FedEx's best Customer Services Practices - Essay Example

FedExs best Services Practices As a courier company operating globally, FedEx has to deal with a complex network of processes services that call for a strategy and operations that are able to seamlessly meld numerous departments, partners, people as well as facilities. In addition, best practices also calls for a high degree of interdependency among services and departments in order to offer and maintain excellent products and services. FedEx has successfully achieved this by investing heavily on the IT capabilities. Today, it has an income of $25 billion a year and this became possible because of the corporation’s focus on providing high value-added services relating to the supply chain, transportation, business and related information. (Waters 2006, p. 9) A cornerstone of value for FedEx is its customer service, an emphasis that so far allowed the company to continuously lead in the industry globally. This paper will examine FedEx’s core business philosophy of maintaining superior customer services and customer relations. Background In 1992, FedEx introduced in a Comdex exhibit, several pivotal services that would revolutionize its courier operations in the context of customer service. Specifically, there were three customer-oriented services launched – all using information technology as the main platform. First, there was the command and control system that manages Fed Ex’s aircraft and truck fleet on a real-time basis, a capability that allows FedEx management up-to-the-minute data on the location of every truck and plane in the fleet; second, there was the online access to services and customer service representatives that allowed packages to be picked up and clients to track their status once sent; and the PowerShip feature wherein FedEx customers are empowered to generate their own billing labels and invoices as well as track their packages through the massive FedEx courier system, accurately and instantly. (LaPlante 1992, p. 108) This development catapulted the IT department to the forefront of FedEx operations. FedEx was able to develop crucial customer value by making every courier transaction easy and fast, not only in terms of package deliveries but in terms of the comprehensive service to customers – from point of contact, point of sales to the actual client involvement in the delivery process. The move was borne out of the company’s experience in regard to the amount and sheer quantity of paper work that clients and FedEx employees alike must deal with – from the package forms, billing paper work and customer statements. The entire process became so tedious that it already became a burden. FedEx invested an exorbitant amount of money to computerize its operation and integrate the internet in its overall business strategy. The direction of FedEx’s customer-centric strategy is stated in its mission statement. To quote: FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and supplier. (FedEx) Customer Focus According to Keyes (2005), there are three important dimensions to FedEx creation of customer value and these use information technology. These are the FedEx way, the FedEx tracking system and FedEx performance support: FedEx way: the principle behind the company’s emphasis on listening to what the customers want and creating services and technology that cater to their core needs. For instance, after learning in a study that customers wanted their peace of mind in their access of the extensive delivery information, FedEx introduced its fast delivery tracking system. The old process, which involved a tedious manual system requiring numerous phone calls and the services of the 1400 operations centers, was drastically streamlined with the introduction of the online tracking capability. Tracking System: The system automatically calculates whether commitment to the customer was met by comparing ship date and service type to delivery date and time. In FedEx’s website, for instance, a customer can login to his account and access learn where his or her package, with several best practices options such as a link to an online customer service support. Performance Support: Here, the goal is to create appropriate tools that enable front-line employees to improve their personal performance using the information in FedEx’s vast databases. This process is also characterized by the system’s capability to aggregate information according to location, geographic unit. (Keyes, p. 8) This dimension to Keyes’ reference on FedEx three-dimensional strategy also highlight another important variable, a “fourth dimension” – the wider employee relations that contribute to FedEx’s excellent customer service philosophy. The point is that whatever excellence the company has in its relationship with customers, it begins with its human resource. Frederick Smith, Chairman, and Chief Executive Officer of FedEx, has often emphasized that “when people are placed first, they will provide the highest possible service and profits will follow.” (Stahl and Grigsby, p. 211) The hallmark of this area in FedEx’s operations is a software called PRISM. This is a human resource system that shows another way in which information system can enhance the company’s competitive advantage by empowering both the managers and employees. Here, employees throughout the world can examine their personnel data, update their personal information, change benefit options, access training records, participate in online training sessions, examine wage schedules, and apply for jobs available anywhere throughout the FedEx’s worldwide operations. (Stahl and Grigsby 1997, p. 211) The previous variables cemented FedEx’s customer-centric philosophy, enabling the company and all its products and services to be about guarantees – “when it positively, absolutely has to be there overnight.” Today, FedEx identity of guaranteed delivery service has become so distinct with those offering “probably there on time but cheaper” package services. In addition, with the electronic service, wherein current system allows customers to easily place pickup orders, print shipping labels and track delivery, customers do not need to spend additional costs by providing them fast service as well as accurate information without ever touching the telephone or going to a local FedEx office. The above variables were translated into the organization’s competitive advantage. One needs to remember, according to Daft and Marcic (2008), that what sets an organization apart from others is its ability to provide a distinct edge for meeting customer needs in the marketplace. (p. 173) By emphasizing excellent and best practices in customer service it outperforms competitors. FedEx, today, holds 45 percent of the marker, as opposed to its closes competitor. Because best practices in customer relations worked best for FedEx, the current strategy emphasized on this aspect to the point that it became one of FedEx’s core competencies. Conclusion By investing on technology, FedEx was able to develop, implement, refine and maintain a sophisticated customer-oriented system that is valuable and satisfactory for client. With computers and the Internet, FedEx was able to offer their customers to place orders, identify shipments, select routes, track and trace packages, whatever their needs are. What is more is that these services and functionalities are accomplished in a matter of seconds, with the clients never leaving their homes or their seats in front of the computer. In examining FedEx’s customer service strategy, one finds that its use of technology is less about what IT can do for its various business processes such as sales, transportation, human resources, and other functional areas. Rather, it is about the ways in which technology are integrated in the various areas in FedEx’s operations in such a way that it propels the organization’s business objectives which is to increase profitability by creating customer value through excellent customer service. References Daft, R. and Marcic, D. (2008). Understanding Management. Cengage Learning. FedEx. (2010). Investor Relations: Mission Statement. FedEx. Retrieved April 2, 2010 from FedEx Web site: http://ir.fedex.com/documentdisplay.cfm?DocumentID=125. Keyes, J. (2005). Implementing the IT balanced scorecard: aligning IT with corporate strategy. CRC Press. LaPlante, A. (1992, November "Federal Express Gives Clients On-line Access to Tracking System." InfoWorld. 14:46. Stahl, M. and Grigsby, D. (1997). Strategic management: total quality and global competition. Wiley-Blackwell. Waters, D. (2006). Operations strategy. Cengage Learning EMEA. Read More