Perfect Package

By Leslie Knudson, Deputy Editor

Business Management speaks with Robert Carter, EVP and CIO of FedEx Corporation, about how technology has catapulted FedEx from a pickup-and-delivery startup company to a global delivery giant driving innovation around the globe.

Back in 1978 when FedEx Founder Fred Smith coined the infamous phrase, “The information about a package is as important as the package itself,” it’s safe to say he had no idea just how true that statement would prove to be. Today, FedEx’s unparalleled tracking systems enable customers around the world to see every detail of a package’s movement from the moment a label is prepared until the package is dropped off at its destined doorstep.

That technology is one of the primary components that have enabled FedEx to grow into its own – and step out of the shadow of its largest competitor UPS – with more than 275,000 employees worldwide serving more than 220 countries and territories. Today the 36-year-old company credited with inventing overnight delivery boasts an annual revenue of $32.3 billion and handles an average daily volume of more than six million shipments for express, ground, freight and expedited delivery services.

Headquartered in Memphis, Tennessee the corporation has expanded from its early days of pickup and delivery into a vast network of operating companies that compete collectively under the FedEx name including: FedEx Express, FedEx Ground, FedEx Freight, FedEx Kinko’s Office and Print Services, FedEx Custom Critical, FedEx Trade Networks and FedEx Services.

One underlying philosophy unites the wide range of businesses and services that comprise FedEx Corporation: “Compete collectively, operate independently, manage collaboratively.” Whether it’s acquiring office supplies and making copies at FedEx Kinko’s or shipping packages via FedEx Freight, the corporate philosophy helps to coalesce the dynamic grouping of companies all operating under the ‘World on Time’ slogan.

With almost 7,000 IT professionals across the entire corporation that fall under CIO Robert Carter’s belt, he recognizes that creating a healthy, engaging culture is a critical piece for success. “We don’t just believe in employee satisfaction; we believe in employee engagement as the real metric that you have to manage to retain your best people. It’s about being engaged, feeling like you’re making a difference and contributing to a cause that’s bigger than yourself. That’s what motivates people to stay and grow with our company.”

A key part of engaging employees is encouraging innovation. Often touted as one of the most innovative companies in the world, FedEx relies on two primary ways for introducing and executing innovation. The first is instilling a culture of innovation across the entire corporation in all of the team members – not just the IT folks. “People are engaged and empowered to come up with ideas and present those ideas,” Carter says. “We believe that everybody has a responsibility to innovate and think of the next best thing.”

Beyond instilling an overall culture of innovation, FedEx also directs specific initiatives aimed at introducing innovation. “When it comes to new products and technologies, there’s a worthwhile investment to make in teams that do research and development specifically to uncover those things,” Carter says. “One example is FedEx Labs, our innovation think-tank that’s staffed with people whose responsibility is to keep a pipeline of innovative ideas and projects alive.”

The visible supply chain
Aside from those wearing the purple uniforms, technology is the other key proponent in helping to differentiate FedEx in the marketplace. In today’s rich digital information age, the ability to track each movement of a package in real-time is its greatest competitive advantage. Today FedEx.com tracks more than 15 million unique visitors per month and handles more than 3.5 million package tracking requests daily.

“Information is very, very fundamental to our DNA and our value proposition at FedEx,” Carter says. “Our value proposition is one of not just velocity – the ability to move things quickly – but visibility, the ability to keep track of them as they are moving. We fundamentally invented the transparency of the supply chain, which today is kind of a yardstick for most businesses to be able to look into their supply chain and see where things are to anticipate the arrival or delivery of important things.”

Carter comments on the role information has played in the FedEx culture ever since the famous line delivered by Smith set the stage for what would be the impetus behind FedEx. “At the time there really wasn’t a culture of either customers or companies that had information about things as they moved through a network – whether it be transportation or otherwise. So from before that day to this very day, we have continued to offer information up to our customers as a strategic advantage and use that same information inside of our company to ensure our quality and productivity as we grow.”

Hailed as the first transportation company to embrace wireless technology more than two decades ago, FedEx continues to be a leader in the use of innovative wireless solutions as customers can track the status of FedEx Express, FedEx Ground and FedEx Freight shipments at anytime from anywhere. On average FedEx Express and FedEx Ground packages are scanned at least a dozen times from pickup to delivery using wireless data collection devices.

The level of detail procured from the wireless scanners translates into benefits for both customers and for FedEx. “The fact that you can track a package as a customer and see each and every step that it takes and be comforted by that level of information – also has a very direct corollary in how we run our business,” Carter notes. “That same information gives us very detailed metrics about how the operation is performing, how many packages are being sorted through the Memphis hub, for example, and what percent of those packages are routed correctly because we constantly are working to have 100 percent accuracy in the movement of our shipments.”

Technology is also the key enabler behind FedEx’s successful peak seasons. Last holiday season, FedEx made history again with a record-breaking 9.8 million packages moving through the FedEx Express and Ground Networks on December 18, 2006.

Faced with handling nearly 10 million packages in one day, planning and preparation starts very early in the calendar year in order to make sure the website, tracking engines and databases can support the increased load. “We build out capacity, stress test our applications and create safety nets that allow us to recover from anything that could potentially go wrong,” Carter explains. “We had an environment during our peak day where we were posting to our databases approximately 3,000 transactions per second on shipment movement alone, while at the same time being able to simultaneously handle a thousand inbound inquiries on that package status information at the same time.”

As the peak season keeps peaking for FedEx and its technology continues to keep the corporation on the edge of innovation, Carter agrees that FedEx is in a very good spot and will continue to grow dramatically. “We’re providing a set of services and capabilities that the world needs and wants – and we’re doing it in a high-quality and customer-focused fashion. So we will continue to grow, innovate and provide connections around the world and in the markets that we serve to allow businesses to operate more efficiently.”