Financial Times FT.com

Case study: FedEx

By Sarah Murray

Published: June 4 2007 13:01 | Last updated: June 4 2007 13:01

“The information about a package,” declared Frederick Smith in 1979, “is as important as the delivery of the package itself.” The founder of FedEx, the US logistics and transportation group, backed this philosophy with funding – FedEx continues to invest about $1.5bn a year in its information technology.

Of course, planes and trucks still do the heavy lifting when it comes to shifting the goods in FedEx’s temporary care. At the Memphis hub, they can be seen in action. Late at night, vehicles of all kinds converge on the airport. Trucks roll in from service stations loaded with large metal containers full of packages while more than 140 of the company’s 700-strong fleet of planes pass through the airport every evening in the space of a few hours.

Supporting these workhorse vehicles, however, is sophisticated technology. At the Global Operations Control Center, the company’s central nervous system at Memphis, large screens display the exact position of every FedEx aircraft in the sky and routing systems map out the most efficient route for each package.

And if the company deploys large airborne machines to deliver its customers’ goods, its business is equally dependent on a tiny rectangle of thin black lines: the barcode. This is how FedEx captures the information about packages that was deemed so crucial by Mr Smith. The barcode on each domestic package has been scanned up to 12 times before the parcel reaches its destination. Those travelling internationally are scanned up to 23 times during their journey.

Crucially, FedEx developed a method of using these barcodes on shipping labels that allowed packages to be tracked. It also developed handheld scanners to read the codes and send them back to a central computer.

John Dunavant, who runs the company’s Global Operations Control Centre, remembers the days before the introduction of barcodes. Back then, he says, couriers would have to look up the destination postal code in a 50-page directory. “If you had a package with a New York City zip code, the courier would look it up and pick up a black marker and put EWR on the package,” he explains. “The problem was you had a lot of option for errors – and everyone has different handwriting, especially me. It looks like I write with my foot.”

But if package scanning has eliminated such errors, it plays a crucial role in the delivery process itself. At “the Matrix” – a giant sorting area consisting of dozens of conveyor belts, technology drives everything. Nothing is left to chance. After being unloaded from their trucks, arriving packages swirl down a sort of giant helter-skelter and slide across a massive slanting steel shelf, helped along by large arms that swing out and nudge the packages gently on to the slope.

Below, workers transfer them on to one of 43 conveyor belts that run parallel to each other. The din is tremendous as, with a banging and hissing, yellow mechanical arms shoot in and out from the sides of the belts, pushing packages off in different directions, down yet more conveyor belts to be sorted yet again.

Here too, technology is in the driving seat, since these busy steel arms – each of which is responsible for hitting packages destined for a different part of the world – need a detailed set of instructions before they can direct the correct package. The instructions come from a set of scanners at the head of the conveyor – the brains of the belt.

As it enters the system, a set of laser beams measures the exact dimension of the package so that the arm, when it shoots out, can hit it exactly in the centre, rather than on a corner, which would simply send it spinning aimlessly round.

For each arm to identify the right parcels to punch, the boxes must be travelling a precise distance apart. Another set of laser beams therefore measures the space between parcels as they move on to the conveyor. If two are clustered together, the system will hold one back for a few seconds until it is travelling at the correct distance from its neighbour.

Finally, the barcode is scanned, telling the arm down the line that a package for its region is heading its way. As soon as the package reaches the arm, the yellow steel shoots out and the package heads off in another direction. More than 160,000 packages travel through the Matrix this way every hour.

Technology has also allowed FedEx to provide another key component of a successful logistics supply chain: visibility. Harnessing the power of the internet, in 1994, the company launched fedex.com, allowing customers for the first time to track the status of a package on its route.

With this ability to buy, sell and track our goods in the virtual world, it is easy to forget that the logistics business remains one grounded in materiality, with cargo shipments relying on wheels and wings to propel them across the globe. But, as FedEx has powerfully demonstrated, information technology is what speeds them on their way and ensures they reach their designated destination without mishap or mix-up.

Sarah Murray’s is author of “Moveable Feasts: The Incredible Journeys of the Thing We Eat” (Aurum Press)

Jobs and classifieds

Jobs

Search
Type your search criteria below:

Deputy Finance Director

Department for Work and Pensions

Executive Director

Harvard Shanghai Center

Global Head of Aftersales

Material Handling Capital Equipment

Chief Executive Officer

Financial Services Group

Recruiters

FT.com can deliver talented individuals across all industries around the world

Post a job now