Chpt4 MIS-FedEx Case

Group 4Group 4

Chapter 4 Chapter 4

Case 1 Page 103Case 1 Page 103

Crystal EnloeCrystal Enloe

Christian GasseChristian Gasse

Johnny VanhornJohnny Vanhorn

Reanetta WalkerReanetta Walker

Stacy AdkinsStacy Adkins

Thilo GraboThilo Grabo

FedExFedEx

RWC 1: Page 103: “FedEx versus UPS: Playing Catch-Up in Telecommunications Innovations”

“Information about the package will soon be just as important as the

delivery of that package.”

(1979) Statement of Frederick W. Smith, Founder and CEO of the FedEx Corp.

(1980) FedEx launched a wireless data network called Digitally Assisted Dispatch System (DADS):

► Efficiency was increased by eliminating radio chatter because the DADS was able to use text messages to change drivers’ routes and pickup requests.

► DADS led to a 30 % increase in couriers’ productivity

(1986) FedEx installed wireless handhelds, called Super Trackers:

► These devices capture package data via a bar-code scan. When couriers return to their trucks, they insert the Super tracker in their DADS unit, and the information is downloaded to FedEx’s tracking system, the Customer Oriented Service and Management Operat-ing System (COSMOS).

Thilo Grabo (Group 4)



“We will harness the appropriate technology to create new services and

to strengthen our operations and networks.”

(1994-2004) Statement of United Parcel Service of America, Inc.

In contrast to FedEx’s freewheeling management style, UPS exercises a button-down management style. For example, UPS has four IT committees: finance, governance, strategy, and technology.

► The 94-year old UPS tries hard to improve its IT but always lags by a step in comparison to FedEx’s IT Innovations.

(1980) UPS has begun to invest $ 14 billion to build integrated global networks.

(1990) UPS introduced its own handheld, called the Delivery Information Acquisition Device (DIAD).

► DIAD captures and transmits delivery data in real time (FedEx’s DADS has no real time features).

► DIAD can be used as cell phone, and has new ease of use and maintainability features.



Furthermore UPS has installed a online platform which offers services to business and private customers.

The Future

(PowerPad) It is a wireless tool which should connect systems

across divisions because FedEx is also a large player in ground, palletized-

freight, and international shipping. (One transparent system for the whole

corporation.)

UPS, too, is upgrading its handhelds and also focusing on automating

processes at its sorting facilities in an effort to

reduce training costs.

PERIOD ENDINGPERIOD ENDING 31-Dec-02 31-Dec-01 31-Dec-00

Total RevenueTotal Revenue 31,272,000 30,646,000 29,771,000

Cost of Revenue 17,944,000 17,397,000 16,546,000

Gross profitGross profit 13,328,000 13,249,000 13,225,000

Operating Expense

Research Development - - -

Selling General and Administrative 9,232,000 9,287,000 7,540,000

Others - - 1,173,000

Total Operating Expense - -

Operating Income or Operating Income or LossLoss

4,096,000 3,962,000 4,512,000

Income from Continuing Operations

Total Other income/Expenses net

1,086,000 159,000 527,000

Earnings before Interest and Taxes

5,182,000 4,121,000 5,039,000

Interest Expense 173,000 184,000 205,000

Income Before Tax 5,009,000 3,937,000 4,834,000

Income Tax Expense 1,755,000 1,512,000 1,900,000

Net Income from Continuing Ops. 3,254,000 2,425,000 2,934,000

No-recurring Events

Discontinued Operations - - -

Extraordinary Items - - -

Effect of Accounting Changes

(72,000) (26,000) -

Net IncomeNet Income 3,182,000 2,399,000 2,934,000

Preferred Stock and Other Adjustment

- - -

Net Income Applicable Net Income Applicable to common Sharesto common Shares

3,182,000 2,399,000 2,934,000

FedExFedEx

http://clk.about.com/?zi=1/XJ&sdn=businessmajors&zu=http%3A%2F%2Fbiz.yahoo.com%2Fp%2Ff%2Ffdx.html

Crystal Enloe (Group 4)

FedExFedEx

Products/ServicesProducts/Services:: FedEx is a global provider of transportationFedEx is a global provider of transportation e-commercee-commerce supply chain management services.supply chain management services.

Number of employeesNumber of employees:: More than 138,000 employees (latest count More than 138,000 employees (latest count

figure)figure)

Reanetta Walker (Group 4)

FedExFedEx

SalesSales:: For the six months ending 11/30/03For the six months ending 11/30/03 Revenues rose 4% to $11.61 billion Revenues rose 4% to $11.61 billion Net income decreased 46% to $219 millionNet income decreased 46% to $219 million

Results reflect strong growth of international yields Results reflect strong growth of international yields at FedEx Express, offset by the $415 million in at FedEx Express, offset by the $415 million in business realignment charges.business realignment charges.

Reanetta Walker (Group 4)

FedExFedEx

CEOCEO:: Fred Smith Fred Smith

CompetitorCompetitor:: UPS is the major competitor UPS is the major competitor of FedEXof FedEX

Mergers & AcquisitionsMergers & Acquisitions

2003: Acquired Kinko’s for $2.4 billion in 2003: Acquired Kinko’s for $2.4 billion in cashcash

2001: Acquired American Freightways, Inc.2001: Acquired American Freightways, Inc.

1998: Acquired Caliber Systems, Inc.1998: Acquired Caliber Systems, Inc.Reanetta Walker (Group 4)

FedExFedEx

Why does telecommunication play such a Why does telecommunication play such a key role in the competition between key role in the competition between FedEx and UPS?FedEx and UPS?

FedExFedEx

This is the information age. Customers want This is the information age. Customers want and demand information. and demand information.

Between these two companies, the one that Between these two companies, the one that offers the most accurate information to the offers the most accurate information to the customer about their package will most customer about their package will most likely attract a greater number of customers likely attract a greater number of customers and gain market share.and gain market share.

Excellent telecommunication devices are currently the only way Excellent telecommunication devices are currently the only way these companies can offer the customer this additional these companies can offer the customer this additional

service.service.

Stacy Adkins (Group 4)

FedExFedExYou can also track using:You can also track using: FedEx InSight FedEx InSight – – they will use the internet to give you they will use the internet to give you

incoming and outgoing package information without entering incoming and outgoing package information without entering a tracking number on their web page.a tracking number on their web page.

FedEx Wireless Solutions -FedEx Wireless Solutions -Package tracking - Enter Package tracking - Enter your tracking number and send the results to as many as 3 your tracking number and send the results to as many as 3 email addresses. email addresses.

Dropoff locator - Simply enter your ZIP code to access Dropoff locator - Simply enter your ZIP code to access information about the closest FedEx Dropoff location. Also, information about the closest FedEx Dropoff location. Also, receive driving directions to those locations.receive driving directions to those locations.

My FedEx - My FedEx - Access and customize many fedex.com online Access and customize many fedex.com online services with a single user ID and password.services with a single user ID and password.

Why does “information about the package” have Why does “information about the package” have such a strategic business value in the express such a strategic business value in the express delivery business?delivery business?

Information about the package

Higher value for the customer Higher value for the company

Christian Gasse (Group 4)

Higher value for the customer

Frederick W. Smith, founder and CEO of FedEx, projected in Frederick W. Smith, founder and CEO of FedEx, projected in 1979 that the information about the package will soon be 1979 that the information about the package will soon be just as important as the delivery of that package.just as important as the delivery of that package.

The delivery has become a matter of course.The delivery has become a matter of course.

Now it is possible that the customer might e.g. track his Now it is possible that the customer might e.g. track his package via internet.package via internet.

Customers can check the status of the delivery or where it is Customers can check the status of the delivery or where it is right in that moment of time.right in that moment of time.

If, for example, a delivery is late because of various If, for example, a delivery is late because of various reasons, the customers has the opportunity to adjust their reasons, the customers has the opportunity to adjust their planning and to react on this delay.planning and to react on this delay.


Higher value for the company

Referring to the example of a delay in the delivery Referring to the example of a delay in the delivery process, FedEx/UPS also has the chance to react process, FedEx/UPS also has the chance to react immediately and take certain steps to minimize the delay immediately and take certain steps to minimize the delay or at least to inform the customer.or at least to inform the customer.

The exact tracking of packages provides the operator with The exact tracking of packages provides the operator with other useful information.other useful information.

• Route ManagementRoute Management

• Human Resource ManagementHuman Resource Management


FedExFedEx

What telecommunication products or What telecommunication products or services would you recommend that services would you recommend that FedEx or UPS use to improve their FedEx or UPS use to improve their competitive position in the overnight competitive position in the overnight delivery and shipping business?delivery and shipping business?

FedExFedEx

They could expand by utilizing the mobile phone They could expand by utilizing the mobile phone

technology, voice and color picture transmission. technology, voice and color picture transmission.

This could give a competitive advantage by allowing This could give a competitive advantage by allowing communication visually and verbally.communication visually and verbally.

Providing more efficiency to the corporate office, Providing more efficiency to the corporate office, field office, and to the trucks. field office, and to the trucks.

The companies could also establish partnership The companies could also establish partnership agreements to use the phone’s facilities which are agreements to use the phone’s facilities which are in operation.in operation.

Johnny Vanhorn (Group 4)

FedExFedEx Another area of expansion Another area of expansion

open to both UPS and FedEx open to both UPS and FedEx is the shipping industry. is the shipping industry.

World waterways are much World waterways are much more cost efficient than air more cost efficient than air or land transportation. or land transportation.

Their telecommunications Their telecommunications technology and expertise technology and expertise could be used in many ways could be used in many ways not conceived by any of the not conceived by any of the world’s shipping companies.world’s shipping companies.

Johnny Vanhorn (Group 4)

Chpt4 MIS-FedEx Case

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