Telecommunication FedEx Is a Logistics

Telecommunication

FedEx is a logistics company whose primary business is overnight courier, but that also operates ground delivery and customs clearance businesses, among others. The company uses information technology to track packages, to assist in employee control, to manage demand and supply and to enhance customer service. The company operates globally, with a highly integrated system. There are around 259,000 employees spread over the world (MSN Moneycentral, 2011), and all either contribute to the information system, work with it, or use it to help in decision-making.

FedEx primarily sends and receives data. This information is numeric (bar codes) and sometimes is treated individually and sometimes aggregated. An example of the latter would be airplane information that is send to the different stations. Each barcode contains information about the weight of the shipment and the type of shipment (First Overnight, Priority Overnight, etc.). The weight information would be aggregated so that the managers know how much weight is on an airplane coming to their station, something that assists in scheduling (calling in extra help on a heavy day, for example). Each point of data is treated individually and contains a subset of data, including all of the scans on that barcode that have occurred as the package moves through the system. This is then available from any information point internally, but it is also made available to the customer on the company's website. The integrated nature of the data at FedEx is considered to be a source of competitive advantage and is a model for other companies (Viswanath et al., 2003).

Thus, a lot of the data that FedEx sends through its system is received not only internally but externally as well. The senders are individual units that the company uses to scan barcodes. The packages are scanned by upwards of a dozen employees along their path -- couriers, package handlers, and employees working with customs officers as well. Most of the data communicated throughout the FedEx system consists of barcodes, which are the share symbols. Within each barcode are subsets of data such as the size, weight and delivery priority of the package. The barcode is transmitted, but the information is stored centrally so that anybody calling up that barcode is able to review the subset data that is associated with that code. This allows the system to transmit data anywhere in the world. It is part of the company's business model that the sender and receiver are not necessarily in the same country -- frequently they are on other continents. The system is designed so that distance is irrelevant in communication, mirroring the way the company reduces geographic distance in shipping as much as possible by delivering as quickly as possible.

When FedEx began, building this type of architecture was part of the business model. The company's first networks were analog, but they quickly moved to a digital system. This early system was known as DADS, which was a text messaging system for dispatchers and couriers that also allowed for barcode information to be transmitted back to the central information center (Dubie, 2002). From there, the company built out its different networks and tied them in together. FedEx has updated its systems so that they are more modern, but of course they remain digital.

The company uses a number of devices to link senders and receivers. The company has 10,000 access points for WLANs and 600 WLANs (Dubie, 2002. Mobile staff (couriers, truck drivers) have mobile access points that they use while on the road. These relay information back to the data center where it enters the system. There is a limited amount of access to this data that the employees on the road have, but stationary employees (managers, customer service staff) have access through computer terminals. The Internet provides customers with access to the barcode and subset information. There is very little time lag even from remote senders to external receivers -- a package delivery scan can show on the website for viewing within five minutes.

Information flow is typically one direction. The information senders handle the packages, while the receivers typically do not handle packages, other than the end customer when the package is delivered. The system is not designed to allow significant data to flow to the individual handling the package and most of them have little need for new information other than what is on the shipping label.

Receipt of information is not typically confirmed, either by internal or external users. For the most part, the people uploading new information do not need to know whether or not the information has been received. There are exceptions -- customer service staff updating an order will want to know that the updated information has been received. They will typically see a note (subset information accessed via the bar code) on their computer screens that confirms that the new information has been received centrally. But because end users (especially external ones like receivers) have no direct connection with the sender of the information (pick-up couriers, package handles), and the latter group only holds the package for a few seconds or hours, there is no need for receipt to be confirmed.

In general, the information is relayed via wireless towers to the centralized information center. It is unlikely that there would be significant weather interference, but there may be issues with the electronic equipment that is used to transmit the information. The handheld devices that scan the information in the first place are subject to malfunction, and any hardware issue along the information pathway would naturally disrupt the flow of information. A transmission tower going down, for example, would take out remote transmissions for an entire city, leaving just the station's transmitting capabilities. In general, thick walls are not an issue, though with any over-the-air transmission of information underground areas can be a problem.

Communications at FedEx is supported by its own operating unit. The CIO heads a unit with a budget of $1.5 billion per year and 5000 employees, as of ten years ago (Dubie, 2002). In general, there are few constraints for this division, largely because FedEx relies so heavily on its information transmission capabilities. The company was a pioneer in the use of wireless information transfer, and has used it as a source of competitive advantage since the company was founded. All of FedEx's competitors have needed to play catch-up and none have really been able to match what FedEx is capable of, in terms of information transmission to the customer. The IT department does have a budget, but major projects are financed if they will add value to the company, because of the need for FedEx to maintain industry leadership in information technology.

For the most part, the information that FedEx transmits is proprietary and is not subject to regulatory oversight. The company pioneered the systems that are in use, and while these systems may be imitated by competitors, FedEx's information is entirely its own and its systems for organizing that information are also proprietary.