Strategic Information Management of Federal Express Corporation - Term Paper Example

Strategic Information Management Introduction Federal Express Corporation, or simply FedEx, was established in the year 1973 by Frederick Smith (FedEx). FedEx was the pioneer of the logistics industry and express transportation. Nowadays, FedEx focuses on worldwide transportation and delivery of parcels and packages and is one of the leading transportation companies. FedEx provides five core services which include overnight delivery of packages, worldwide express delivery, ground small parcel delivery, customs brokerage and freight delivery. FedEx has superior customer service that is displayed by the company’s determination of doing whatever it takes to ensure that their customers are served (King 69-82). Being an international company, FedEx provides different services and products for different countries. In New Zealand, for instance, FedEx provides the International Priority (IP) service and FedEx Packaging. To create a competitive service advantage and enhance its customer base, FedEx expanded into the internet (Hunter and Felix 97-115). This has allowed FedEx to become more involved in the internal processes of the customers as well as allowing customers to pull real time data and information into their internal systems. This has contributed to FedEx becoming an e-business (Hitt, Robert and Robert 167-189). It was not the initial intention of FedEx to become an e-business, but the alignment of its organizational structure with processes and systems due to decisions made by the company have resulted in a successful twenty first century business. E-business has lent support to supply chain logistics solutions management and transportation logistics efficiency (Krcmar, 76-89). PEST analysis Political FedEx is required to follow international rules, laws and regulations since it conducts its business internationally. If a shipment is in violation of the export laws of the United States, FedEx does not carry it (Harrison 76-86). As seen with many other shipping companies, FedEx does not assume liability for any expenses or loss, including, but not limited to penalties or fines that are caused by failure to comply with regulations and export laws relating to the import, export or movement of goods at central hub locations. To prevent restricted and contraband items from entering or leaving the United States, FedEx employees work jointly with the United States Customs officials (Hinton 47-73). FedEx in conjunction with law enforcement have strict shipping guidelines aimed at deterring and preventing the movement of deadly or dangerous agents into the United States. FedEx screens packages for monetary instrument shipments and illegal currency that violate the Bank Secrecy Act reporting requirements (Garson 65-93). Economic From its beginnings as a package mover, FedEx has grown to become the world’s leading transportation provider. FedEx pioneered the transformation of the conventional business into an e-business by establishing critical factors. FedEx has developed a global network that not only offers transportation but also provides full service management support and tools. The deregulation of the transport industry was led by FedEx, and this resulted in economic competition and a decrease of transportation costs from 7.6 percent of the Gross Domestic Product in 1980 to 6.2 percent of gross Domestic Product in 2000 (Coulter 1-46). In 2000, FedEx had employed over 160000 United States part-time and full-time workers (FedEx). The payroll and benefits amounted to 7.3 billion dollars (FedEx Express Overview). In the United Sates, FedEx operations have a direct and indirect employment impact of over 500000 jobs (FedEx Express Overview). This means that FedEx is responsible for one of every 270 jobs. In the fiscal year of 2000, the revenues at FedEx exceeded 18 billion dollars while the direct and indirect activities of FedEx activities gave an output estimated at 53 billion dollars (FedEx Express Overview). Every year, the number packages exported by FedEx has been increasing by 15 percent (FedEx Express Overview). Furthermore, over the last seven years, FedEx has tripled its market share. These exports have increased in value by 300 percent, which is an annual average increase of 22 percent while during the same period the exports from the United States only increase by 50 percent, which is only 7 percent (Ulfelder). The economy of the United States is multiplied by the evolution and success of FedEx. Socio-cultural The global community has seen the demonstration of caring given by FedEx. Throughout the world, FedEx has used its resources in a bid to help thousands of organizations. FedEx goes to disaster sites and delivers tons of aid through aircrafts and vehicles. To make their communities better places to live, work and play, FedEx employees volunteer countless hours. FedEx improves education and helps ensure children’s safety by giving them financial support (Love 227–242). FedEx employees and the communities they live in experience the commitment of the company. This is done by offering financial and volunteer support for charities that promote humanitarian, educational, civic, cultural and artistic wellbeing (Moore and John 10-21). Technological FedEx is setting the industry standard for customer service and efficiency by making enormous strides in technology. In response to customer needs, FedEx has sought technological advances. FedEx has also excelled in anticipation and protection of demands of an environment that would thrive and depend on information (Sims 99-114). FedEx customers and support personnel have access to technology that enables them to have wireless access to system networks and essential information from anywhere and at anytime (Gallo 67-85). FedEx develops and leads in its industry by developing innovative wireless solutions since its first inception and integration of wireless technology more than two decades ago (Zeng 30-40). Value chain analysis FedEx has five primary activities in its value chain. The first activity is inbound logistics that covers the handling and storing of products that are to be shipped. The second activity is the operations that include shipping products, value chain analysis handling orders, logistics, checking orders and financial analysis (Desarbo and Sinha 834-857). The third activity is outbound logistics that include delivery of products and receiving payment (Love 649–661). The fourth activity is marketing and sales that deals with developing a positive image of the company so as to ensure that customers feel comfortable and satisfied with their services and products. The last primary activity is service. Service concentrates on doing anything to ensure that the customer is satisfied (Malek 78-111). FedEx has four support activities in its value chain. The first support activity is procurement which deals with purchasing assets such as trucks, planes and gas. The second support activity is technology development that deals with investments in innovation of systems, information technology, research and development (Drejer, 39-73). The third support activity is human resource management. This is where FedEx hires, trains, develops and compensates it employees who include truck drivers up to the top-level management (Somogyi and Robert 1-19). The last support activity is firm infrastructure that handles general management, legal support, planning, government regulations and accounting needed to support the value chain (Collins 56-89). Electronic Data Interchange (EDI) The ability of a company to keep up with new emerging technologies determines whether or not the company can keep up with e-business (Clark 87-113). By improving several of its core competencies, FedEx has succeeded in transforming into an e-business. In January 2000, FedEx changed its name to FedEx Corporation due to a new branding strategy. This new name was extended to four of its subsidiary companies. This new branding strategy took advantage of the fact that FedEx customers have counted on the company for cutting edge technology and reliable services. An integrated set of business solutions resulted from the transformation of the company. Customers have since then only had to deal with one company for its logistics, supply chain and delivery needs (Haddad and Jonathan 44-68). A single point of access was provided for all billing, customer service, automation and sales. The FedEx umbrella consists of companies that operate independently but collectively (Willcocks and David 87-110). How Electronic Data Interchange influences policies and decision making in FedEx Corporation A competitive advantage due to a higher market share is offered to businesses that have the best technology. FedEx’s vision is to satisfy worldwide demand by distributing packages in a timely and reliable manner. FedEx therefore operates under a customer focused approach so as to achieve its vision and goals. Since the company was founded, FedEx has been emphasizing on putting customers first as the company aims to become a part of the global market (Denton 15-43). FedEx has a strategy that capitalizes on growing its e-business and aims at integrating its virtual information infrastructures with its physical transportation to create a large system that can meet the business’s needs that range form supply chain management solutions to transportation services (Ditsa 26-48). All systems are centered on the customer as FedEx takes on a customer focused approach. The transformation of FedEx started with building the systems and technology infrastructure. Afterwards, business processes were integrated into the systems. The transformation was a difficult task that required expertise in supply chain and logistics management. At this time, FedEx was following the technology age that was taking place in the United States and this piggybacked into the growth of the e-business market. The final step was for FedEx to make transformations to its business and market the innovations and advancements to the people (Clardy 67-92). Technology is the key success factor for FedEx. Technology makes a business run and is the factor determining whether or not the company will make money (Duffy and Michael 109-123). Technology is used on every major activity at FedEx. Frederick Smith is acknowledged as the visionary responsible for causing FedEx and other companies to start thinking outside the proverbial one (Galliers and Dorothy 76-114). This thinking has resulted in FedEx surpassing the rest of the industry by using information technology. Frederick Smith believed that while competitors focused on third parties subcontracting their shipments and buying space on commercial airlines, FedEx should concentrate and invest on acquiring its own transportation fleet. This belief has contributed to the overall success of FedEx in committing to its overnight delivery of packages. Over 100000 sets of personal computers were installed following the introduction of new technology (Schwegler 1-19). The software in these computers allows customers to log and link into the tracking and ordering system. An electronic network resulted from production of customer’s personal computers that were preloaded with FedEx software. Information enables corporate customers to exercise just-in-time inventory management, tighten their order-to-delivery cycle and synchronize market demand with production levels. The quality of information being provided to the workforce at FedEx became synonymous to the company’s quality of service (Thorp 27-62). Effectiveness of the FedEx Corporation response FedEx has recognized the internet’s potential to provide convenient, easy and fast services to its customers. In 1994, a bold package tracking application was launched on the FedEx website and that was one of the first true corporate web services (Johnson 109-117). FedEx was in the forefront in providing a web feature that allowed for customers to decide and generate their own unique shipping label bar codes and the contact couriers who would pick up their shipments. Today, FedEx’s website handles a daily input of 1 million requests on package-tracking. Every day, over two million customers connect to FedEx electronically (Burke and Clinton 132-161). Two thirds of the five million shipments that FedEx delivers are done through electronic transactions. The business community acclaims the FedEx website for its ease of use, speed and customer-focused features. The success of an e-business depends on some critical factors that FedEx has identified so as to enhance its management of information (Betz 17-58). The successful advanced e-business in FedEx’s network economy transformed from its beginnings as a conventional business. The several areas that FedEx has succeeded in include information infrastructure definition, application of new technologies resulting from visionary leadership, maximum benefits being seen from a realignment of the organizational structure and the integration of internal processes. All of FedEx’s customers have access to the e-business that has been harnessed from new technologies. A customer may choose any way that they wish to connect to FedEx because of the development in technology (Cronin). The most success from the restructuring of FedEx is experienced by integration of logistics and supply chain management in the new technology. This success has caused several benefits to FedEx such as inventory levels being cut, order-cycle time is shortened and costs are reduced (Earl 13-56). The customers therefore end up having improved quality of service. A vast matrix of information and transportation networks have been laid out by FedEx that for some time now, have provided the company with competitive advantage. The need for FedEx to become even more customer and solution focused will become apparent. A unified customer centered front is ensured by integrating all processes from the value chain, parcel carrier business and logistics (Aiello 23-48). FedEx’s customers will be served by the new restructuring that constantly applies new technologies aimed at improving response time and providing information that is valuable. FedEx will continue to exploit, innovate and build technologies from the already created success base and the company will remain at the top of the transportation industry in the foreseeable future. FedEx is the innovator in the transportation field (Oakland 117-134). This is because it is the first company to introduce the processes and technologies that are used by other courier companies of today (Brewster, William and Martin 112-124). The context-specific process of inventing, diffusing, adopting and finally implementing technology results in innovation. The strategic importance of innovation is understood by the management at FedEx. This has resulted in the formation of links to create FedEx Technology Institute. A technological innovation trend is also shown by FedEx. This means that instead of always being reactive to competition, FedEx forces competitors to follow their lead. This ensures that the brand name that is ‘FedEx’ is constantly well respected, and the company also gains a competitive edge. Recommendation and conclusion FedEx has an obligation of binding the nations where it operates by offering business correspondence to the people (Ahmed, Mark and Clark 15-30). FedEx should render good services to the community and provide efficient, reliable and prompt services to patrons who are in all areas. To continue its success, FedEx needs to keeps its cost down while competing with other transportation courier companies such as United Parcel Service (UPS), Dalsey, Hillblom and Lynn (DHL) and Thomas Nationwide Transport (TNT). This means that FedEx will have to increase speed of transactions by using the latest technology. To avoid customers from switching to their competitors, FedEx need to keep their customers happy as this will win the customers’ loyalty. FedEx has three things it has to do; the first thing understands the necessities surrounding FedEx becoming competitive. Secondly, FedEx has to meet the needs of the marketplace and thirdly, FedEx should try its level best to exceed those needs and set tough targets that its competitors will only dream to achieve (Staff 35-67). 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