Case Study on

FedEx- E Procurement
Journey
By Group 7
18BSP2209 Ameya Pendbhaje
18BSP2697 Shubhanshu Katiyar
18BSP2858 Akash Kumar
18BSP3393 Vaibhav Dhakrey
 History
 In 1971, Frederick W. Smith raised funds and purchased a used aircraft
company in Little Rock, Arkansas.
 He began using the aircraft to provide overnight delivery services for
envelopes and small packages being shipped within the United States.
 Smith eventually named his business-Federal Express.
 FedEx generates over $35 billion annually. Uses 48,000 vehicles global to
deliver goods. Also utilizes another 30,000 vehicles at its airport operations.
 FedEx has over 370 facilities in US and Canada alone and operates more
than 210 countries currently.
 It is the world's largest airline in terms of aircraft, operating 672 planes. It is
the 3rd Largest commercial Airline.
 FedEx’s IT Initiatives
 Initiatives at FedEx started in the late 1970s
 Smith introduced sophisticated combination of laser scanners, bar codes,
software and electronic connections to support its increasingly complex
and widespread networks.
 By late 1970s, FedEx had become the industry leader in the usage of
information technology
 FedEx’s 65 % of the total volume was processed using an automated
shipping system.
 FedEx IT Infrastructure

 Introduces UNIX based client/server system replacing main

server system
 By mid 90’s implemented a new ERP system and expanding its
use of the web and e-commerce.
 The entire ERP, CRM and data management system across the
FedEx organizations was built on HP-UX platform.
 Purchasing & Procurement

 FedEx spends annually $7 billion on indirect purchase such as

subscription, cell phones, pagers, parts etc.
 FedEx had a centralized purchasing even though initially they
relied on inefficient paper based process.
 FedEx identified e-procurement strategy as the key to
automate and streamline the entire procurement process.
 E-procurement systems is a collaborative procurement of
goods, works and services using electronic methods in every
stage of bringing in the efficiency & transparency
 FedEx’s E-procurement Objectives

 To act as a catalyst for procurement reform

 To do a complete BPR to have a refined process
 To reduce cost of doing business for both government and
suppliers.
 To establish level playing field and fair competitive platform for
the suppliers.
 E-Procurement Implementation

 In June 1999, FedEx began a pilot implementation of the Ariba

e-procurement solution for ‘personal computers.‘ Later
included other products as well to the list.
 They focused on 3 areas mainly, a) Technology (Ariba, People
Soft, Inacom) BPR(With KPMG for internal MRO process
practices) and Logistics
 FedEx had the advantage of having Unix plat form helped
integrating Ariba since it runs on HP-Ux platform
 Currently the system is accessible to the 145000 employees of
FedEx worldwide.
Ariba Buyer – Flexible Configuration
Ariba Marketplace
Ariba Marketplace
 E-Procurement Process
 Sourcing 40000+ supplies starting from computer servers to staple
pins flows through ORMS on the company intranet.
 FedEx did an awareness campaign on its entire supplier circle and
invited them to use Ariba.
 All the Vendors took it positively and implemented the process
knowing the exposure they are going to get worldwide
 FedEx’s E-procurement systems reduced unauthorized spending
and administrative costs which in turn help them to track spending
patterns and boost internal efficiency.
 Achievements after Ariba installation

 Overall purchasing cycle time has been reduced from 70 to 20

percent.
 Number of suppliers got reduced more than 50 percentage.
 The company was able to achieve more competitive pricing from
suppliers and in turn provide good benefits to its employees.
 The full ROI achieved within 3 months. Today the major portion of the
FedEx's yearly requisitions goes through Ariba system.
 Still its expanding the e-procurement activities in terms of users and
suppliers to have more savings
Thank You