FedEx: The Supply Chain Management Solutions Provider

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Case Details:

Case Code : OPER029
Case Length : 17 Pages
Period : 1971 - 2003
Organization : FedEx
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Industry : Logistics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Appreciating FedEx's SCM services, Dennis Samaritoni, Vice President of Corporate Services at National Semiconductors said, "FedEx has helped us prove that quicker cycle times and reduced costs are not mutually exclusive. It's been five years of hard work and a painful change process, but we've succeeded. We used to have to deal with so many different nodes in the process-freight forwarders, customs agents, handling companies, delivery companies and airlines. Now FedEx is our one-stop shop."⁷ By making the optimal use of synergies existing between its various group companies (Refer Exhibit II), FedEx has continued to launch customized and innovative SCM services in the new millennium.

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Background Note

The history of FedEx dates back to 1971, when its founder Frederick W. Smith (Smith) felt the need for an airfreight system that would facilitate quick overnight delivery of documents directly to customers. place. To serve this need effectively, Smith decided to setup his own company.

In June 1971, FedEx Corporation was incorporated at Little Rock, Arkansas, US with an initial investment of $84 million. In March 1973, FedEx shifted its basic airline operations to Memphis, Tennessee, US. On April 1, 1973, FedEx commenced full-fledged operations with a network, spread across 25 cities in the US. This marked the beginning of the air/ground express industry.

In 1974, FedEx commenced its logistics operations with its Parts Bank⁸ service. The service involved FedEx solving the warehousing problems of small companies by facilitating overnight shipping of their manufacturing related parts.

For this purpose, FedEx constructed a small warehouse at a corner of its Memphis sorting facility. This was FedEx's initial effort to provide multi-client warehousing services.

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7] "Special delivery," Monua Janah and Clinton Wilder, Information Week, October 27, 1997.

8] A place where companies store parts required for their manufacturing requirements. Normally, companies stored parts close to their manufacturing facilities so that they could quickly ship parts to the facilities as and when they require.