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eCommerce Merging

Merging eCommerce
and the Supply Chain
eCommerce and
the Supply Chain

Presented by

Brett Buckhold
Integrated Technology Consultant
FedEx e Supply Chain Services

May 10, 2000

©2000 FedEx Corporation - Briefing at Annual 1


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eCommerce
Agenda
Merging eCommerce
and the Supply Chain

FedEx Corporation Overview


A Networked Economy
Key Business Trends
FedEx’s eSupply Chain
Perspective
Response to the
Marketplace
Case Study Examples
Questions

©2000 FedEx Corporation - Briefing at Annual 2


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eCommerce
Merging eCommerce
and the Supply Chain

FedEx Corporation
1 Overview

©2000 FedEx Corporation - Briefing at Annual 3


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Who is FedEx
eCommerce Corporation?
Merging eCommerce
and the Supply Chain

Headquarters:
Memphis, Tennessee
FedEx Corporation
Overview

A Networked Economy (Key


Business Trends) Time-definite express Exclusive-use, expedited,
delivery door-to-door delivery
Headquarters: Headquarters:
FedEx’s eSupply Chain Memphis, Tennessee Akron, Ohio
Perspective

A Response to the
Marketplace Small-package ground
delivery Tower Group International
Headquarters: Custom brokerage/consulting
Case Study Examples Pittsburgh, Pennsylvania

Summary

Integrated logistics, technology


and transportation solutions Foremost less-than-truckload
Headquarters: freight carrier in the western US
Memphis, Tennessee

Consolidated sales, marketing and


information technology supporting a
single, global FedEx brand
Headquarters:
©2000 FedEx Corporation - Briefing at Annual Memphis, Tennessee 4
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CONFIDENTIAL
FedEx Corporation
eCommerce Provides...
Merging eCommerce
and the Supply Chain

FedEx Corporation
Overview

A Networked Economy (Key


FedEx Corporation
Business Trends) Worldwide Services
FedEx’s eSupply Chain
Perspective
Network Physical Based Information Based
A Response to the Supply Chain Solutions
Marketplace
Management Services

Case Study Examples

Summary

Ÿ Transportation to and from 90% of the world’s GDP


Ÿ Complete management of related information and logistics services

©2000 FedEx Corporation - Briefing at Annual 5


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eCommerce
Merging eCommerce
and the Supply Chain

A Networked
2 Economy - Key
Business Trends

©2000 FedEx Corporation - Briefing at Annual 6


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Key Business Trends
eCommerce
Merging eCommerce
and the Supply Chain

FedEx Corporation Three major trends shaping a


Overview

A Networked Economy (Key


“networked economy”
Business Trends)

FedEx’s eSupply Chain


Perspective • Providing fast, global reach
A Response to the
Marketplace
• Speeding the supply chain
Case Study Examples

Summary • Conducting business electronically

©2000 FedEx Corporation - Briefing at Annual 7


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Key Business Trends
eCommerce
Merging eCommerce
and the Supply Chain

FedEx Corporation
Fast, Global Reach
Overview

A Networked Economy (Key


Business Trends)
• World’s economy has become more fully
FedEx’s eSupply Chain
Perspective
integrated (a ‘business without borders’
A Response to the
environment)
Marketplace

Case Study Examples


• Ability to source and sell globally is a
Summary
critical success factor

• Framework for global commerce is


essential

©2000 FedEx Corporation - Briefing at Annual 8


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Key Business Trends
eCommerce
Merging eCommerce
and the Supply Chain
Speeding the Supply Chain

FedEx Corporation • Fast-cycle logistics is increasing as


Overview
companies of all sizes discover the power
A Networked Economy (Key
Business Trends) of supply chain velocity
FedEx’s eSupply Chain
Perspective
• Information-intensive services will power
A Response to the
Marketplace the supply chain
Case Study Examples
• Ability to manage inventory at rest while
Summary
managing inventory in motion is an
intricate step of the supply chain

• Adding value, visibility and velocity


throughout the supply chain will be
©2000 FedEx Corporation - Briefing at Annual
expected 9
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Key Business Trends
eCommerce
Merging eCommerce
and the Supply Chain

Conducting Business Electronically


FedEx Corporation
Overview

A Networked Economy (Key


• Electronic commerce in general is the best
Business Trends) way to minimize time and distance
FedEx’s eSupply Chain
Perspective

A Response to the
• Convenience, accessibility, connectivity,
Marketplace and reliability are the prerequisites of
Case Study Examples conducting business electronically
Summary

• Business-to-business e-commerce is the


largest growing segment of this trend
(estimated to top $100 billion in sales this
year and exceed the trillion-dollar sales
mark by 2003)
©2000 FedEx Corporation - Briefing at Annual
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- Forrester Research 1999 10

CONFIDENTIAL
eCommerce
Merging eCommerce
and the Supply Chain

FedEx’s eSupply
3 Chain Perspective

©2000 FedEx Corporation - Briefing at Annual 11


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eSupply Chain Management
eCommerce
Merging eCommerce What is it?
and the Supply Chain

The coordination and movement of products,


FedEx Corporation
Overview information and currency from the suppliers’
A Networked Economy (Key suppliers through manufacturing to the
Business Trends) customers’ customers
FedEx’s eSupply Chain
Perspective Suppliers Manufacturers Distributors Retailers Consumers
A Response to the
Marketplace

Case Study Examples

Summary

• A cross-functional business process


• Increasingly driven from the right to the left,
from the consumer and customer to the
supplier and manufacturer
• Competitive focus is no longer a product vs.
©2000 FedEx Corporation - Briefing at Annual
product, but rather supply chain vs. supply 12
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CONFIDENTIAL chain
eSupply Chain Management
eCommerce
Merging eCommerce What is the value?
and the Supply Chain

FedEx Corporation • Richmark study respondents expect supply


Overview
chain solutions:
A Networked Economy (Key
Business Trends) • To drive savings of 3-6% of revenue
FedEx’s eSupply Chain
• Are willing to invest 18-25% of these savings
Perspective over 3-5 years
A Response to the • Are willing to invest $10M annually for
Marketplace
operations
Case Study Examples

Summary • Additionally, a PRTM study finds for mid-market


companies (typical - $500M revenue):
• $5-15M in annual supply-chain cost reduction
benefits
• 10-15% improvement in on-time commitment
performance
©2000 FedEx Corporation - Briefing at Annual
• 12-40% increased volume flexibility 13
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eCommerce
Merging eCommerce
and the Supply Chain

Response to the
4 Marketplace

©2000 FedEx Corporation - Briefing at Annual 14


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FedEx eSupply Chain Approach
eCommerce
Merging eCommerce
and the Supply Chain

FedEx Corporation
Monitor
Monitor and
and
Overview Manage
Manage
A Networked Economy (Key Service
Service Recovery
Recovery
Business Trends)
Proactive
Proactive
FedEx’s eSupply Chain Reporting
Reporting
Perspective

A Response to the Plan


Plan
Marketplace Demand
Demand
Co-Planning
Transportation
Case Study Examples Co-Planning
Manufacturing
Manufacturing Services
Summary
Distribution
Distribution
Network
Network
Orchestrate
Orchestrate &
&
Optimize
Optimize
Right
Right Product
Product
Right
Right Time
Time
Right
Right Place
Place
©2000 FedEx Corporation - Briefing at Annual Right
Right Price
Price 15
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FedEx eSupply Chain Approach
eCommerce
Merging eCommerce Plan
and the Supply Chain

FedEx Corporation
• Two approaches
Overview
• Integration of planning software tools with
A Networked Economy (Key
Business Trends) visibility
FedEx’s eSupply Chain • Collaborative planning applications and
Perspective
services for mid-market companies
A Response to the
Marketplace • Need addressed
Case Study Examples • To balance supply and demand
Summary
• Value
• Planning collaboration results in more
demand-responsive, accurate forecasts and
production schedules (this improves order fill
rate, delivery performance, and reduces
inventory)
©2000 FedEx Corporation - Briefing at Annual 16
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FedEx eSupply Chain Approach
eCommerce
Merging eCommerce Orchestrate and Optimize
and the Supply Chain
• The ability to time-phase the express and non-express
distribution of products and orders on a global basis.
FedEx Corporation “The right product at the right place at the right time.”
Overview

A Networked Economy (Key


• Need addressed
Business Trends) • To optimize supply chain performance
FedEx’s eSupply Chain • Value
Perspective • One source coordination that optimizes pick location,
A Response to the mode selection, carrier selection and management,
Marketplace international trade, and warehouse activities
Case Study Examples • DCSS components
• Order Management System A customer is able to
Summary
• Warehouse Management System provide on-time
delivery commitment
• Multi-Carrier Shipment Automation
to their customer at
• Trade Compliance Expertise time of order and
• Transportation Management coordinate the
and Optimization shipment with other
• Merge-in-Transit Capabilities components to arrive
• Multiple Processing Facilities at the same time.
©2000 FedEx Corporation - Briefing at Annual • Billing & Invoicing 17
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• Web Enablement
CONFIDENTIAL
FedEx eSupply Chain Approach
eCommerce
Merging eCommerce Monitor and Manage
and the Supply Chain

• Ability to view in-transit and static inventory and order


FedEx Corporation status, coupled with real-time exception alerts.
Overview
Provides monitoring services with proactive recovery
A Networked Economy (Key and ongoing metrics for continuous improvement.
Business Trends)

FedEx’s eSupply Chain • Need addressed


Perspective • To know what is happening across the supply chain; to
A Response to the access and share data across the supply chain
Marketplace

Case Study Examples


• Value
• Less reliance on inventory, improved customer service
Summary and retention
A customer is informed by their FedEx
• DCSS Components Command & Control Monitor that her
• GIV order is in jeopardy due to a freight
forwarder error. Shipment is diverted to
• SC3 another transportation mode or carrier.
• FedExNet 2 Shipment is on time. Plan integrity is
• Customer service maintained.
©2000 FedEx Corporation - Briefing at Annual 18
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eCommerce
Merging eCommerce
and the Supply Chain

Case Study
5 Examples

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How is the customer using eCommerce?
eCommerce
Merging eCommerce EDI - INT
and the Supply Chain
Before

Customer
• Eliminates approximately 40% of the
tracing calls received by customer
each day (13,000 total - all carriers)

Benefits
• Reduces FedEx customer

Corporation
KPMG - FedEx
Alliance Recap Customer service calls

FedEx
Service • Improved asset utilization
FedEx Corporation (FedExNet)
Overview • Breathes life into FedEx synergistic
value proposition
Worldwide Services
Market Approach
After
FedEx
Partnering for FedEx
Ground Viking
Success Express
Next Steps
Web Page
Solution/Challenge

Q&A
• Enable customers to trace orders from
inception to delivery via customer web ECXpert
ECXpert
page Encryption
Encryption

• Populate customer order system and


web page with secure shipment data
©2000 FedEx Corporation - Briefing at Annual FedEx 20
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linked to customer order number Ground Viking Net
CONFIDENTIAL Express
How is the customer using eCommerce?
eCommerce
Orchestrated Delivery Management
Merging eCommerce
and the Supply Chain

Customer
Before • Growth without additional
infrastructure
• Inventories cut

Benefits
2 Component 1
DC
• Cash flow accelerated
5
• Unique (turnkey) replicable

Corporation
3
4 1
solution

FedEx
Customer
• Consultation fees
• Incremental transportation volume
After
Total days in transit and awaiting 22
installation = 24 5
3
Component 1
1
Solution/Challenge

4
• Reduce global inventory Customer
• Reduce circuitous shipments and
transit miles

• Global merge
©2000 FedEx Corporation - Briefing at Annual 21
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Total days in transit and awaiting installation = 5
CONFIDENTIAL
FedEx Solution Engine
eCommerce
Merging eCommerce
and the Supply Chain

FedEx Corporation FedEx


Overview Corporation
A Networked Economy (Key Enabling Technologies Worldwide

Information
Business Trends) Services
SAP
FedEx’s eSupply Chain eSCS
Perspective

A Response to the
Marketplace

Case Study Examples


Operating Entities FDX Logistics
Network Logistics
Summary
Physical

Transportation Integrated Solutions

©2000 FedEx Corporation - Briefing at Annual 22


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CONFIDENTIAL
eCommerce
Merging eCommerce
and the Supply Chain

6 Questions

Thank
You

©2000 FedEx Corporation - Briefing at Annual 23


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CONFIDENTIAL