Fedex Case Study on Creating Value Essay example

Words: 1274
Pages: 6


Creating Value at FedEx and UPS

From the company's founding close to 30 years ago, FedEx's strategic competitiveness has been based on an obsession with, and careful nurturing of, delivery speed and reliability as its core competencies. These competencies have been critical to the pursuit of the opportunities that were associated with Frederick W. Smith's early vision of today's fast-cycle global economy. Believing that value could be added to business firms' operations if they were to receive urgently required materials on an overnight basis, Smith pioneered what is seen as a fast and reliable, yet pricey, delivery system.

Historically, the foundation of FedEx's successful business model has been customers'
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The ability of supply-chain management systems to create value for organizations is being more widely recognized in a world that is increasingly being affected by the Internet's capabilities. In the context of the supply part of the value chain, the Internet has provided a host of new direct-ordering systems. Simultaneously, however, it has created a need for more efficient distribution capabilities. This need exists for the conduct of both business-to-consumer and business-to-business transactions.

Competitors are also challenging FedEx as the firm seeks to find ways to create value for customers. UPS, for example, has been very aggressive. The following comment from business analysts suggests the change UPS is completing to discover additional ways to create value for client organizations: "UPS used to be a trucking company with technology. Now it's a technology company with trucks." Largely responsible for this transformation of UPS is the $11 billion the firm poured into technology in the last decade. These funds were used to buy a host of products-mainframe computers, a vast array of networked PCs, handheld computers, wireless modems, and cellular networks, among others-and to hire and support 4,000 programmers and technicians.