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Fedex Case Study Information System

In: Computers and Technology

Submitted By malvi74
Words 3327
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Question 1: List the business processes displayed in the video.

FedEx is a logistical service company employing 100 000 employees all around the world. They are specialised in transportation, e-commerce and business services. In order to be successful in their job they came up with a really efficient information system. We are now going to describe the different business processes shown in the video that retraces the entire journey of a package.

1. First a FedEx employee goes to the house of the customer and picks up the letter or the box the customer wants to send. The employee immediately scans the product so FedEx recognizes it. From this moment on and until the end of the process, FedEx will be able to know where each package is. When the pick-up tour ends, the truck goes to a sorting center to transfer the packages.

2. Once in the warehouse (called sorting center), all the packages need to be classified. Some of them are headed to the US; others are going to Europe or Asia for instance. First the package is put on a belt where it is measured (length, height, weight, volume) it tells FedEx how much to charge the customer for the shipping. Then the package goes under a scanner that reads the destination and puts the box in the right belt.
If the machine cannot scan the box then the package is sorted out manually.

3. The third step is to put all the boxes in the right container and to fill it up at its maximum. The container is designed to fit in perfectly with the shape of the plane. Then it is weighted after that and then it goes to the plane.

4. After that the containers are loaded in the aircrafts directed by a control tower. There, employees check the weather, the location and all the information to make sure that the flight will be conducted properly.

5. Once the plane is arrived, the packages need to be sorted out a second time. The process is the same that the first time but boxes are divided into more precise geographic localisations.

6. The final step is the delivery to the customer’s house. The packages are delivered by truck to the customer’s front door. The process is officially finished when the recipient signs the delivery paper.

In conclusion we can say the system used by FedEx is really efficient. They control the transporting system from the beginning to the end because they have their own trucks and airplanes. Thus they are independent and depend only on their resources.

Question 2: List the types of information systems shown in the video. Can you describe how systems that were not shown might be used at FedEx?

A system is a process that transforms input into output. For an information system there are 3 components: the input (data from the organization and the external environment), processing and the output (information available for people and activities that use it). Thus, it is about converting raw data into meaningful information in order to have feedbacks. The important point about information systems is to not think it is just about technologies and computer. Actually, IS has three dimensions: technology of course, the organization, and the management (or strategy). IS is the technology used by some people with a view to a strategy.
It is possible to classify the different information systems in categories according to our book “Management Information System”: there are systems for management groups (transaction processing systems (TPS), management information systems (MIS), decision support systems (DSS), Executive Support System (ESS)), systems for linking firms (CRM, SCMIS, ERP) and other systems like Database Management System (DBMS) and expert systems. We are now going to see which of the types are shown in the video about FedEx.

First let’s observe the systems used by FedEx in the video:
 The first system is a Management Information System (MIS) which represents a specific category of IS which is a help for middle managers by making them aware of the organization’s current performance. It allows them to monitor, control performance and provide them with the future performance. For instance, FedEx uses this system for predicting how much they will charge the customers for its package. Indeed, each package, when it is scanned, reveals different information: the length, the weight, the height and the volume. All the dimensions can be analyzed and will tell the price of the service.
 Then we have Decision Support Systems (DSS) which combine data and mathematical or analytical models (What if analysis, sensitivity analysis or dimensional analysis like OLAP for instance) for the semi-structured decisions and unstructured decision making. They are made by the business analysts and “super users”. They help giving information not provided. These systems also help senior management and executives to stick with performance information. An example of analysis can be the balanced scorecard method who emphasizes results/ Goals/Initiatives according to 4 dimensions: Finance, business process, customer and learning & growth. When it comes to executives, DSS is called ESS (Executive Support Decision) in this case data come from internal and external data and drill-down capabilities.
In the video, a DSS is used to sort packages by hand when their labels cannot be read. Employees sort them thanks to a code referring to a destination.

 The video also shows the use of the Database Management System (DBMS). It is the interfaces between the applications and physical data files. This software allows the creation and availability of a database that can be used by individual business applications. They can extract the data needed without modifying it. Thanks to Relational DMSM, which links tables together, a simple key can allow access to an entire table, it is called primary key. In the video, we see that employees are using scanners all steps long. Thanks to the label containing a key, they have access to multidimensional tables with different information life the weight, the destination… so they can sort the packaging.

 Last but not least the expert system is an information system that grabs and stores the knowledge of human experts in order to be able copy it the way people are thinking and making decisions to help those who have less expertise. This system is divided in a knowledge base and inference rules. In the video, this system is used when it comes the control center. The employees are checking flights and regulating flows thanks to precious information given in their computer like the weather, the flow rate and a packaging monitoring.

Then let’s observe the IS which are not used in this video while they could be helpful:

 On the one hand there is the Knowledge Management Information System. They are systems that support the creation, capture, storage and dissemination of firm expertise and knowledge. It is very important as far as demographic issues are of paramount importance, firms need to be prepared: we can say that knowledge is a firm asset. The difficult part is to transfer the explicit part of knowledge which cannot be learnt contrary to the implicit part. More knowledge could be shared in FedEx company, for instance every employee could share and be aware of the prices or the routes of each box.

 On the other hand the Transaction Processing system (TPS) is not shown in the video. They are computerized systems used to perform and record the daily routine transactions necessary to make properly the business (like a sales order, an employee record keeping, or a payroll). It is an operational help to keep a track of every transaction. The Data are integrated in a system and then transmitted thanks to Management reports. For example, FedEx could keep a track of every sales order for each client in order to customize its service and know better its client. Thus for Mr. A the data kept would be, the price he paid, the number of packages sent, the destination… Then a report could tell FedEx its most common destinations and help him order faster.

 Last but not least, FedEx could use a Geographic information system (GIS), whose software can analyze and show data on digitized maps to help planning and decision-making. Thus the employee could see at what step is the packaging (storing, travelling, delivering…) and it would show how many steps before delivery by hand remain for a product.
Other systems are present like the ERP and its secondary systems (CRM…), but we will take a look at those systems next question.

To conclude, FedEx is highly based on IS as far as its sorting activity is concerned, and succeeds in “Mathematizing to the max”. Nevertheless, IS remain possible to exploit and FedEx might betterness its incredible performance.

Question 3: The system displayed in this video is an enterprise system. Why is this true? Explain your answer.

An Enterprise System, (or ERP: Enterprise Resource Planning) is, according to our class, a suite of integrated software modules and a common central database. It allows collecting data from many divisions of firm (Finance/accounting, Human resources, Manufacturing/production, and Sales/marketing) for use in nearly all of firm’s internal business activities. The main advantage for the firm is that any other division or process can have a fast access to information of another division. In an ERP, there are different systems like, Supply Chain Management systems, Customer Relationship Management (CRM) and Knowledge Management Information Systems.
The aim of ERP is to increase operational efficiency, provide firm wide information to support decision making, enable rapid responses to customer requests for information or products and include analytical tools to evaluate overall organizational performance.

After watching the video, it is obvious that there is an integration of the different divisions’ data.

First, with the label and the barcode, information is integrated like the weight, height, or the destination of the package. All this information is available to all employees who have an access to a scan that can read the barcode. All the data collected are automatically sorted in order to send each package to the right destination as fast as possible and at the minimum cost. We can say that there is an enterprise system. Thus the aim of efficiency is present.

We also notice that they aim at being able to answer to customer requests by integrating information, indeed any employee can tell for example how much the delivery of the package will cost to the customer thanks to diverse criteria.

FedEx succeeds in increasing performance thanks to analytical tools relying on many data: according to the weight and height, they evaluate the best way to put packages into the plane in order not to lose any space. Packages are in boxes that fit the shape of the plane. Without the availability of the information, it would not be possible to save so much space.
Moreover, FedEx is able to follow directly the journey of each package thanks to the data collected and sorted out. There is a common central database that helps for example employees in the air control center to coordinate shipping and monitor packages at any time. This is very efficient since FedEx controllers can use this information to make decisions in order to make sure that packages will be delivered on time.

Nevertheless, there are systems we don’t see in the video but probably used by FedEx in other steps:

• Knowledge Management Information Systems, as we saw on the previous question is absent in this process, because there are no really transfer of knowledge between the employee at that time.

• A supply chain management system is a system that tends to improve a supply chain which is a Network of organizations and processes for procuring raw materials, transforming them into products and distributing the products. Here in the video, we do not observe such a system as there are no supplier in this step of the process, it is just about storing and delivering.

• And of course the CRM, which is increasingly more important in business and which consists in knowing the customer.

Question 4: How important is technology to FedEx’s business processes?

Technology is present everywhere in FedEx business process. Without technology, FedEx wouldn’t be able to deliver its packages so quickly.
At the beginning of the process, when the employee comes to pick up the package, he/she uses the technology because the package gets an identification number entered in a database. Thanks to this code, the customer can know at each time, where his package is located. This is a part of the customer service part of the CRM: the customer wants to know where his package is, if it has been delivered yet, so FedEx enables the customer to have access to a part of its data base, a data mart, on his own, through a website. Actually, FedEx uses a Geographic information system application. So at that point, the technology serves the process, but also improves the company’s customer relation. The customer feels more secure about his package.
Then, when the package comes to the hub, it goes over a belt circuit that drives it along its road in the hub. It’s weighted and measured by a machine. This operation determines the price to be paid by the sender. It avoids waste of time, because the steps would be longer if it was done by a person. Then the label on the package is scanned by another machine. Thanks to a code, the scanner determines its route through the hub until reaching the right container. The belt circuit is automatically regulated and orients by itself the packages without any human intervention. This is an artificial intelligence: once the destination code read by the computer, it determines a genetic algorithm to find the shortest and right way to reach the right container that will bring it to its destination.
The monitoring of the aircrafts also uses technology. The operators use computers to manage take-offs and landings of FedEx aircrafts among other aircrafts that are passing through the airport. Even at this step of the process, the packages are also monitored and operators know all the packages that are in the aircraft.
After landing, the packages are reaching another sort center which is organized the same way as before, with the same technology. And when the package is delivered, the employee scans it for the last time, to confirm the delivery. The identification number of the package goes out of the data base.
FedEx uses technology at each step of the transportation, from the entrance of the package to the system when picked up, until its exit when delivered. This important use of technology is justified, because it avoids human mistakes, improves the delays of delivery, and enables both the company and the customer to know at every moment where the package is located.

Question 5: How could FedEx’s shipping process be made even more efficient?

The video used for the case is clearly to the advantage of FedEx. The company appears flawless and ultra efficient when actually the whole system could be improved.
First of all, FedEx receives on the Internet complaints and criticisms about the last part of its shipping process: the delivery by hand. In December 2011, a video has created a buzz on the internet: it was showing a FedEx employee throwing a computer monitoring over a gate because nobody answered. Other customers are complaining about packaging left in unsecure places where it could have been stolen or next to a dog. Lastly some people have never received their order. This raises the question of the reliability and trust into the shipping, to the employees and FedEx itself this is far more important as the competition becomes very harsh: DHL, Chronopost EPS, UPS are rivals.
One of the solutions may be to work on the confidence between FedEx and its customers, and reinforce loyalty. The receiver should be aware of the future arrival of the package (date, time) and could leave another address just next to the real one where it could be left (at a neighbor’s, a close shop). Another solution could be an incentive for employees according to the number of complaints they received, so that they would pay more attention to the place where they leave the box. Else, the FedEx employee who picks up the package could put directly a label on it, indicating directly the destination of the package, so that they know how many packages are going to each destination every day. With that system, FedEx would avoid losing packages and sending packages to the wrong destination In the storing process, there is one loss of time in sorting package whose labels could not be read by the scan because the label was an unreadable face. So they pay employees to sort those packaging by hand which is costly and time-consuming. Different solutions could do away with this problem. First the label could be printed on every face of the box, thus no matter how the package is one the belt, one label would be detected, avoiding any human work at the beginning of the chain to replace the packages. Another solution, the scanner could read through the package like x-rays, so even if the face containing the label was hidden it would be detected. Last solution, the belt could be transparent, and then the scan could also be placed under the belt so no package would be forgotten.
In order to avoid breaking fragile packages, customers or FedEx’s employees themselves should grade the package, defining how fragile is the package. So that FedEx's machines notice that the package needs care, it could be removed from the violent and rapid belt and transferred to a slower belt.

Moreover the scanning could be more precise concerning the destination of the package. We believe it could be cost saving to use train for medium distance shipping. Furthermore improving the shipping could also be made by the place where are located the storing places, there is a strategy for the place of the hub. The video was made in 1998, at that time the biggest hub was Memphis, which is still the case, but no other hub was considerer whereas globalization was very important. It is in 1999 that they decided to set a hub for the EMEA area (Europe, Middle East, Africa) at Roissy Charles de Gaulle in Paris. For Europe for instance it would be cheaper to use train rather that plane.
Creating only one hub for Europe, Middle East and Africa seems unrealistic. Plus emergent countries were leaving aside (China, India, Brazil…), whereas it is one of the biggest challenges to improve shipping. They may play a big role, and should been taken into account, hubs and storing set at the right places could decrease shipping cost, and reduce shipping time. If FedEx misses the turn on emerging countries it could be on a downturn dynamic. Figures speak for themselves: the growth rate in France is 1.5% for 2011 when it is 11.2% in China. In a period of economic crisis, where customers are always looking for more at the cheapest price, FedEx must be compared to its rivals in the market it manages the more which is the US. In fact, the US Post charges for an overnight delivery a flat fee around the US, whereas FedEx and its direct competitor UPS charge for the same package, according to weight and distance. So FedEx should find a way to charge its customers in a different and cheaper way. They should try to be more competitive in price. But it should still be profitable enough to invest in research and development, in order to keep its number one ranking in efficiency through state of the art facilities and information systems.

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