company. (2) Advanced technology and communication throughout the companys operations. (3) Incorporating smaller companies with similar operations under its belt to synergize and control more of the market.Strong Brand Image In 1990, Federal Express became the first company awarded the Malcolm Baldrige National Quality Award in the service category. In 1994, Federal Express became the first global express transportation company to obtain simultaneous system-wide ISO 9001 certification in international quality standards. Federal Express has also developed their own quality system that matches their customers standards.Company Weaknesses and Resource DeficienciesRising Prices Federal Express prices are above their competitors. This can be a weakness if their customers do not grasp a difference between Federal Express and its competitors services.Labor Disputes with Pilots Federal Express pilots have formed the Fedex Pilots experience. This organization demanded changes in the pilots salaries, retirement benefits, and the fact that Federal Express outsources some foreign flights or else of giving their own pilots the job. The pilots have a Web site where news is posted and feelings are discussed. During the busy Christmas season in 1998, the pilots threatened to strike. Federal Express and the Fedex Pilots Association have developed a tentative agreement, which is published on the pilots Web site. However, the pilots do not believe this agreement fully meets their expectations. This dispute is by all odds an internal weakness for Federal Express, considering they have 3,500 pilots employed with them. Their operations would suffer if there were strikes. When UPS employees went on strike in 1997, Federal Express took the extra 800,000 shipments a day. If Federal Express employees went on strike, their competitors could gain an advantage.Running Subsidiaries on an individual basis FDX has deliberately chosen to keep their companies separate. In FDXs 1998 Annual Report, CEO Frederick Smith states, Simply layering the unique resource and operating requirements of a time-definite, global, express-delivery network onto a day-definite, ground small-package network would surely result in diminished service quality and increased costs. Under the FDX umbrella, we will leverage our shared strengths while operating each delivery net work independently, with each focused on its respective markets. Frederick Smith is confident this will be a strength, instead of a weakness. Time will tell.Company Opportunities magnification Globally Federal Express can continue to expand globally, including the other companies under FedEX.Expansion Internally Federal Express can continue to acquire more companies, and expand into new technologies or areas in their industry.Run Subsidiaries Together If FDX doe