Just-in-Time Inventory

Just-in-Time Inventory - Chapter 1 FEDEX AND KEY INDUSTRY...

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Unformatted text preview: Chapter 1 FEDEX AND KEY INDUSTRY DRIVERS A fter creating and revolutionizing the modern air express industry, FedEx has extended the benefits of high-speed, high-tech, global delivery throughout the economy. Today, the growing _ corporation which has added ground, freight and expedited transportation to its hallmark FedEx Express business _ uniquely epitomizes the story of the changing nature of business. It’s a story of how this country has shifted from the Old Economy to the new Economy. It’s a story of how a corporation can influence trends and, in turn, be influenced by them. And it’s s story of how business, particularly during uncertain economic and political times, must continue to change and adapt as these fundamental trends emerge. Assessing the drivers shaping the express transportation and logistics industry is hampered by a lack of attention by economic theorists and by a lack of data. However, the critical market forces related to FedEx in particular, and to the transportation/logistics industry in general, can be categorized as follows: 1. 2. 3. 4. Business Trends Transportation/Logistics Industry Trends Consumer Trends Economic Trends These key drivers and their component trends are depicted in summary form in the following chart and are discussed in greater detail in the body of this report. Global Impacts of FedEx In The New Economy 1 DRIVERS OF THE EXPRESS INDUSTRY Drivers/Trends Functional Area Dimensions Quality Inventory Control Streamlined Transactions Competitive Advantage Efficiency Speed and Reliability Market Access Customer Service Geographic Coverage Integrated Solutions Tastes/Preferences BUSINESS LOGISTICS INDUSTRY CONSUMER ECONOMIC Consumer Tailoring Market Channels Global Economy Economic Growth Integration U.S. Economy Total Quality Management (TQM) Just-In-Time (JIT) Manufacturing Electronic Data Interchange (EDI) Speed to Market Management by the Web Overnight, Time-Definite Delivery Deregulation Enhanced Service Options Global Reach Integrated Supply Chain Management From Mass Production… …To Market Segmentation Mass Customization Emergence of e-tail Markets Growth in Output, Trade and Investment Growth of Emerging Markets Globalization Emergence of the New Economy The development and application of new information and communications technologies has also had a profound impact on these four functional areas. Because technology plays such a powerful role, it will be addressed within the context of business, industry, consumer and economic trends rather than as an “industry driver” of its own. Global Impacts of FedEx In The New Economy 2 KEY INDUSTRY DRIVERS: PAST, PRESENT & FUTURE • • • • Competition • New business models (JIT) • Quality Management (TQM) • Speed to market • Expanding global reach • • • • • Growth • Higher wealth, output • Growth of emerging markets • U.S. productivity growth • Emergence of New Economy Globalization Increasing trade & investment Greater integration & linkages Reducing barriers Liberalization Value Demand for: • Lower prices • Better service & quality • Convenience • Speed & reliability Macro Drivers Business Drivers Value Creation IT (EDI, e-commerce) Lower costs Greater efficiency Innovation Increasing shareholder value Express/Logistics FedEx Consumer Drivers Choice Demand for: • New shopping outlets (e-commerce) • Customization • Specialty products • New delivery options Industry Drivers • • • • Competition Deregulation Globalization New services Non-traditional competitors Infrastructure • IT usage, information systems • Physical equipment & facilities • Global expansion A. Business Trends: The Diffusion of Modern Business Practices When FedEx was established in the early 1970s, the U.S. economy was still firmly grounded in the “Industrial Age.” Mass production had been mastered, with large corporations producing consumer goods for an increasingly affluent population; however, advanced technologies, such as those used for computing and new forms of telecommunications, were still in their infancy. The highly competitive, swiftly transforming business practices we now take for granted were nowhere in sight. Gradually, a number of industry competitiveness issues and trends converged to spur demand for express transportation. These drivers, particularly in high-value manufacturing industries such as electronics, pharmaceutical industries, biotechnology and automotive industries, directly created the need for the specific services offered by the express industry over the last three decades. Fred Smith and FedEx premised the company’s role on the “value concept” of meeting the demand generated by these drivers, most of which were not yet fully articulated at the time of FedEx’s founding. Specifically, FedEx Express operations were based on the tenet that the key driver in the Industrial Age – price – was being supplanted by a new driver – the “price/value ratio.” Value was heightened by speed, reliability, and visibility, all of which contributed to the emerging new business model. Quality ! Total Quality Management (TQM) Total Quality Management (TQM) is the discipline or business process that emphasizes improving the quality of the products, as well as the processes required to manufacture and deliver such products. W. Edwards Deming was an American statistician and a quality-control expert who used statistics to examine industrial production processes for flaws.1 Deming believed that improving product quality depended on increased management-labor cooperation, as well as improved design and production processes. He greatly influenced Japanese industry as it rebuilt in the postwar years and was often critical of U.S. corporate management. Total quality management implies that the entire process of design, development, production, delivery, and management is subject to scrutiny. For a firm to say it is committed to TQM, it has to infuse quality standards into all aspects of its operations, from the strategic thinking of business executives to post-sales services. TQM places a premium on client satisfaction. 1 See W. Edwards Deming, “Quality and the Required Style of Management: The Need for Change,” The Journal for Quality and Participation, 1988. Global Impacts of FedEx In The New Economy 4 First pioneered in Japan, and then adopted by U.S. firms in the 1980s, Total Quality Management emphasizes improving the quality of the products and the processes required to manufacture and deliver such products. It is closely linked with other advanced manufacturing practices, such as just-in-time inventory, lean manufacturing, flexible manufacturing, and ISO 9000. Leaner, quality-oriented manufacturing practices has led directly to the need for precise inputs of key components in the manufacturing process. The delivery of these high-value inputs at the right time was made possible by the services offered by the express industry, started by FedEx during the mid 1970s. Inventory Control ! Just-in-Time Inventory Just-In-Time (JIT) manufacturing is a system by which all production is coordinated to minimize the intervals between processes. The fundamental goal of JIT is to minimize the amount of inventory that must be maintained throughout the supply chain, while still ensuring smooth production processes. The delivery of parts to the plant, the movement of components through the different production processes and the delivery of final goods to the wholesaler or the retailer are made only when required. JIT manufacturing was first introduced in Japan in the mid-1970s by the automobile manufacturer Toyota and was later imitated by other Japanese manufacturers. The system has revolutionized manufacturing processes and has had a major impact on inventory control systems, work-flow patterns and customer-supplier communications systems. Under JIT, substantial efficiencies are gained from frequent deliveries of small quantities to meet immediate demands. JIT uses the “demand-pull” system of production/materials control, as opposed to the former “supplypush” model. Rapid-turnaround transportation logistics services are critical ingredients for success in JIT. The JIT system has many advantages. With lower levels of inventory, less warehouse space is needed at the production facility. Also, with less inventory, the firm has less money tied up in inventory-related costs. In addition, the quality of inputs usually improves significantly, because the firm cannot rely on reserve stocks to replace defective parts and components. JIT started to spread in the United States during the early-1980s. Prior to that, American production managers typically liked to maintain large levels of inputs as insurance against batches of poor-quality parts and delays in the arrival of inputs and components. This was all changed by the practice of JIT manufacturing. In 2000, an estimated 47 percent of Global Impacts of FedEx In The New Economy 5 U.S. manufacturing firms were utilizing some form of JIT inventory control system.2 The utilization of JIT places great pressure on suppliers’ transportation systems, because suppliers must be able to deliver their inputs precisely when required by customers. This manufacturing practice created a growing market demand for highly reliable, fast-turnaround transportation companies such as FedEx. During the mid-1980s, JIT inventory was still a new concept in the United States and manufacturing companies had average inventory levels lasting several weeks, if not months. By the late 1990s, however, manufacturing companies practicing enhanced logistics and inventory control practices were run on as little as 10 minutes of spare inventory.3 The increasing efficiency of the logistics industry facilitated the successful implementation of “just-in-time” inventory control. Over the past two decades, the logistics industry has taken on an entirely new set of responsibilities, which have required new competencies. First introduced in Japan, the JIT manufacturing practice was fundamentally made possible in the United States by the availability of reliable, fast-turnaround express delivery companies such as FedEx. JIT has now become a common practice for advanced manufacturing companies and even service companies. Given the large distances between supplier and buyers in this country, JIT would not be possible without the availability of fast-cycle logistics services by companies such as FedEx. The new logistics industry, led by companies such as FedEx, has combined the monitoring of product availability and orders with high-speed, reliable delivery. This allows companies not only to reduce the amount of inventories they must hold at any one time, but also to respond rapidly to changes in market conditions and even tailor products to consumer demand. Streamlined Transactions ! Electronic Data Interchange (EDI) By the late 1970s, the introduction of in-house computing capabilities enabled companies to process data electronically; however, the exchange of this data between companies (or among different departments or affiliates of the same company) still relied heavily on the traditional postal system. Often a company would enter data into a business application, print a form containing the data and mail this form to a trading partner. The trading partner, after receiving the form, would re-key the data into another business application. Inherent in this process were poor response times – and the use of the postal system often added days to the exchange process, along with excessive paperwork, duplication of effort and the potential for errors as information was transcribed. 2 U.S. Department of Transportation, Federal Highway Administration, U.S. Freight: Economy in Motion 1998, May 1998, p. 64. 3 Ibid, p. 4. Global Impacts of FedEx In The New Economy 6 Using new telecommunications technologies, companies gradually began to transmit data electronically over telephone lines, and had the data input directly into a trading partner's business application. These electronic interchanges improved response time, reduced paperwork, and eliminated the potential for transcription errors. This method was realized by the widespread use of computer telecommunications, under a common format called Electronic Data Interchange (EDI). During the early 1980s, work began on setting national Electronic Data Interchange standards. Both users and vendors input their requirements to create a set of standard data formats that: " " " " Were hardware independent; Were unambiguous, such that they could be used by all trading partners; Reduced the labor-intensive tasks of exchanging data (e.g., data reentry); and Allowed the sender of the data to control the exchange, including knowing if and when the recipient received the transaction. By the late 1980s, EDI was employed by many of the more advanced manufacturing companies in the United States. It greatly reduced paperwork and transmission errors, reduced data entry and postal delivery times, and allowed companies to communicate seamlessly with their suppliers and customers. Starting in the 1980s, EDI helped to improve inter-firm communications and to increase efficiency in the design, development, manufacturing, and distribution of products. The availability of faster information, brought by EDI, also led to greater demand for shorter inventory cycles and shorter transit times – facilitated by time-certain services offered by companies such as FedEx. Because of the premium placed on service, as well as the timeliness of information, the air cargo industry has been a pioneer in the use of EDI to track and quickly move shipments. Through the use of EDI and other technologies, transportation and logistics companies have developed information-sharing databases with their customers, which improve their ability to move goods quickly through the supply chain. Competitive Advantage ! Speed to Market Speed to market has become a critical factor in competitive advantage in today’s marketplace. Product cycles have become dramatically shorter, requiring a combination of rapid development, design and prototyping, flexible manufacturing, improved network management and fast-cycle logistics. In all cases, the technology for gaining information about the consumer and turning that information into a prototype for quick feedback Global Impacts of FedEx In The New Economy 7 from the consumer continues to evolve and continues to shorten product life cycles and time to market. A survey of leading corporate transportation officials predicted that order cycle times would be reduced from an average of 123 hours in 1997, to 69 hours in the year 2000.4 Similarly, product transit times were expected to drop from 57 hours in 1997 to 42 hours in the year 2000 – a reduction of 26 percent. In today’s fast-paced marketplace, particularly for high valueadded, fast-growing industries, speed-to-market is one of the most important sources of competitive advantage. Unless companies can significantly reduce product cycle times, they are often confronted with substantial foregone revenues – due to either lost orders or missed opportunities to charge higher margins to “early adopter” customers.5 The vast network of suppliers and buyers operating over the Internet greatly facilitates cycle reduction time. According to Andrew S. Grove, Chairman of Intel Corporation, “The Internet is a tool, and the biggest impact of that tool is speed. The speed of actions, the speed of deliberations, and the speed of information has increased, and it will continue to increase.”6 Competition is revolving increasingly around the speed at which companies can bring products to market. This does not mean rushing goods to outlets at the expense of poor product quality, design flaws and rejections, but rather shortening the development cycle in order to capture market shares for goods before new generations of products appear and render existing models obsolete. “Speed to market” has become a critical source of competitive advantage in today’s marketplace. Product cycles have become dramatically shorter, requiring a combination of rapid design and prototyping, flexible manufacturing, improved network management, and fastcycle logistics. Competitive pressures have given rise to the need to improve customer service and speed delivery time. FedEx plays a key role in fast-cycle logistics, and is increasingly playing a critical function in assisting companies to dramatically reduce cycle time. By facilitating just-in-time delivery of intermediate goods through guaranteed time-definite delivery, and delivery of final products to customers, FedEx has increased the speed-to-market of time sensitive “New Economy” products such as IT components, drugs/biotechnology materials and supplies, medical devices, and advanced manufacturing components. 4 Bernard La Londe, “Ante Up,” Traffic World, April 7, 1997. There is substantial evidence that in fast-moving industries such as IT, slower production cycles often mean lower margins to equipment manufacturers because their customers can find alternative models of the same equipment from wholesale resellers of the product, or value-added service providers which can reconfigure/upgrade existing equipment and systems. In these cases, the time-sensitive margin premiums are passed from the manufacturer to either wholesale resellers, or to value-added service providers. 6 “The 21st Century Corporation,” Business Week, August 21, 2000. 5 Global Impacts of FedEx In The New Economy 8 Efficiency ! Management by the Web Sparked by new technologies, particularly the Internet, companies in the 1990s and in the new millennium have been undergoing a radical transformation. Many factors, from the need to expand beyond national borders to the inexorable shift toward intellectual capital, are driving change. But the most important “change factor” affecting businesses is the rise of Internet technologies. The 21st Century corporation is adapting to “Management by the Web.” This system of management is predicated on constant change, not stability; is organized around networks, not rigid hierarchies; is built on shifting partnerships and alliances, not self-sufficiency; and is constructed on technological advantages, not bricks and mortar. Already, old business models that emphasized fixed assets, working capital and economies of scale have become increasingly vulnerable to nimbler organizations that employ new technologies to enhance quality and customer service and to reduce costs. Increasingly, business organizations are taking the form of what is called a virtual enterprise. Defined by the way it binds individuals or groups to achieve a common purpose, rather than by contracts, the partners are linked via electronic networks and can work independently without being tied to a central location. Although not all firms can achieve similar “virtual” status, the movement toward virtual enterprises can push organizations to become leaner, more efficient, responsive and economical. The sectors moving most quickly in the direction of “virtuality” are entertainment, publishing, software, venture capital, biotechnology, transportation and telecommunications. The 21st Century corporation looks like a web – a flat, intricately woven network that links partners, employees, external contractors, suppliers, and customers in various forms of collaboration. The players are growing more and more interdependent. Fewer companies will try to master all the disciplines necessary to produce and market their goods, but will instead outsource skills – from research and development to manufacturing – to outsiders who can perform those functions with greater efficiency. Managing this intricate network of partners, spin-off enterprises, contractors, and freelancers will be as important as managing internal operations. Indeed, it will be hard to tell the difference. All of these constituents will be directly linked in ways that will make it nearly impossible for outsiders to know where an individual firm begins and where it ends. Companies will be much more “molecular” and fluid. They will consist of autonomous business units connected not by large buildings, but rather by networks extending across geographical Global Impacts of FedEx In The New Economy 9 boundaries all based on networks. The boundaries of the firm will be more fluid, blurred, and hard to define. Many modern firms look increasingly like a web: a flat, intricately woven network that links partners, employees, external contractors, suppliers and customers in various collaborations. The players are growing more and more interdependent. More outsourcing is occurring and more rapid inter-firm transactions are taking place. The “glue” that ties the web together includes two key components – fast-cycle logistics and advanced network management. These are two services that are provided by express companies such as FedEx. The following chart indicates some of the key areas in which corporations have been transformed over the past quarter century. Under each characteristic, FedEx has played a key role in actively facilitating the advent of the 21st Century corporation of the New Economy. CONTRASTING CHARACTERISTICS OF THE CORPORATION Characteristic Organization 20th Century (Old Economy) The Pyramid 21st Century (New Economy) The Network Focus Internal Customer Style Structured Flexible Reach Regional/National Global Resources Physical Assets Information/Knowledge Production Mode Mass Production Mass Customization Production Structure Self-Sufficiency Network Alliances Inventories Months Hours Production Cycle Time Weeks/Months Days Information Weekly Real Time Product Life Cycle Years Months Quality Affordable Best Perfection Source: Business Week and SRI International Global Impacts of FedEx In The New Economy 10 B. Transportation/Logistics Industry Drivers: Enabling the Enablers The transportation/logistics industry has historically exerted an enormous, albeit often unnoticed, influence on the efficiency of the overall economy. Before the advent of FedEx, the delivery of packages and documents was carried out by a haphazard system of carriers, consisting of trucks, trains and aircraft that were often operated by independent entities. Neither speed nor reliability were the hallmarks of this system. Speed and Reliability ! Overnight, Time-Definite Delivery With its creation in 1973, FedEx invented the concept of overnight express delivery.7 The model was based on the “hub-and-spoke” distribution system, whereby shipments are collected at various pick-up points and routed to a central distribution point for sorting and reloading onto planes for their final destination. The FedEx Express model is based on guaranteed time-definite delivery, with extremely high levels of speed, efficiency, and reliability. Today, it is difficult to appreciate the enormity of the breakthrough of “guaranteed” and “time-definite” delivery, much less overnight delivery. This feat constituted a quantum achievement in logistics, and it triggered the fundamental transformation of the industry. FedEx invented the concept of the overnight express delivery in the early 1970s. The FedEx model sets the industry standard for speed, reliability and guaranteed, time-definite delivery. Market Access ! Deregulation Deregulation of the transportation industry in the United States took place from 1977 to 1980. Before deregulation, government regulatory agencies, such as the Interstate Commerce Commission (ICC) and the Civil Aeronautics Board (CAB), regulated and, in effect, controlled the rates and the service offerings that carriers could make available to the public. Within this regulatory environment, innovation was stifled. Following the Air Cargo Deregulation Act of 1977, both shippers and carriers became free to negotiate the best rate and service packages to meet the needs of both parties. Furthermore, the deregulation of the U.S. transportation industry led to the rise of sophisticated third-party logistics providers. As a result of deregulation, transportation rates have decreased substantially, especially in the air and trucking industries. Both shippers 7 R.F. Bruner and D. Buckley, The Battle for Value: Federal Express Corporation Versus United Parcel Service of America, Inc. University of Virginia Darden School Foundation, 1995. Global Impacts of FedEx In The New Economy 11 and carriers are now free to innovate with respect to products, services, routes, and prices. The result has been that shippers have achieved tremendous savings, most of which are passed on to their customers. With respect to air, trucking and rail deregulation, the Brookings Institution has estimated that overall, shippers have reaped some $11 billion in annual benefits.8 Deregulation has been a major driver of the success of the transportation industry, with benefits flowing down to individual and business clients. FedEx played a major role in advocating deregulation. Both shippers and carriers are now free to innovate with respect to products, services, air routes and prices. Deregulation also led to the rise of the air express industry and integrated third-party logistics providers. Customer Service ! Enhanced Service Options As the transportation/logistics industry has evolved, it has continuously added to the range and quality of services it offers to customers. Many firms promote their customer service qualities more than the products themselves. Industry client satisfaction surveys have indicated that one of the greatest strengths of transportation and logistics services is their commitment to customer service standards. In addition to offering guaranteed, time-definite delivery of freight and packages, FedEx Express enhanced service options by offering customers several delivery time options, as well as additional services such as shipment tracking, customs clearance for international shipments, inventory control systems, scheduling and routing, and warehousing expertise. By offering total solutions for integrated logistics, technology, and transportation, FedEx added a comprehensive customer service package. It set high standards for customer service and reliability, standards that have been emulated by many of its competitors. Logistics companies such as FedEx have taken customer service to new standards. This service involves ensuring that the product will arrive when wanted, in the right quantities, and in an undamaged condition. FedEx has continuously enhanced customer service options by offering numerous express delivery options and by providing a host of value-adding services. The customer service that FedEx provides, including information about the package-in-transit, are often deemed to be as important to the customer as the package itself. 8 Steven Morrison and Clifford Winston, The Evolution of Airline Deregulation, The Brookings Institution Press, 1995; and Deregulation of Network Industries: What's Next? Sam Peltzman and Clifford Winston, eds., The Brookings Institution Press, 2000. Global Impacts of FedEx In The New Economy 12 Geographic Coverage ! Global Reach Another major factor that has had a positive impact on the transportation/ logistics industry is the globalization of business. Increasingly, companies purchase their inputs from anywhere in the world, wherever the best quality for the best price can be found. In this globalized marketplace, the entire world is a potential market for most products. FedEx was early to comprehend that a transportation/logistics integrator must have the capability of covering all of the geographic locations of its customers and its customers’ clients. In 1979, FedEx Express offered its first international service to Canada. The company’s continually expanded its international reach, and today it provides direct delivery to over 210 nations, which account for over 99 percent of global economic output. FedEx’s pioneering role in promoting international air cargo liberalization and expansion has paved the way for the creation of a truly global transportation network. As companies go global, controlling logistics and distribution becomes more complex. Emerging technology is playing an increasing role in providing critical information at any point in time about the location of a product and how long it will take to be delivered. An important new service is making this information available to clients via electronic communications so they can know when they can expect delivery. As regional or global sourcing grows, this type of control over procurement and distribution via sophisticated logistics is increasingly crucial. In the new global environment, the transportation of both inputs and finished products presents challenges to businesses. Transportation companies need to offer their clients complete coverage of both domestic and international locations. FedEx has steadily constructed a truly global pick-up and delivery network. FedEx’s global reach enables global sourcing and selling for its customers. The global reach of FedEx has enabled remote areas of the country and the world to participate more directly in the global market economy. Integrated Solutions ! Integrated Supply Chain Management A number of large U.S. firms have revamped their logistics strategies in order to integrate vendor and customer information and logistics systems into their own systems. This trend emerged gradually during the 1990s. Integrated logistics management allows firms to coordinate operations related to purchasing, transportation, inventory and warehousing – thus yielding significant cost savings and also increasing service and performance levels. Global Impacts of FedEx In The New Economy 13 A number of firms have outsourced their supply chain services, such as just-in-time transportation and delivery, to companies like FedEx.9 This has presented clear opportunities for players in the express transportation business. In addition to possessing the physical resources such as planes and trucks, these third-party logistics providers have become expert users of another key resource – information technology. FedEx introduced concepts such as “virtual warehousing,” which essentially gives businesses an opportunity to outsource much of their logistics operations. The sharing of time-sensitive demand, sales and shipment status data enables further integration with other supply chain partners that have access to the same information databases. The focus of new supply chain management strategies offered by FedEx is on customer “demand-pull” solutions. These strategies abandon the concept of stocking shelves and then building demand. The new approach undertaken by FedEx concentrates on learning from customers what they need and how products can be better configured and delivered to meet those needs. In the new model, products are “pulled” by customer demand, not “pushed” by supply. Integrated information systems are used to provide moment-by-moment awareness of the status of a company’s overall materials and processes. Integrated supply chain management offers businesses significant benefits, including lower inventory and intermediary costs; an increase in supply chain efficiency; and simplicity and transparency in order placement, delivery, and management of suppliers and customers. It also gives producers the opportunity to stay focused on their core competencies.10 These benefits directly contribute to making the firms more competitive. Tight supply chain integration is no longer perceived as a competitive advantage; it is now acknowledged to be a competitive imperative. FedEx has been a pioneer in assisting companies with supply chain management. Integrated supply chain management has offered businesses significant benefits including: lower inventory and intermediary costs; an increase in supply chain efficiency; and simplicity and transparency in order placement, delivery, procurement, and management of suppliers and customers, and the ability to stay focused on their core competencies. 9 National Semiconductor, for example, outsourced much of its logistics operations to FedEx. Virtually all of National Semiconductor's Asian products are shipped directly to a FedEx distribution warehouse in Singapore, from various factories and subcontractors in Asia. 10 C. K. Prahalad and G. Hamel, "The Core Competence of the Corporation," Harvard Business Review, May-June 1990. Global Impacts of FedEx In The New Economy 14 C. Consumer Trends: From Supply-Driven to Demand-Driven Approaches Consumer demand and tastes have always been important ingredients in economic activities and supply/demand formulations. However, in previous eras consumers were far less “powerful” than producers, and consumer choices were often circumscribed due to the limited availability of products and services. Technology, near-perfect access to information and other advances are turning this equation on its head, giving consumers much more power and choice, and thus substantially changing business models. Tastes/Preferences ! From Mass Production… Prior to and during the 1970s, U.S. companies focused their production and marketing efforts on reaching the mass market of consumers. Products were manufactured in assembly-line production systems, and the major emphasis was on internal production systems, not on maximizing consumer satisfaction. For many products, a “one-size-fits-all” mentality was taken. Consumer research was not very sophisticated and most products were designed to meet mass market needs, not the specific needs and tastes of smaller groups of consumers. The major revolution came from television advertising, which provided a new marketing channel to industries and the opportunity for instant access and brand recognition to millions of consumers. …To Market Segmentation The 1980s ushered in the era of marketing segmentation. Consumer and industrial markets were changing rapidly and becoming increasingly competitive. Offering top-quality goods and services was no longer sufficient. Companies needed to satisfy more discriminating customers who could choose from a multitude of product offerings in the global marketplace. Mass marketing eroded in appeal in the 1980s, giving way to the new form of STP (segmentation, targeting, and positioning) marketing.11 Systems were introduced in order to target different types of consumers more effectively. One of the major advances in marketing has been in consumer targeting – the identification of target groups through such techniques as VALS, a psycho-graphic system that segments consumers 11 Art Weinstein, Market Segmentation, 1994. Global Impacts of FedEx In The New Economy 15 “values and lifestyles” elements, including financial resources, attitudes, behavior and decision-making tendencies.12 During the period of mass production and consumption, the demand for express transportation services was limited in most industries. Large, “one-size-fits-all” production runs were the norm, and most of the industry transportation modes were oriented towards bulk commodity transport. Little customization of the product took place and speed to market was not a major consideration. Express transportation was not yet an absolute necessity for many businesses during this period. During the 1980s, the era of marketing segmentation was introduced. One of the implications of this new, customized approach to marketing is that smaller, more specialized product runs are required. The smaller production runs are facilitated by the introduction of point-to-point transportation networks offered by express companies such as FedEx. Consumer Tailoring ! Mass Customization The 1990s have been called the era of “super-segmentation.” Using this technique, companies tailor their products to each individual by turning customers into partners and giving them the technology needed to design and articulate exactly what they desire. This phenomenon, called mass customization, is resulting in waves of individualized products and services. It’s also a boon for companies, which can charge premium prices and no longer have to guess what and how much customers want. A recent example of a company employing the mass-customization approach to marketing is a Procter & Gamble spin-off called Reflect.com, an online cosmetics merchant. By answering a series of queries ranging from color preferences to skin type, consumers can custom design up to 50,000 different formulations of cosmetics and perfumes. Customers can even design the packaging for the products. Procter & Gamble charges a premium price for the custom-blended blushers and lipsticks. Customers mixing their own shades are not likely to try comparison-shopping. Reflect.com is one of many efforts to create enduring relationships with customers in an age of commoditization. Mass customization has yielded remarkable efficiencies for adopters. Dell Computer, for example, generates more working capital than it consumes because its customers specify and pay for products before Dell has to pay suppliers.13 In contrast, Honeywell International has $3.5 billion of working capital tied up at any given time. The key to Dell's remarkable feat lies in the company's made-to-order business model, which greatly limits inventory. Already, the company turns over its tiny inventory 60 times a year, a tenfold improvement from 1994. The result is obvious: 12 13 The VALSTM system was developed by SRI International. “The 21st Century Corporation,” Business Week, August 21, 2000. Global Impacts of FedEx In The New Economy 16 Dell's customers finance the company's growth so it does not have to take on debt. Mass customization also allows Dell to make only the products it will sell. As a result, there are no write-downs or discounts to move unwanted or outdated merchandise. The 1990s have been called the era of “mass customization,” where companies tailor their products to each individual by turning customers into partners and giving them the technology to design and articulate exactly what they desire. Mass customization is resulting in waves of individualized products and services, as well as savings for companies, since they only build the product after they have received the specified order. FedEx’s advanced information systems and fast-cycle logistics make mass customization a possibility for its business customers. Market Channels ! The Emergence of E-Tail Markets Starting in the mid 1990s, e-tail companies such as Amazon.com and eBay led the development of an entirely new channel for reaching consumers – the Internet. The Internet is introducing a full new generation of technology-driven marketing techniques, including Internet advertising, interactive marketing programs in which potential customers ask questions about products and receive immediate responses electronically, and visualization/design of products and their capabilities. Armed with more information, better education and higher income levels, consumers are becoming more demanding in terms of price, choice, delivery and convenience. E-commerce has dramatically increased the number of smart consumers and buyers, since they now have immediate access to information on costs and capabilities of numerous products in the same category. In addition, transaction costs are being sharply reduced by Internet commerce, since it often eliminates the need for costly retail space, reduces transaction and data entry costs, and avoids several intermediary costs. Since the mid 1990s, the development of the Internet and e-commerce has introduced an entirely new channel for reaching consumers. Armed with more complete information about products and services, as well as more shopping options, consumers are becoming more demanding in terms of price, choice, speed and delivery. The recent advent of e-commerce has fueled the demand for fast-cycle logistics in order to move products quickly from point-to-point, and to ensure highly reliable customer fulfillment. FedEx and other express companies are providing the logistics support required for B2B and B2C Ecommerce fulfillment. Global Impacts of FedEx In The New Economy 17 D. Economic Trends: Globalization and the New Economy Economies inevitably push outward. Starting with individual farms and villages, economies have expanded to encompass regions, nations, and ultimately the entire globe, as economic actors sought new markets and sources of inputs. Notwithstanding periods of contraction and consolidation, economies grew increasingly integrated through freer movements of goods and services, capital, people and technology. FedEx and other transportation and logistics companies have actively participated in the integration of the U.S. and global economies. Global Economy ! Growth in Output, Trade and Investment Fundamental U.S. and global economic variables created the opportunity for the establishment and growth of the express transportation industry, and global growth, in turn, was fed by the industry. In the United States, the most important economic trends shaping the express industry over the past three decades include record levels of economic growth, higher productivity and the introduction of new technologies. Internationally, the key factors were increased global trade and investment and intensified rivalry due to a lowering of barriers to international trade and competition. In recent months, growth projections for regions around the world have been reduced. This economic slowdown reflects a variety of factors, including: " Greater-than-expected impact of the global slowdown in a number of key countries and regions; " A delayed economic recovery in the United States and the shocks of the September 11 crisis; " Rising energy prices in recent years; " Weakening domestic demand growth and confidence in Europe; " The prospect of slower growth in Japan as it implements structural reforms; " The continued decline in information technology spending, which affects Asia in particular; and " Deteriorating financing conditions especially Latin America. Global Impacts of FedEx In The New Economy for emerging markets, 18 GDP growth is now slowing in almost all regions of the globe, accompanies by a sharp decline in trade growth. Global growth is now projected at 1.3 percent for 2001 (2.5 percentage points lower than in 2000). The WTO estimates that world trade will grow by less than 2 percent in 2001, contrasted with over 12 percent trade growth in 2000. GDP growth has fallen to less than 1 percent in Latin America and 1.4 percent in Europe, and several Asian countries are facing recessions and have been hit hard by the slowing of world trade. In spite of recent setbacks, the long-term economic outlook is fairly strong. The WTO projects that trade growth will rebound to over 4 percent by 2002, and then exceed 7-10 percent after 2003. The global economy is forecasted to grow at a real rate of 2.9 percent annually over the next decade. Economic growth rates are projected to be highest in Asia (excluding Japan), Sub-Saharan Africa and Latin America. Industrialized countries, with their mature economies, are expected to grow at an average annual rate of 2.4 percent, while growth in developing and newly industrializing countries is projected to average 4.5 percent. The assumptions underlying these relatively favorable projections for worldwide economic recovery after 2002 include the following: " Monetary expansion in the United States and Europe, providing economic stimulus over the next year; " Low inflation and improved structural policies in industrial countries, creating an environment in which technology-driven productivity growth can resume quickly; " Rapid technological developments and just-in-time production systems, allowing for relatively rapid rebounds in production levels; " Improved macroeconomic management, rising savings, increased openness, and greater diversification, creating better incentives for investment, technological progress, and growth. Global Impacts of FedEx In The New Economy 19 Despite a series setbacks in 2001, the global economy has grown steadily over the past three decades. Over the next decade, world trade is projected to increase at by 7-10 percent annually – due to the expansion of regional free trade blocs and the lowering of trade barriers introduced through the WTO. The last decade of trade growth has created structural changes that now favor trade expansion and diversification, helping to cushion economic shocks such as those experienced in 2001. Developments in global financial markets are also likely to bring renewed growth after 2002. Globally-integrated logistics management companies such as FedEx are well positioned to serve this global expansion of trade and investment. The expansion of global trade and investment has resulted in increased demand for global transportation/logistics networks and services such as those offered by FedEx. FedEx’s vast reach enables global sourcing of parts and components by its customers, which, in turn, contributes to higher international economic growth and efficiency. Integration ! Globalization Globalization involves the increasing interaction among economic systems, to the point where transactions take place almost without any regard to national borders. Market-directed capitalism has become the paradigm for most of the world. There has been a noticeable revision in favor of market liberalization, with the consequence that deregulation and privatization have become policies central to governmental reform in many countries. This shift in policy orientation also reflects a response to technology-driven globalization. By lowering the costs of transactions and information, technology has reduced market frictions and provided significant impetus to the process of broadening world markets. Expanding markets, in turn, have both increased competition and rendered many forms of intervention ineffective. An accelerated period of global integration took place during the late 1980s and the 1990s. Due to improved transportation and communication linkages, as well as the reduction of trade barriers, global trade and investment accelerated sharply. In light of recent political events, including the September 11 crisis, as well as the current economic downturn, the issue of globalization has become increasingly controversial. Terrorism poses a challenge to the remarkable pace of globalization experienced in recent years, as fear of terrorist acts could potentially induce disengagement from cross border activities. In spite of these temporary setbacks, globalization and the opening of international markets remains a critical driver in the world economy. In the Old Economy, the global company was defined simply as a firm that sold its goods in overseas markets. This was true in the United States during the 1960s and 1970s. By the 1980s, many companies began selectively sourcing components and raw materials (beyond traditional purchases of natural resources) from overseas locations. During the Global Impacts of FedEx In The New Economy 20 1990s, global companies were busily establishing manufacturing presences in numerous countries. Companies are now locating different types of operations (headquarters, product design, manufacturing, marketing/distributions, etc.) in different places providing the greatest advantage. Most company outposts are connected by the Internet, so that different locations can work together in real time. Economic globalization is the inevitable reality of the 21st Century. With very few exceptions, countries are undertaking market liberalization to take advantage of globalization. Deregulation and privatization have become policies central to governmental reform around the world. By lowering the costs of transactions and information, technology has reduced market frictions and provided significant impetus to the process of broadening world markets. Companies such as FedEx have played a critical role in allowing companies to move products quickly across borders, and they have also provided the technology to track the movement of these shipments. U.S. Economy ! Emergence of the New Economy During the 1990s, the U.S. economy experienced ten years of unprecedented economic expansion. Real GDP in the United States grew at an average annual rate of over 4 percent, higher than that experienced in any period since the 1960s. The unemployment rate fell below 4 percent, and the underlying rate of price inflation slowed, despite very high rates of resource utilization. Even the most optimistic of forecasters could not have anticipated such a favorable confluence of economic events. Recent economic and political events have led to a temporary downturn in economic activity that is expected to last at least through early/mid-2002. The record-setting economic expansion of the 1990s ended in March 2001, as the country’s economy entered a contractionary period that was exacerbated by the September 11 terrorist attacks. U.S. unemployment has risen to 5.4 percent, and the OECD and IMF estimate that the U.S. economy will grow by only 1.1 percent in 2001 and 0.7 percent in 2002 (in contrast with a forecast of 3.3 percent growth only a year ago). Major sources of economic weakness include the collapse of the high-tech sector, the slump in equity values, a big reduction in inventories and a large increase in oil prices, in addition to the shocks of the September 11 events which created great uncertainty among businesses and consumers. In the near future, a U.S. rebound may be restrained by the economic downturn in the rest of the world, which has depressed demand for American exports. In spite of the current downturn, there have been major structural changes in the U.S. economy, which contributed to the period of extraordinary Global Impacts of FedEx In The New Economy 21 growth in the 1990s and will likely contribute to economic recovery after 2002.14 These trends include the following: " " " " " " " Increased labor productivity Higher capital spending New efficiencies from technology Leaner companies with low cost structures Lower levels of inventory Higher long-term economic growth The combination of low inflation and low unemployment Among the core causes of the robust economic expansion in the United States are well-executed monetary and fiscal policies that have created an economic environment conducive to non-inflationary growth. The U.S. economy has also benefited from recent actions to deregulate industries. The removal of unnecessary government regulation over the past 30 years has allowed businesses to focus more clearly on a marketplace that has become more competitive, with fewer constraints and increased flexibility. The dominant force in recent years, however, appears to have been a significant rise in the rate of productivity growth. Although U.S. productivity estimates have been revised downward, productivity growth is still estimated at 2-2.5 percent during the latter half of the 1990s, quite a bit higher than the 1.5 percent rate achieved during the previous 25 years. Although the frenzied pace of high-tech investment in the late-1990s was unsustainable, long-term structural changes such as the revolution of information technology have probably been the most important causes of the increases in labor productivity, according to Alan Greenspan and a number of other prominent economists.15 In the wake of September 11, Federal Reserve Governor Laurence Meyer asserted that the higher security costs associated with terrorist threats are likely to cause only a one-time decline in the level of productivity. This transitory effect on the growth rate will last only a year or two, followed by a return to the higher rate of productivity growth that would have prevailed in the absence of the higher security costs. Continuing technological innovations are likely to result in higher growth over a number of years as they are disseminated throughout the economy.16 These structural changes have had effects beyond increasing the rate of productivity growth. They have also enhanced the ability of businesses to reduce their operating expenses. In many industries, better information and access to high-speed logistics have helped firms cut back on the 14 These structural changes have led to the creation of what is often referred to as the “New Economy.” See “Structural Changes in the New Economy,” speech by Federal Reserve Chairman Alan Greenspan to the National Governors’ Association Meeting in State College, Pennsylvania, July 11, 2000. 16 See “Remarks by Governor Laurence H. Meyer,” speech before the National Association of Business Economics, St. Louis, Missouri, November 27, 2001. 15 Global Impacts of FedEx In The New Economy 22 volume of inventories that they hold as a precaution against delays in their supply chain, or as a hedge against unexpected increases in demand for their products. The ratios of inventory-to-sales and inventory-toshipments have both trended downward since the 1990s. As fluctuations in inventory investment tend to amplify swings in the business cycle, the adoption of “just-in-time” supply chain management and the resulting downward trend in inventories have the potential to lessen the risk of major business cycle adjustments in the United States. The major recent structural changes in the New Economy include increased labor productivity, higher capital spending, new efficiencies from technology, reduced levels of inventory, smoother business cycles, higher long-term economic growth and lower levels of inflation and unemployment. The fundamentals of the New Economy remain strong and bode well for continued growth and recovery after the current economic downturn. The new logistics industry, forged by such companies as FedEx, has contributed significantly to the creation and expansion of these New Economy drivers. These companies have played an integral role in the development of these structural changes by combining the monitoring of product availability and orders with high-speed, reliable delivery. This has contributed to the reduction of inventory levels, dampening of business cycle fluctuations and better supply/demand management, which has also diminished inflationary pressures. E. FedEx Corporate Impact Model In this report, the impacts of FedEx will be explained through a “corporate impact model.” It is not a formal theoretical model based on theorems, scientific discovery, or intricate multivariate equations. Rather, the model provides a logical course of reasoning, points out general influence areas – or “impact modules” – and specifies the nature and degree of impact. Then, the challenge is to fill in and measure as many impact modules as possible. The model is framed according to the following line of reasoning and assumptions. Like individuals, corporations continually interact with other elements of society. On one side of the equation, companies operate within a milieu that is shaped by economic, social, policy/regulatory, and other factors. Clearly FedEx has been affected strongly by major industry trends and drivers. On the other side of the equation, corporations exert their own influence on the society that surrounds them. Through their economic activities, firms employ workers, utilize resources and create value in the form of goods and services. Through these activities, corporations help to shape not only the overall economy, but also, through various feedback mechanisms, the very trends and drivers that molded the companies in the first place. Global Impacts of FedEx In The New Economy 23 Since the system and relationships are dynamic, corporations generate both static and dynamic impacts. Therefore, in the real world, companies can be considered as both “endogenous” and “exogenous” variables in the model. Endogenous variables are the entities or factors that are affected by outside influences, whereas exogenous variables constitute those outside factors. In short, corporations represent both “causes” and “effects” in the system. The following chart depicts the workings of the corporate impact model in summary form. To begin, the business, industry, consumer, technology and economic drivers collectively determine the environment in which a company operates. The firm itself carries out a set of activities to produce goods and services. The direct impacts of these activities are felt through purchases, sales, customer services, systems and innovations that affect third parties, and activities to improve the policy and regulatory environment. Then, through a series of feedback mechanisms, these direct impacts are then transmitted back to alter the very drivers that started the process. The loop is closed. In the real world, the relationships and linkages are much more complex, but the ultimate process and outcome are the same. Corporate Impact Framework Business Drivers Industry Drivers Consumer Drivers Purchases Sales Corporation Business & Economic Activities Customer Services Technology Drivers Systems & Innovations Economic Drivers Policy/Regulatory Activities Every corporation displays strengths and weaknesses, and every company encounters problems and makes mistakes. FedEx is no exception, and its executives have openly admitted missteps, such as the introduction of Global Impacts of FedEx In The New Economy 24 ZapMail. Reflecting on the experiences and roles played by different companies, however, it becomes clear that their relative influences differ, in some cases significantly. Some firms act as pioneers and leaders, whereas others tend to be followers. By all accounts, FedEx has served as a leader and as a catalyst of change, both within the transportation and logistics industry, as well as throughout the economy. The following assumptions and determinations will guide the application of the corporate impact model to FedEx: " The influences of FedEx are exerted both by what it has been and has become (its presence as a corporate entity), and by what it has done and is doing (services provided to customers, transactions, technological innovations, etc.). " The corporate impact model is not a singular approach or calculation, but rather represents a bundle of approaches, each directed toward exploring a specific impact module. The modules collectively add up to an aggregate set of impacts. This is much like FedEx itself, whose success has been the sum result of a combination of factors. " In view of the nature of FedEx and the environment in which it operates, it is important to identify and assess both Old Economy and New Economy impacts. " Contributions should be determined with reference to the “beneficiaries” of the effects created by FedEx. " Since FedEx has been a pioneer whose innovations have been widely copied by other companies, it is necessary to measure both the “direct” and “indirect” effects of FedEx. Direct impacts refer to those specifically derived by FedEx activities, and indirect impacts represent the broader ripple effects that have swept through the industry, other sectors and ultimately the global economy. In many cases, these indirect impacts cannot be quantified. How does one tackle the task of specifying and evaluating the impacts of a corporation? In the Old Economy, this could be accomplished reasonably well by measuring the output, exports, employment, and income generated by the firm, especially for those firms involved in manufacturing. In addition, specific contributions such as Ford’s invention of the assembly line for mass production or Apple’s configuration of the PC could be highlighted. Global Impacts of FedEx In The New Economy 25 The task is much more challenging for FedEx, which formally is part of the service sector but strongly supports manufacturing and other sectors, and which encompasses both the Old and New Economies. In addition, FedEx has, on a regular basis, introduced new logistical and technical innovations that have ultimately brought about major changes in the general way of doing business. Measuring the activities and contributions of service sectors such as the transportation/logistics industry has always been difficult, as has quantifying the “value” of technological innovations. The application of the corporate impact model for FedEx is depicted in the following diagram. The model begins by separating impacts into four categories that reflect forms of impacts as well as recipients of these effects: ! Business impacts on the firms served by FedEx; ! Industry impacts on the transportation/logistics industry; ! Consumer impacts on domestic and global consumers; and ! Macro impacts on the U.S. and global economies. Technology drivers and impacts are not placed into a separate category in this application because technology linkages are incorporated into all of the other categories. The remaining categories of effects are distinct but, at the same time, are highly interrelated. For example, FedEx has allied with its customers to improve the efficiency of their distribution systems, thus reducing inventories and associated costs. This contribution also benefits consumers by reducing the final prices they pay for products. In addition, the inventory savings achieved by individual companies and consumers aggregate up to macroeconomic benefits in the form of reduced inflationary pressures, higher savings and investment, and/or more consumption of other goods and services. One will find that most impacts are not isolated, but instead give rise to multiple waves of effects. In addition, the effects and contributions are differentiated between Old Economy and New Economy impacts. In this way, the critical role of FedEx in integrating these economies can be highlighted, for perhaps the most important influence of the company has been the way in which FedEx has enabled and supported the introduction and diffusion of new processes and products. These processes and products, in turn, have contributed to the fundamental transition of the economy. Some direct impacts can be quantified with a reasonable amount of certainty. An example would be the number of direct jobs created by FedEx (the number of FedEx employees). The indirect impacts, in this Global Impacts of FedEx In The New Economy 26 case the number of indirect jobs generated by FedEx through employment multipliers, can be estimated using external parameters. The SRI team utilizes what it deems to be the most logical assumptions to estimate indirect impacts. Alternative parameters will be noted where appropriate. Global Impacts of FedEx In The New Economy 27 GLOBAL IMPACTS OF FEDEX • • • • U.S. deregulation International policy liberalization Connecting America Creating employment and income • Supply Chain revolution • Reduced cycle times • Speeding high-tech products to market • New businesses & products • Level playing field • Outsourcing non-core functions • New technologies • • • • • Globalization Economy-wide inventory reduction U.S. productivity boom Lower business cycle risk Growth of New Economy regions U.S. & Global Economy • Enhanced customer fulfillment • Customization • Greater market power Macro Impact Businesses Business Impact FedEx Consumer Impact Consumers Industry Impact • Lower inventories & carrying costs • Time-certain, reliable delivery • Enhanced shareholder value • Bar code technologies • Value of guaranteed, time-definite delivery • Lower prices • Benefits of hub-andspoke model • More delivery options • More shopping options • More product choices Transportation/ Logistics Industry • • • • The Express revolution Hub-and-spoke model Raising industry standards Creation of centralized logistics networks • Elevating use of Information Technology • Real-time shipment monitoring • All-encompassing supply chain services and solutions In other areas, the quantification of impacts is more difficult, partial or virtually impossible, either because insufficient data are available or because there is no reasonable paradigm to determine cause and effect or assign quantitative causality. For example, in the area of customer fulfillment, FedEx achieved 99.5 percent accurate overnight delivery of the book, Harry Potter and the Goblet of Fire, to customers on the day it was first released and sent out by Amazon.com. While the accuracy rate of this milestone in customer fulfillment can be measured, the satisfaction attained by customers cannot. In such instances, the impact may be important and thus should be noted, but will be done so qualitatively rather than quantitatively. An important element of the model is “blowing up” impacts from the micro level to the macro level. A case in point will be assessing the effects of FedEx’s “invention” of the hub-and-spoke logistics model. This approach certainly had beneficial effects on the company and its customers. In addition, the hub and spoke model was copied widely by the transportation industry, especially the airline industry. The effects of innovations that are diffused throughout the economy are clearly greater than those conferred on FedEx alone. Where possible, the SRI team will develop logical constructs to arrive at estimates of overall impacts in these instances. Taxonomy of Impacts The corporate impacts of FedEx to be explored in the chapters that follow are summarized below. The next chapter will focus on business impacts, referring to the influences on and benefits to business clients of FedEx. This is followed by an assessment of impacts on consumers, either directly or via FedEx’s business clients. The next chapter will address FedEx’s role in creating the express industry and on shaping the broader transportation/logistics industry. Finally, the analysis will turn to overall economic benefits generated by FedEx throughout the U.S. and global economies. Global Impacts of FedEx In The New Economy 29 BUSINESS IMPACTS OF FEDEX Old Economy Impacts New Economy Impacts 1. 2. 3. 4. Reducing inventories and carrying costs Providing time-certain, reliable delivery Enabling “just-in-time” efficiency enhances shareholder value Pioneering bar code technologies: Scanning into the future 1. 2. 3. 4. 5. 6. 7. Promoting the supply chain revolution Reducing cycle time, raising profits Speeding high-tech products to market Enabling new businesses and products Leveling the playing field for small businesses Outsourcing non-core functions Pioneering business technologies for the future CONSUMER IMPACTS OF FEDEX Old Economy Impacts New Economy Impacts 1. 2. 3. 4. Offering added value of guaranteed, time-definite delivery Reducing consumer prices Adopting the hub-and-spoke model Increasing delivery options, product choices and shopping options 1. Enhancing customer fulfillment 2. 3. Allowing for greater customization Increasing market power TRANSPORTATION/LOGISTICS INDUSTRY IMPACTS OF FEDEX Old Economy Impacts New Economy Impacts 1. Launching the express revolution 1. 2. Creating a new logistics framework – the hub-and-spoke model Pushing out the industry standards envelope Implementing centralized logistics networks 2. 3. 4. Global Impacts of FedEx In The New Economy 3. Elevating the use of information technology Sharpening visibility through realtime shipment monitoring Creating new services to encompass the entire supply chain 30 IMPACTS OF FEDEX ON THE U.S./GLOBAL ECONOMIES Old Economy Impacts New Economy Impacts 1. 3. Creating a free-market for transportation through deregulation Opening skies and international markets Connecting America 4. Creating employment and income 2. Global Impacts of FedEx In The New Economy 1. 2. 3. 4. 5. Linking the world’s businesses and peoples through globalization Reducing economy-wide inventory Contributing to the U.S. productivity boom Lowering business cycle risk Supporting the growth of New Economy regions 31 ...
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This note was uploaded on 04/29/2009 for the course CBS 456765 taught by Professor Paul during the Three '09 term at Curtin.

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