FedEx and Operations Management Essay

Operations management refers to all levels of an organisation and how best to efficiently convene, fund, maintain and maximise its services and/or operations, both internal and external. The core goal/objective of operations management it to maximise outputs while reducing and minimising the inputs required to achieve the desired results.

FedEx’s external environment both positively and negatively affects the organizations operations. Their external environment consists of government, weather, and the economy. FedEx does not have a very large external environment because their operations are not affect by many outside sources.

In addition to that, FedEx came up with new services such as Saturday deliveries, delivery by 10:30 A.M., customer interfaces (drop boxes, drive through stations and express delivery stores) and same day pickup of order. This is to distinguish its services. More on that, FedEx's philosophy of "People-Service-Profit" was successful in insuring a union free workforce devoted to customer focus. In 1978, deregulation in transportation helped FedEx to acquire larger planes therefore achieve lower cost. Trade deregulation in Asia-Pacific enabled FedEx to expand further. The acquisition of Gelco express, Tiger International, and establishment of Airport Hub in Brussels expanded FedEx internationally. Inflation and rising global competitiveness generated the need for "just-in-time" supply model, which was the advantage supported by FedEx advanced technologies.

By capitalizing on this strategy, FedEx was able to boost its average delivery volume in 1976 to 20,726 packages per day via its three services, Priority-One, Standard Air, and Courier Pack, compared with an average of 10,521 delivered daily the prior year. Clearly the company’s calculated use of strategically-located hubs, nighttime flight routes, and limited package size allowed the company to carve out a niche by reliably delivering packages on an immediate, overnight basis.

Operations Management in an organisation is repsonsible for managing and in making decisions concerning the activities that convert inputs into outputs , that is goods and services. This covers both short term actvities as well as longer term activities to meet strategic goals. Inputs can be the raw materaials need to manufacture goods such as furniture or the computers needed to create a service like online shopping site. Operation management’s role is to make decisions to improve how operation activities function, for example, to improve the final quality of the output or to change production methods to be more efficient in terms of cost and in time.

Operations Management explores the way organizations produce and distribute goods and services. Everything you wear, eat, sit on, use or read comes to you courtesy of the

Outsourcing the warehousing functions: In this option, all warehousing actions will be outsourced to Global Logistics (GL) and distribution will start from main warehouse at

DHL 31%, USPS 8%, FedEx 27%, and Amazon 3%. From these numbers Amazon is a very small player in the shipping department. Every competitor, expect DHL, are currently shipping the excess freight that Amazon cannot maintain. With Amazon 's move to acquire more of the market, these competitors need to be on the lookout because portions of their market share can be taken away. These major shipping firms only provide shipping services not offering household products like Amazon. With Amazon starting by semi-supplementing their shipping avenues, Amazon has the potential to grow even larger. The market cap numbers are not a good basis to judge market share on since FedEx and UPS have the majority of the market in the shipping industry. FedEx and UPS are the major competitors against Amazon and its new shipping department. FedEx and UPS had the most recent annual net income of $50.3 billion and $58.3 billion respectively. They represent the majority of packages delivery from individuals, businesses, and online retailers.

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

FedEx is a logistical service company specialized in transportation, e-commerce and business services. The success of FedEx lies on an efficient information system. The business process is as follows:

FedEx was first established in 1973 as a logistic company with the name Federal Express that be created by founder and first CEO Frederick W Smith. The Headquarters is in Memphis, Tennessee in the US. The company became well known for its fast and reliable delivery service around the world. On its first night of operation FedEx delivered 186 bundles to 25 urban locations in the US with only 389 employees and a 15 Dassault Falcon aircraft. In 1980 FedEx purchased a system for live updates on the packages. In this system, FedEx drivers share the current locations from the trucks to provide updates of the packages to the customers. This information was sent to a central computer of FedEx then the company improved the update system by introducing FedEx.com webpage. This webpage allowed the tracking data to be easily accessible. However, recently, FedEx uses Savvy bundle for packing and tracking the products across couriers. (Baldwin, 2016)

Centralize warehousing in Waltham (option 1) to meet demand in Southeast and Northeast regions using delivery service of Winged Fleet as their rates are cheaper for these two regions (Exhibit 2).

The company I decided to do my course project on was Fed-Ex. This corporation was incorporated on October 2, 1997. Fed-Ex provides many services such as, FedEx Express, FedEx Ground, FedEx Freight and FedEx services. FedEx Express offers a certain time of delivery within one-three business days. However, FedEx ground focuses on residential and business deliveries with packages weighing up to 150 pounds. Furthermore, FedEx Freight provides service to virtually all United States ZIP Codes (including Alaska and Hawaii). And finally, FedEx Services provides other companies with many sales, markets, informational technology and customer service. FedEx has ben providing their employees with many benefits until the economy went into recession.

Operations management focuses on managing the processes of producing and distributing products and services. Operations activities often include product creation, development, production and distribution. It deals with all operations within the organization. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. The nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.

When it comes to strategy, FedEx has done a great job of staying on top in the market place after all these years. FedEx has built a very powerful empire over the last decade, insuring customers with different global delivery services. Different companies have different strategies that work with their company to reach a specific goal, at FedEx the main strategy for success would be customer service. Customer service would have to be the number one strategy FedEx is mostly concerned with and constantly researching new ways to make it easier and more convenient for customers to deliver packages across the world. To help accommodate customers, FedEx has established online databases to ensure customers of package delivery; customers are able to track packages from the convenience of their homes or offices. Something else that FedEx has established are flights, and freights for those international customers, they have also improved services to and from all over Europe as well as Asia, in