FedEx steps up digital transformation to improve service delivery

FedEx, a global logistics player, has undertaken several digital transformation initiatives to improve their service delivery to customers.
FedEx and digital transformation
Robert B Carter is the Chief Information Officer of FedEx responsible for managing digital transformation plans. He is a member of the five-person Executive Committee, which plans and executes the corporation’s strategic business activities. Carter is also co-president and co-CEO of FedEx Services, which provides sales, marketing, information technology, communications, customer service, technical support, billing, and collections services.

Rob Carter is the winner of the Forbes CIO Innovation Award. Rob Carter and his team designed a partnership with third party retailers to receive packages. The innovation called FedEx OnSite has expanded FedEx’s reach by 9,000 stores, and enabled the company to receive over 10 million packages as a result.

Software giant Microsoft and FedEx recently announced they will bring together FedEx network intelligence with capabilities from Microsoft Dynamics 365 to introduce a “logistics as a service” for retailers, merchants and brands.

Satya Nadella, chairman and CEO of Microsoft, said: “We’re bringing data and insights from the FedEx network together with the Microsoft Cloud, starting with Dynamics 365, to help organizations accelerate their digital transformation across their business operations.”

Digital transformation strategy

Digital technologies are transforming the logistics industry across the globe. The demand for faster and more efficient supply chain movement has been an all-time high, thanks to the rapid growth in manufacturing and e-commerce sectors.

FedEx, in line with its digital transformation strategy, has optimized its extensive network and realized the full value potential. The company launched DRIVE, a global transformation initiative, to support profitability and deliver on their financial targets by achieving more than $4 billion in structural cost reductions by fiscal year 2025.

FedEx’s focus within DRIVE is in three main areas: FedEx Express, FedEx Ground, and shared and allocated overhead expenses. At Express, the team is transforming the network to be more agile, efficient, and digitally led. An initial priority is to optimize the global air network, which is expected to generate approximately $400 million in savings.

Deploying digital assets is an important pillar of this strategy. With this, they are also addressing Express pickup and delivery operations globally to improve efficiency. In February, the company plans to implement a new U.S. network design that will improve P&D efficiency and result in cost savings of approximately $300 million annually.

The company has launched an air network domain to restructure the Express air network to be more agile and flexible to changes in demand and also recognizing that deferred parcel and freight will be a bigger component.

In Europe, where FedEx expects over one third of Express’ DRIVE savings, the company has invested hugely to bring the networks together. “We are adjusting our network, deploying route productivity tools, and investing in digital capabilities for planning and automation. Additionally, we are rightsizing our intra-Europe air network and improving processes to enhance the end-to-end customer journey,” Raj Subramaniam — President and Chief Operating Officer of FedEx, said while delivering the earnings call.

FedEx Ground is delivering holiday shipments faster to more locations than their nearest competitor. This is mainly attributed to the enhancements to route optimization and package handler scheduling technologies. They focus on every aspect of the package lifecycle. For instance, in line haul operations, they are using tools, technology, and processes to drive increased packages for trailer. This provides the foundational data, tools, and insights critical not only for delivering DRIVE savings goals but also for sustaining those savings and transforming the way we operate.  They have also implemented new digital capabilities called estimated date of delivery, which gives their e-commerce retailers greater accuracy on their delivery times.

Shared and allocated overhead expenses are a significant opportunity for DRIVE savings. This includes procurement and digitizing and centralizing support functions. “One example of digitizing support functions is our ability to reduce customer service calls by redirecting customers to best-in-class digital applications,” Subramaniam added.

In another major innovation recently, FedEx Express India has integrated WhatsApp into FedEx Delivery Manager International (FDMi) e-commerce solution in the country. FDMi is an interactive e-commerce delivery solution that provides customizable delivery options and alerts. E-tailers can use the solution to help customers schedule their pickup and manage the shipment in transit. This helps FedEx minimize delivery attempts and eliminate failed deliveries.

Rajani Baburajan

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