How FEDEX delivery supply chain strategy works | Logistics | MBA Case study analysis with Solution

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 Bank 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.

In order to offer a large portfolio of supply chain services to its customers, FedEx equipped its network of group companies with the most modern and technologically advanced infrastructure facilities. The company employed the latest and most sophisticated package tracking, billing and communication systems. By the fiscal year 2002-03, FedEx was delivering 3.3 million packages from 211 countries each day through its fleet of around 643 aircrafts and 48,000 vehicles and trailers. Across its worldwide network, FedEx operated city stations and employed customer service agents, cargo handlers and couriers who picked up and delivered shipments in the stations' service areas.

In some cities, FedEx operated World Service Centers, which were staffed storefront facilities located in high-traffic, high-density areas. Unmanned Drop Boxes (40,000 in US) provided customers the opportunity to drop packages in office buildings, shopping centers, post office, industrial parks and other strategic locations. FedEx also forged alliances with retailers to extend this customer convenience network to drop-off sites in retail stores. The Authorized Ship Centers enabled customers to drop off their shipments, purchase FedEx's services and receive services such as personalized packaging assistance. In international regions, where low package traffic made FedEx direct presence less economical, Global Service Participants were selected to complete deliveries and to pick up packages.


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