¶ … Management
Information management is essential for FedEx. The company uses information in a number of ways. On the operations side, data drives decisions regarding the scheduling of assets. Every piece has its own delivery time guarantee, for example, and it is necessary to use information to ensure that the right piece gets on the right plane and right truck to reach its destination. How this works is as follows.
The customer goes online and schedules a pickup, and the automated system plugs that information directly to the courier who works that route. The package is scanned at pickup. The tracking number of the basis for information on that package -- the person at the destination can see within minutes that the package has been picked up. From there, the package is scanned at the local depot, when it goes on the plane, when it lands at the hub, when it is sorted for the next plane, then when it lands at its destination airport. It is scanned when it goes onto the truck for delivery, and then again when it is delivered. With the tracking number is a lot of information, such as the weight of the package, the package type and other data that is used in scheduling resources.
FedEx knows the mean volume for each of its scheduled flights, and the routes are designed around a particular mean volume as well, that an individual courier can handle. So each decision regarding capacity is made on the basis of the information that is gathered by the company. Routes are designed on the basis of the load that they carry.
Furthermore, performance reviews are done on the basis of this data as well. Each station, and each route, has a set of specs that are based on historical data. The data is collected regarding how many stops can be done within a given time frame on average....
There are data points for every business day, so over 200 per route, per year. With that many data points, FedEx is able to understand mean and standard deviations for performance on any given route, and use that in the performance reviews for people. It works the same at other jobs -- sorters who scan packages at the stations have specs for how many of those are normally done in an hour, for example.
Data is not only used in operations, but in sales as well. FedEx knows how its best customers are based on the volumes that they ship, and they have sales staff who work with those clients to ensure that their needs are already met. New businesses can be developed from this information -- for example the sales staff can talk to a good client and find out that there is something else that they need, and FedEx can respond to that. This is why they have customs clearance and those sorts of businesses, because they are closely related to the overnight shipping business and customers indicated a desire for them.
Fundamental Impact
FedEx has always used data to drive its business, with the objective being to maximize efficiency. The organization realizes that to move the volume of goods that it does, to have that sort of throughput, could be an incredibly inefficient process. In essence, flying planes is expensive. The objective that the company has with respect to efficiency is to optimize capacity of critical resources, starting with the aircraft. If each plane flies as full as possible, and each truck as well, then the company will be operating at its optimal efficiency. In this way, FedEx can keep its fixed costs as low as possible, by leasing the fewest possible planes will maintaining its ability to meet all customer needs. It is the same with trucks. The company wants…
