Fedex Case

Describe FedEx’s corporate philosophy and explain how FedEx’s systems fit in the context of its corporate philosophy. FedEx’s corporate philosophy - People-Service-Profit (P-S-P) philosophy: relied heavily on management’s ability to create an environment that encouraged and allowed people to choose to deliver superior service. i. Believed customer satisfaction begins with employee satisfaction. James Barksdale aware that keeping the promise to customers required employees to work harder => “People first” philosophy ii.

Attention to quality service emerged early in FedEx’s history:- 1. 1975: “Federal Express. Twice as Good as the Best in the Business. ” 2. 1970s: service was measured by percentage of overnight deliveries that were made on time 3. 1980s: FedEx managers concluded that high service percentages would not sufficient in the future - To strike the best movement toward 100% customer satisfaction. (as Frederick Smith mentioned – “The first time you tolerate anything other than a movement toward 100% customer satisfaction, you’re on the road to mediocrity. i. It attains this philosophy from both focus and broad views. It is broad in that it covers all the areas from Leadership, Information Technology, Human Resource Utilization, Quality Assurance of Products and Services, Quality Results and finally, Customer Satisfaction. It is focus in a sense that it excels in all these areas. FedEx was the first company to win in the service category in 1990, since the award was established in 1988 – Malcolm Baldrige National Quality Award (MBNQA), with 160,000 requests altogether. i. FedEx only recognized the highest rating of “completely satisfied” as an acceptable level of customer satisfaction in its Customer satisfaction surveys, aligned its measurement improvement towards its goal of 100% complete customer satisfaction. - FedEx Quality =Productivity philosophy - Recognized the correlation between doing things right the first time and productivity: good relationship between customers and suppliers The ways FedEx’s systems fit in the context of its corporate philosophy In 1980s it adopted quality-improvement process (QIP) to support P-S-P i. Recognized the correlation between doing things right the first time and productivity (quality = productivity) ii. Defined quality service not in statistical terms, but as performance to the standards of the customer: 100% satisfaction ? FedEx implemented “quality-improvement programs” in 1990 even at tough economic times – with oil prices had more than doubled between August and December 1990.

This could reflect the persistence in aligning the corporate philosophy of the management. - As support to its “quality-improvement” philosophy, by mid-1987, FedEx selected consulting firm – Organizational Dynamics Incorporated (ODI) at times when FedEx struggling with problems internally (rapid growth in overnight service) to initiate a companywide education program on quality, focused more on the thought processes in quality improvement. i. Led workshops for senior vice-presidents and managing directors ii. Trained managers to facilitate workshops for employees As support to its “quality-improvement” philosophy, it implemented framework of ideas in the modules above, it set up “quality action teams” (QAT) – to help employees to change the way they did their job i. FADE framework: Focus -> Analyze -> Develop -> Execute ii. Extensive training given to QAT members iii. Focused on small, incremental changes Outcomes: i. Creative solutions through employee involvement and careful analysis. E. g. devised mnemonic devices to help new employees remember the abbreviations for destination cities, saved estimated US$3 million in training costs ii.

Cultivate a culture of continuous improvement – constantly changing the system to improve the service to customers - As support to its “quality-improvement” philosophy, in late 1980s it set up “service quality indicators” (SQI), to give customer satisfaction measurement with weight and points assigned to every package with refer to list of all things that could go wrong with an overnight delivery. The number was then combined from each customer complaint, for tracking, comparing and communicating to every employee in daily basis. As support to its “quality-improvement” philosophy, Customer satisfaction surveys on both general and segmented studies were conducted. Quarterly, customer satisfaction study was conducted by phone across FedEx’s four main market segments with a five-point satisfaction scale. It also utilized targeted customer satisfaction studies to gather more feedback from customers. - As support to its “quality-improvement” philosophy, it carried out Customer / Supplier Alignment (CSA) process for internal service. i. One party listed and ranked the ten most important services that party provided to his or her internal customer ii.

That same party listed how well he or she supplied the customer’s needs, thereby rating his or her own performance iii. The other party went through the same process ? CSA also uses between employees and managers - As support to its “people first” philosophy, set up ‘guaranteed fair treatment procedure’. A three-step process that gives employees access to upper management within 21 working days. - As support to its “people first” and “quality-improvement” philosophy, Survey Feedback Action was used to solicit employee feedback. i. Total involvement of everyone makes people committed ii.

Measurement of quality on leadership iii. Continuous improvement which look for ways to correct or prevent problems - As support to its “people first” and “P-S-P” philosophies, Leadership Evaluation Awareness Process (LEAP) was set up to evaluate, consider and guide potential managers about the challenges connected with leading people. - Innovative and Risk Taking culture: As support to its “quality-improvement” philosophy, FedEx fostered a culture that stimulated innovation and created a workplace to encourage the motivated people to innovate and dare to take risk.

And to align with its “people first” philosophy, FedEx had a no-layoff policy, which secured employee’s jobs and enabled its employee to take risk. 1. How has FedEx used information technology to provide 100% customer service? COSMOS (Customer, Operations, Service, Master On-line System) Every package that entered the FedEx system was tracked by a central computer system, with worldwide network transmitting customer information to and receiving it in a central database. The system was continuously updated with new information about package movements, customer pickups, invoices, and deliveries.

Supertracker The overnight package was tagged with a10-digit bar code, as a protocol to transmit information from courier’s hand-held computer to COSMOS. Digitally assisted dispatch system Each courier van was equipped with the dispatch system with interactive screens in their vans. The system communicated to approximately 30,000 couriers through the network. Powership FedEx provided a computerized shipping management system (Powership) to allow customer to print air bills for programmed addresses, download transactions to FedEx, manage accounts receivable, and track packages through COSMOS.

Central to the P-S-P philosophy and FedEx’s success:- ? COSMOS: allowed customer-service representatives to handle customer enquiries with confidence ? Dispatch system: ensured a quick response to delivery and pick-up requests ? Powership: give customer accurate and timely information free of charge ? Supertracker: made itself indispensable to overnight vendor with such a complete distribution solution

Other areas that FedEx probably utilize information technology - One of the examination categories / items was “Information and Analysis” for getting the MBNQA award in 1990, which required “Scope and management of quality data and information” and “Analysis of quality data and information”. These two areas are obviously achieved by integrating Information Technology to enable its business running. - Through continuous improvement – enhancing the systems so that customer requests could be handled in a shorter cycle. e. g. rom processing 10% yesterday and 90% the day before mails to schedule 100% of today’s mail to be processed today. - Customer complaints were logged since early 1980s and the information was used in internal evaluations of systems. - To keep the list of things that could go wrong with points and weights, and to record the points and weight of every complaint for “service quality indicators” (SQI) implementation. The system then combined the figures from each customer complaint for tracking, comparing with projections and communicating to every employee in daily basis. The results of all the customer satisfaction surveys were complied to identify trends, allow for customer segmentation to a meaning level, and to provide a detailed measure of service attributes. - Employee support systems to record the complaints from employees with built-in work flow and schedule for management reviews - A system was created to record the employee survey questions and feedback actions, for continuous improvement. It charged work groups with examining management’s effectiveness, which relates to the bonus managers can get.

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