3. ļ¬ Founded in 1971 by Frederick W. Smith.
ļ¬ First Investment-$ 84 Million ($4m-equity,$80m invst)
ļ¬ 1980ās:
ā FedEx reached its maturing stage.
ā First US company to reach $1 billion in
revenues.
ļ¬ FedEx handles 3.3 million packages
History
4. History
ļ¬ Founded in 1971 by Frederick W. Smith.
ļ¬ First Investment-$ 84 Million ($4m-equity,$80m invst)
ļ¬ 1980ās:
ā FedEx reached its maturing stage.
ā First US company to reach $1 billion in
revenues.
ļ¬ FedEx handles 3.3 million packages
5. Vision:
100 % customer satisfaction after every interaction and
transaction 100 % service performance , ensuring that all
delivery are made within the time commitment for the
service selected by the customer
FedEx is committed to our People-Service-Profit Philosophy. We
will produce outstanding financial returns by providing totally
reliable, competitively superior, global, air-ground
transportation of high-priority goods and documents that
require rapid, time-certain delivery."
mission:
7. ļ¬ Cost effective.
ļ¬ Alternative for small packages.
ļ¬ Distance and time are wider.
ļ¬ When customers need it now.
ļ¬ 24hrs. 7 days a week, including nights,
weekends and holidays.
ļ¬ Most familiar service.
ļ¬ Handles millions of shipments.
ļ¬ Delivers in 1 to 2 business days.
ļ¬ Heavy weight shipments.
ļ¬ Less than truck load (LTL) freight.
ļ¬ 600 miles next day delivery.
ļ¬ 1,600+ miles second day delivery.
ļ¬ Custom brokerage.
ļ¬ Electronic custom clearance.
ļ¬ Speed shipments across the border.
12. Location DecisionsLocation Decisions
Country DecisionCountry Decision Critical Success FactorsCritical Success Factors
1.1. Political risks, government rules,Political risks, government rules,
attitudes, incentivesattitudes, incentives
2.2. Cultural and economic issuesCultural and economic issues
3.3. Location of marketsLocation of markets
4.4. Labor talent, attitudes, productivity,Labor talent, attitudes, productivity,
costscosts
5.5. Availability of supplies,Availability of supplies,
communications, energycommunications, energy
6.6. Site size and costSite size and cost
7.7. Air, rail, highway, and waterwayAir, rail, highway, and waterway
systemssystems
13. The Elements of
Strategy
Time Horizon
ļ¶ Short Term
ļ¶ Intermediate
ļ¶ Long Term
Evaluation
ļ¶ Cost
ļ¶ Quality
ļ¶ Profitability
ļ¶ Customer satisfaction
Focus
ļ¶ Process Technology
ļ¶ Market Issues
ļ¶ Volume
ļ¶ Quality Tasks
Consistency
ļ¶ Professionalism
ļ¶ Proliferation
ļ¶ Changes in the task
ļ¶ Explicit goals
15. FedEx- Innovation
ļ¼Overnight package delivery;
ļ¼Computerised Package Tracking System-
(COSMOS)
ļ¼Hub-and-Spoke System;
ļ¼Just-in-time
ļ¼Build-to-Order
ļ¼Fusion of Technology: Use of Handheld;
16. FedEx- Innovation
ļ¾Central hub concept
ļ¾Enables service to more locations with
fewer aircraft
ļ¾Enables matching of aircraft flights
with package loads
ļ¾Reduces mishandling and delay in
transit because there is total control of
packages from pickup to delivery
17. COSMOS
[CUSTOMERS OPERATIONS AND SERVICE MASTER ONLINE
SYSTEM]
ļ¬PARCEL TRACKING SYSTEM-1979
ļ¬ PROOF OF DELIVERY INFORMATION
ļ¬ELECTRONICALLY REPRODUCED AIR BILL FOR
CUSTOMER.
ļ¬CENTRALIZED DATABASE- @MEMPHIS
17
19. BENEFIT:
ļ¬FASTER MOVEMENT
ļ¬CUSTOMER WERE ABLE TO MANAGE THEIR
INVENTRY COST MORE EFFICIENTLY
ļ¬ REDUCED WRONG DELIVERY-97% correct
delivery *
ļ¬ DELIVERY IN TIME-96 % in time*
19
Source *,#: FedEx Competitiveness through Efficient Logistics, KPMG 2010 report
21. Hub and Spoke Network
ļ¬H&S network involves a series of nodes (hubs),
connected by arcs (spokes) that represent viable
transportation alternatives between two nodes.
22. How it Works
Pure Hub and Spoke vs. Hybrid Hub and Spoke
Hubs and Super hub are created on the basis of center of gravity method
23. Center-of-Gravity Method
ļ¾ Finds location of distribution centerFinds location of distribution center
that minimizes distribution coststhat minimizes distribution costs
ļ¾ ConsidersConsiders
ļ¾ Location of marketsLocation of markets
ļ¾ Volume of goods shipped to thoseVolume of goods shipped to those
marketsmarkets
ļ¾ Shipping cost (or distance)Shipping cost (or distance)
24. Center-of-Gravity Method
ļ¾ Place existing locations on aPlace existing locations on a
coordinate gridcoordinate grid
ļ¾ Grid origin and scale is arbitraryGrid origin and scale is arbitrary
ļ¾ Maintain relative distancesMaintain relative distances
ļ¾ Calculate X and Y coordinates forCalculate X and Y coordinates for
ācenter of gravityāācenter of gravityā
ļ¾ Assumes cost is directly proportionalAssumes cost is directly proportional
to distance and volume shippedto distance and volume shipped
25. Center-of-Gravity Method
x - coordinate =x - coordinate =
āāddixixQQii
āāQQii
ii
ii
āāddiyiyQQii
āāQQii
ii
ii
y - coordinate =y - coordinate =
wherewhere ddixix == x-coordinate of location ix-coordinate of location i
ddiyiy == y-coordinate of location iy-coordinate of location i
QQii == Quantity of goods movedQuantity of goods moved
to or from location ito or from location i
26. Center-of-Gravity Method
North-SouthNorth-South
East-WestEast-West
120120 ā
9090 ā
6060 ā
3030 ā
ā
| | | | | |
3030 6060 9090 120120 150150
ArbitraryArbitrary
originorigin
Chicago (30, 120)Chicago (30, 120)
New York (130, 130)New York (130, 130)
Pittsburgh (90, 110)Pittsburgh (90, 110)
Atlanta (60, 40)Atlanta (60, 40)
27. Center-of-Gravity Method
Number of ContainersNumber of Containers
Store LocationStore Location Shipped per MonthShipped per Month
Chicago (30, 120)Chicago (30, 120) 2,0002,000
Pittsburgh (90, 110)Pittsburgh (90, 110) 1,0001,000
New York (130, 130)New York (130, 130) 1,0001,000
Atlanta (60, 40)Atlanta (60, 40) 2,0002,000
x-coordinate =x-coordinate =
(30)(2000) + (90)(1000) + (130)(1000) + (60)(2000)(30)(2000) + (90)(1000) + (130)(1000) + (60)(2000)
2000 + 1000 + 1000 + 20002000 + 1000 + 1000 + 2000
= 66.7= 66.7
y-coordinate =y-coordinate =
(120)(2000) + (110)(1000) + (130)(1000) + (40)(2000)(120)(2000) + (110)(1000) + (130)(1000) + (40)(2000)
2000 + 1000 + 1000 + 20002000 + 1000 + 1000 + 2000
= 93.3= 93.3
28. Center-of-Gravity Method
North-SouthNorth-South
East-WestEast-West
120120 ā
9090 ā
6060 ā
3030 ā
ā
| | | | | |
3030 6060 9090 120120 150150
ArbitraryArbitrary
originorigin
Chicago (30, 120)Chicago (30, 120)
New York (130, 130)New York (130, 130)
Pittsburgh (90, 110)Pittsburgh (90, 110)
Atlanta (60, 40)Atlanta (60, 40)
Center of gravity (66.7, 93.3)Center of gravity (66.7, 93.3)
+
30. ļ¬Companies centralize large distribution
centers which essentially do three things
ā receive goods/information coming from many
suppliers
ā consolidate goods/information according to the
location where they are to be shipped
ā ship them individually to their final destination.
31. Role of Terminals
ļ¬A terminal may be defined as any facility
where freight and passengers are assembled
or dispersed
ļ¬Terminals may also be points of interchange
involving the same mode of transport
ļ¬Terminals may also be points of interchange
between different modes of transportation
34. ļ¶ Super Hub- Memphis International airport
ļ¶ Asia pacific: Guangzhou Baiyun Int. airport
ļ¶ Canada: Torontopearson Int.airport
ļ¶ Central Eastern airport: cologneBonn airport
ļ¶ Europe/Middle East Africa: Paris de Gualle airport
ļ¶ Latin America/Caribbean: Miami Int. airport
ļ¶ United states: Fort worth, Indianapolis,
Newark Liberty, Oakland,Ted Stevens
Anchorage,
37. Pros and Cons of H&S
Pros Cons
Spokes are simple, and new ones can
be created easily.
Inflexible, changes at the hub, or even in a
single route affects the whole network.
Scheduling is convenient since there
are few routes, with frequent service.
The hub constitutes a bottleneck in the
network.
Complicated operations can be
carried out at the hub, rather than at
every node.
Delays at a spoke can also affect the whole
network.
Small number of routes generally
leads to more efficient use of
transportation resources.
Cargo must pass through the hub before
reaching its destination, results in longer
journey.
39. GOC :Global operations control Center
ļ¬Tracking of shipment in real time
ļ¬Tracking real time movement & position of
trucks and flight.
ļ¬Monitor wether condition
ļ¬Cosmos & GOC work in tandem.
40. Fedex GIS TrackInG
OperaTIOnS
ļ¬ To meet delivery deadlines.
ļ¬The information age. Customers want and
demand information
ļ¬The navigation tool connects wirelessly to
ArcGISĀ® Server.
ļ¬Weather, traffic and other factors affecting
the route
ļ¬Accessed online and included in the route
computation.
ļ¬
41. The entire system depends on TEAMWORK
and meticulous timing. Tiffins are
Collected from homes & taken to nearest
Railway Station. Then they are sorted
out for area-wise distributiuon, so that a
single tiffin could change hands 3 to 4
Times in the course of its daily journey.
42. The Flow Logic
Grant Road
(12)
Churchgate
(1-10)
Lower Parel
(14)
2
3
7
4
5
6
Zones for destination
Distribution
By Carriers
at lunchtime
To offices
Point of
Aggregation
And Sorting
C
DB
A E
Collection from home
1
43. Coding System
VLP : Vile Parle (suburb in
Mumbai)
9EX12 : Code for Dabbawalas
at Destination
EX : Express Towers
(building name)
12 : Floor no.
E : Code for Dabbawala
at residential station
3 : Code for destination
Station eg. Churchgate
Station (Nariman Point)
Dāsouza
44. Zero % fuel Zero % investment
Zero % modern technology Zero % Disputes
99.9999% performance 100 % Customer Satisfaction
SIX SIGMA IN SERVICE SECTOR
45. Working of NMTBSA
ļ¬Error Rate : 1 in 16 million transactions
ļ¬ Six Sigma performance (99.999999)
ļ¬ Technological Backup : Nil.
ļ¬ Cost of service - Rs. 300/month ($ 6.00/month)
ļ¬ Standard price for all (Weight, Distance, Space)
ļ¬ Rs. 36 Cr. Turnover approx.
[6000*12*5000=360000000 i.e Rs. 36 crore p.a.]
ļ¬ āNo strikeā record as each one a share holder
ļ¬ Earnings -5000 to 6000 p.m.
ļ¬ Diwali bonus: one monthās from customers.
SIX SIGMA IN SERVICE SECTOR
46. Presented by:
Amit Kumar (56) Vijay Kumar (102)
Vishal Jawa (104) Vivek Mittal (105)
Satendra Singh (93)
Editor's Notes
In the airline industry, H&S networks allow airlines to offer a greater variety for service between city-to-city pairs, permit economies of scale in terms of passenger consolidation along frequently traveledspokes, and to a certain extent allow an airline to dominate market share in a particular region.
Pure Hub and Spoke ā This can be found in parcel or shipping industries where there is only one, centrally located hub. All routes originally travel to the hubs, receive localized goods that have already been separated, and return to their origins. And of course, the hub location must be located strategically. Cost, traffic and efficiency factors should decide which system is best for any organization. Hybrid Hub and Spoke ā Hybrid is typically found in the Airline industry where most all flights that originate at some spoke location connect through one of a few hub locations and on to their intended destination. Various airlines generally operate several hubs. At times, you can also find direct flights that do not connect through a hub. Direct flights are based upon demand and cost factors.
The key is consolidation. By having one (or a few) large center(s) (hubs), companies can bring in required parts from many locations into one load designated towards one common destination. The system does have advantages and disadvantages that will be discussed later. A hub and spoke is a combination of cross-docking and consolidation.