Business Model

Presented By:- Shantam Vaish

Coverage• Brief History• About FedEx• What Is FedEx’s Business Model• Logistics System• Success Mantra• SWOT

FedEx: A Concept that Blossomed into an Industry

• FedEx (FDX) was the brainchild of Frederick W. Smith in 1965. An economics student at Yale University, Smith wrote a term paper in which he came up with the idea for an overnight delivery service.

CEO

About FedEx

• Founded by Frederick W. Smith in 1971.• Headquarters located in Memphis,

Tennessee.• Daily Volume of more than 7.5 million

shipments• Workforce of more than 3,25,000 team

members worldwide• Revenue of $47.45 billion for year 2015

What Is FedEx’s Business Model?

• FedEx creates value by offering “high-value added” package delivery to over 220 countries.

• The business model can best be summed-up in the company’s early slogan: When it absolutely, positively has to be there overnight.

• With 652 aircraft (the world’s largest freight airline) moving over 4 million packages per day, FedEx guarantees speed with a reliability of greater than 99%

Cont...

• FedEx provides a portfolio of transportation, e-commerce, and business services through wholly owned subsidiaries. In the same year, Fortune ranked the company 12th for the “world’s most admired companies” for the 14th consecutive year.

Logistics System

Old Supply Chain

New Supply Chain

Service

• Review and analysis of supply chain

• Order administration

• Shipment planning and management

• Freight bill audit and payment

• Invoice and report generation

Competitor

UPS History

• Started in 1907 by 19 year-old Jim Casey then called American Messenger Company.

• Became Unite Parcel Service of America in 1929 and began shipping packages on commercial airliners.

Fedex

• 50,000 Delivery Trucks

• 625 Cargo Planes

• 325,000 Employees

• $47.45 Billion USD

UPS

• 88,000 Ground Trucks

• 583 Planes

• 360,000 Employees

• 58.36 billion USD

The Competition

• Price competition

• Information Technology

• Service Expansion

• Logistic Serviceshttp://fitsmallbusiness.com/fedex-vs-ups-vs-usps/

Success Mantra

COSMOSIt is a computerized package tracking system that monitors every phase of delivery cycle at Federal Express

Hub & Spoke

It is a centralized integrated logistics system designed to keep cost down. Hub and Spoke distribution centers receive products from many different origins, consolidated the products and send them directly to destination.

GOC

FedEx has control centers in London, Paris, Toronto & Hong Kong but much of the action happens in GOC of Memphis, Tennessee in a room filled with hundred of computers screens, videos & busy people.

24 hours a day, 365 days in a year they monitor system for potential disruption any problems from a jet fuel supply issues in Asia to a volcano in the Alaskan Island to earthquake in Europe.

In urgent situation the GOC has the authority to act fast & make crucial decision.

SWOTStrength

• Network in more than 220 countries and more than 3,25,000 employees worldwide

• Best use of technology• Dependable knowledge in

the delivery business.• High investment in IT

systems• More than three decades of

experience in logistics services

Weakness

• More dependence on US market

• Since this is a competitive segment, the market share growth is limited

• Less competitive ground shipping

Opportunities

• To use cooperative strategies

• Challenging competitors through mergers and acquisitions

• Local competitors with poor service & products

• Acquire smaller companies to increase market share

Threats

• Rising fuel prices could impact company’s profit

• Varying market demand

• Vulnerable to increasing reach by major competitors.