Introduction
The Federal Express (FedEx) Global Transportation and logistics corporation was the brain child of its founding CEO, Frederick Smith. FedEx, as it is more commonly referred to, was incorporated in April of 1973 and pioneered the overnight delivery business. FedEx is responsible for transporting over 3.4 million packages daily, circa 2009. This report will explore the vision and leadership behind the executive team at FedEx. It will look at the corporation’s use of information technology networks and how this has helped build effective ‘value add’ customer synergies and also investigate its acquisition strategy which has helped effect the corporations growth of its global Transportation Infrastructure over the last quarter of a decade.
Strategic Vision and Leadership
It could be said that Fred Smith, the founding President and CEO of Federal Express has always had transportation DNA in his blood. It was his father; James Fredrick Smith a former truck salesmen, set up Smith Motor Coach with a single converted truck in 1925 and went on to become a subsidiary of the Greyhound corporation in 1931. The idea for FedEx’s overnight delivery service was borne from an economics term paper, Smith penned as an undergraduate at Yale in the sixties. By 1971, the entrepreneur Smith had raised millions in VC1 funding alongside a substantial personal investment to launch Federal Express (FedEx), the overnight delivery service with 8 planes, initially covering 35-40 US cities (BusinessWeek 2004). Smiths’ early vision recognised that the US economy was becoming service-orientated; needing an efficient, reliable overnight freight service to transport packages and documents for continued growth.
The leadership and vision of Fred Smith and his executive management team have effectively grown the company from its humble beginnings in Memphis to the billion dollar global transportation business as it stands today. Core to the success of FedEx is its People-First Philosophy. From the outset Smith wanted to make employees an integral part of the decision-making process, stating; “When people are placed first they will provide the highest possible service, and profits will follow” (FedEx 2010). These three tenets of the FedEx corporate philosophy: People, Service, Profit or P-S-P, form the basis for all business decisions made at FedEx. In an interview with Alan B Graf the current CFO, reinforced the idea that every customer interaction should be “outstanding” and that each of the 250,000 associates pledge to the “purple promise” – placing customer service as the cornerstone of the supply chain environment (Dalton 2005).
During the seventies, Smith’s vision of the overnight express delivery prospered due to government de-regulation in the airline industry in ’77 ’78 and then again in 1980, when interstate transportation was deregulated. As the business grew Smith had the vision that he could help his customers control their transportation and inventory costs through innovative use of information technology to track customer packages. At the time, FedEx started pioneering the use of crash-printed sequential bar code readable numbers (BusinessWeek 2004) and handheld bar code readers. The real-time tracking system was borne. This allowed customers to keep up with inventory items whilst on the move and whilst sitting in a warehouse. FedEx now had the technical ability to add real value to the customers supply chain by synchronising the movement of customer’s goods with information and the financial transactions that accompany them creating value.
Transportation and logistics infrastructure
The supply chain facilitates the transportation of goods and services from suppliers to retailers to meet consumer demand. To this extend FedEx has built a large global hub and spoke transportation network which accommodates its customers need to outsource non-core logistics activities.