FedEx Supply Chain Analysis Essay

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Session Long Project (SLP)

FedEx Corporation is one of the largest companies in the courier industry. The company is renowned not just nationally in the United States (U.S.) but internationally. FedEx Corporation belongs to the parcel service industry segment. The size of the industry segment is quite large in the sense that in the past fifteen years or so, consumers in America have spent beyond fifty billion dollars in shipping packages, parcels, and also letters. Also referred to as Federal Express, the company is a big player in the segment and is positioned as one of the trailblazers in the industry segment. However, it is important to note that in this particular industry segment, each of the players serves a niche. For instance, Federal Express is specialized in overnight delivery, while UPS concentrates on standard shipping on the ground for parcels not surpassing 150 pounds. In overall, this segment in terms of the whole courier industry can be deemed to have a strong hold. This is because the parcel service segment is not only cost-effective and economical, but it is also fast, reliable and convenient to the consumers. Consumers are able to send packages easily, and in a well-timed manner, not only locally but internationally as well. However, with the advancement of technology, aspects such as e-mail have dented the industry as more and more individuals would prefer to send letters electronically through e-mail, or as attachments in cloud servers (Morlok et al., 2000).

The company offers several services to its consumers. Federal Express offers a wide ranging portfolio of e-commerce services, transportation services and also business services. This is done by firms that compete in a collective manner as they function and operate autonomously, but managed all together under the brand name that is FedEx. Federal Express Corporation offers transportation services and is considered to be the biggest company in terms of express transportation. The second set of services is delivery services, which are done by FedEx Ground. This company is one of the main companies in North America that leads in the delivery of small packages on the ground. On the other hand, FedEx freight focuses on the shipping of packages and freight services. Lastly, there is also FedEx Services which provides the consumers with retail services that enable them to have accessibility to the different shipping and small package services that are offered through online services, and also offering technical support (FexEx Website: Annual Report).

FedEx uses core technologies to offer better service to its consumers. To start with, it is important to point out that the mission statement of the corporation is "To produce superior financial return for our shareholders as we serve our customers with the highest quality transportation logistics and e-commerce" (FedEx Website, 2015). In the initial stages, the company was very frail in terms of information technology (IT). However, in the past ten years or so, the company has heavily invested in information technology and has become a pioneer in this aspect. For this reason, FedEx has grown to become the major source of delivery for parcels that are ordered online over the internet. The company's core competencies are centered on package routing and delivery. These core competencies are mirrored in the company's proficiency in bar-code technology, managing networks and also wireless communications (FedEx Annual Report).

In the wider community, FedEx has grown to amass a strong position and reputation. In as much as DHL and UPS have gained recognition and market share, Federal Express has had a dominant account to the wider community. This is to the extent that the name of the company came to be a household saying with consumers using the term "FedEx the parcel to me" when making a shipment with any air carrier consumer service. The company has grown to become one of the most reliable and well-known companies in the courier industry. The company is not just a leading company in offering services in North America but also internationally as well. Having an established brand name also helps the company to be well established and have a strong position in the wider community.

The financial position and health of the company has been positive and constructive. In the past three years, according to the financial information obtained in the company's annual report, the revenues of the companies have steadily increased. Aside from 2013, the company's profitability has been growing. The following charts indicate the financial performance and position of the company (Annual Report, 2014).

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In as much as the revenue amounts of the company are very solid, the rival companies such as UPS do generate higher revenues. This is part of the reason why the company is focused on expansion. This will enable the company to increase its international presence as well as its market share.

2014

2013

2012

Revenues

45,567

44,287

42,680

Operating Income

3,446

2,551

3,186

Operating Margin

7.60%

5.80%

7.50%

Net Income

2,097

1,561

2,032

Diluted Earnings per share

$6.75

$4.91

$6.41

Source: FedEx 2014 Annual Report

With FedEx Ground and FedEx Freight continuing with their solid performances, it is expected that the company will have increased revenues. This is set to propel the company into an expanding trajectory. The company has placed plenty of emphasis in the expansion of its operations internationally. For instance in the past year, the company expanded its global services by making an acquisition of Supaswift Limited. This is a firm that offers services in seven different nations in South America. This offers the company increased international presence and an extensive network on the ground to gain an understanding of the consumer needs in the region. The imminent future of the company looks quite bright. Expansion will offer the company a competitive edge and increase its contention in the market. One of the most relevant aspects of FedEx with regards to its history has to be the manner in which it has become very much well established. The company, in the past failed to sustain its position but through the investments in technology, the company has established itself as a solid and major player in the industry (FedEx Annual Report).

Module 1 Case Assignment

Principles of Supply Chain Management

Anderson et al. (1997) clearly outline the seven principles of proper supply chain management (SCM). In the time since these principles were published, the article published in the Supply Chain Management Review has come to be regarded as a classic article. The first principle is to adapt supply chain to the needs of the consumers. Individuals in businesses, and also experts in supply chain, are taught to focus on the needs of the consumers. So as to gain a better understanding of the customers, segmentation is undertaken to split customers into different groups. This enables a company to understand the needs for each segment. For instance, the most basic manner of segmenting consumers is making use of the activity-based costing (ABC) approach, which can categorize the needs of consumers in terms of profitability and also product. Anderson et al. (1997) make the suggestion that the consumers ought to be segmented centrally in consumer service needs.

The second principle is customizing logistics network. For a number of companies, the logistics network is structured to meet the common service needs of all the consumers, while for other companies it is done to satisfy the hardest needs of a particular consumer segment. However, the authors are quick to note that this does not apply for all of the instances. The third principle in SCM is aligning demand planning across the supply chain. Experts and practitioners in the field of supply chains are taught how to have sharing of the demand data with the partners, in order to ensure that no party has to remain with the redundant stock. The authors insist that the ideal SCM is one that necessitates sales and operations that go beyond company restrictions to encompass every association of the supply chain from the initial supplier to the last consumer. This ought to be involved in creating predictions collaboratively and then sustaining the essential capacity throughout the operations.

Fourth, there is differentiation of products that are close to the consumer. Conventionally, manufacturers have centered their production objectives on forecasting the level of demand that is there for the finished goods. This has in turn caused them to increase their inventories in order to balance the errors made in projecting. This brings to mind the notion of creating or manufacturing products once the clients have made their orders. However, the authors offer a better approach, which is that of standardization. This basically implies that manufacturers ought to formulate products and select a packing and classification that meets the terms according to the rules of numerous countries. By standardizing the products, a manufacturer can easily decrease the costs owing to the economies of scale. Principle number five is the management of supply sources in a.....

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