Case Scenario: Changing Competitive Priorities at FedEx
FedEx is a $ 38- billion- a- year a$38-billion-a-year delivery service company that thrives on deliv-ery speed and reliability. FedEx delivers 7.5 million packages each day. Because 60 percent of the packages go by plane, FedEx charges premium prices for the service. For years, companies traditionally chose FedEx because of its on- time delivery and technological superiority in tracking packages. The Internet, however, changed things drastically. Many busi-nesses use complex Web- based processes designed to eliminate much of the unpredictability in their operations by communicating directly with cus-tomers and suppliers. E- mail delivers documents instantaneously, and low-cost truck lines, discount air carriers, and even ocean vessels can now track shipments via the Internet.
These technological advances cut into the demand for FedEx's tradi-tional services. The growth potential now lies in ground transportation, presently dominated by United Parcel Service. This demand is fueled by Internet companies, such as Amazon. com, which relies on ground trans-portation services to deliver packages directly to the customer's door, and by the vast business- to- business supply networks created by Web- based purchasing systems. To remain competitive, FedEx created two new ser-vices: FedEx Ground and FedEx Home Delivery. FedEx Ground focuses on business- to- business deliveries via a recently procured trucking company. FedEx Home Delivery specializes in deliveries to residences. In addition, FedEx invested $ 100 million in processes to coordinate the flow of goods. The goals are now low- cost operations and dependable delivery? a change from past operations goals that stressed speed.
Tasks:
1. Analyze the case study.
2. Using APA-style writing format, provide a written summary of the case study. Indicate the operations management technique that was used and recommend a technique that was not used and its potential outcome.