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FedEx is a transportation company headquartered in the United States; it has branches all over the world. The firm offers delivery and transportation services to a myriad of clients. This organization is subdivided into four major groups, which include FedEx Express, FedEx services, FedEx Ground, and FedEx Freight.
FedEx Express mostly focuses on door to door delivery through a money back guarantee. It does this through its integrated network of vehicles and technologically-based tracking system. FedEx Ground deals with the small package market in Canada and the United States.
This encompasses all the home deliveries that are less than 150 pounds. FedEx Freight covers the distributional or business market. Here, the company transports commodities that are time bound, bulky and essential to the supply chain. This market is also eligible to money back guarantees.
Lastly, FedEx Services handles back-office activities such as IT, customer service, sales and marketing. It also encapsulates FedEx mobile, which is a service that runs on mobiles and other Apple-based products. This facilitates the process of tracking one’s package in order to know where it is located.
The firm’s main competitors include organizations such as DHL, TNT, UPS, and ABF Freight System. In this industry, FedEx is still recognized as a market leader because of initiating a number of services. FedEx was the first organization to introduce overnight letter delivery. It was also the first to bring in Saturday deliveries or deliveries that arrive at 10.30 am on the next day.
The firm handles customs brokerage and is also in charge of delivering packages across the border. Sometimes these clearances can be done electronically. The organization is ISO certified and also won a Baldridge Award for Quality.
It transports approximately 2.9 million packages every night through air transport and meets the needs of Canadian consumers through a group of 3, 500 workers in the country. In the customer care category, the firm has about 250 employees who respond to calls all day and night from Canadian clients.
Statement of the problem
The case study revolves around a customer service malfunction. The concerned client is an Office Manager at Canadian-based firm, Desktop Innovation. FedEx lost her package temporarily and thus failed to deliver it on time.
Furthermore, employees within the organization did not offer sufficient support to her during the delivery of this package. As a result, DI lost a very crucial business opportunity, and cost its clients unnecessary expenditures in dealing with the challenge.
The macro issue is poor customer service at FedEx. The micro issues include poor tracking and follow up of the lost package, inadequate feedback to the client on the status of the package, and uncoordinated responses to alterations in customer delivery requirements.
The customer was also dissatisfied with the kind of compensation the firm was offering her, and she received no personal acknowledgement of wrongs committed by FedEx.
In order to understand this problem fully, one must look at the internal and external constraints that affect the organization. The internal constraints in FedEx are the procedures, processes, systems and policies put in place. An organization’s employees are only as effective as their systems.
In fact, analyses show that approximately 85% of employee effectiveness emanates from organizational systems while the rest of the percentage comes from the person’s skills. Therefore, all the customer service personnel in FedEx who dealt with the aggrieved client are limited by the procedures, processes and policies put in place.
This company has a series of money-back requirements that must be fulfilled in order to qualify for a refund. Employees can only do so much for disgruntled customers if they require a refund but have not followed the right procedures. Therefore, these systems are a constraint in the process.
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On top of that, the company is a profit-making institution, which implies that all the decisions being made, must be in the best interest of the company shareholders. Sometimes this may involve reducing refunds because they may hurt their bottom line.
Another set of internal constraints entails the level of coordination within the organization. If communication impediments exist and all employees do not share information accurately, then this will translate into service failure. The firm’s logistics handlers must be in constant communication with the package trackers as well as the customer care representatives.
The company is highly constrained by this issue because it has a vast number of employees who may not always relate to the developments that occur in that company. DI expected to receive their package before the trade show, but since the company lost the package for a substantial amount of time, then it was no longer necessary to send the package to the first location.
In this regard, Anita Kilgour changed the directions, but because the company’s employees were poorly coordinated, then the package went to the wrong location. The firm’s infrastructural capabilities also constrain employees to act in immediate response to consumer complaints. They have to transport their packages to various destinations around the world and sometimes this may necessitate long waiting times.
When packages are to be delivered within North America, then the organization needs to possess tracks that can take on direct routes as this minimizes distortions. However, because most tracks deliver several packages to several destinations, then many stopovers are necessary. Sometimes this may lead to the temporary or permanent loss of an item as was the case with DI’s packages.
This organization takes pride in its people policies. It values its employees and always puts them first. It intends on creating the best atmosphere for people to stay committed to the company, so it achieves this through in house promotions, employee-satisfaction surveys as well as pay for performance.
While this may be an important strategy, it can act as a constraint to great service quality because employees may focus on protecting their own interests. For instance, if their quality is assessed through the numbers of people that they can talk to at any one time, then chances are that they will try as much as possible to finish with one client in order to move onto the next. Anita Kilgour may have been a victim of this kind of focus.
Technology use is essential in the prompt delivery of services especially when the delivered packages must go to various parts of the world. As a result, the firm must invest in technologies that will trace the location of these packages.
Even though technology is designed to enhance service quality, sometimes it may act as a constraint. There is only so much technology can do; besides, the system may not always manage to track the millions of packages handled by the firm at any one time. In this regard, the company will be limited by the responses it can make to customers such as Anita Kilgour.
The external constraints that affect this organization include customs rules or customs clearance. Since the package was going to another country, then the firm needed to deal with some customs related issues. Other external parties determine the pace of customs clearance. Therefore, the company’s ability to meet its customer obligations may be hampered by these third parties. Such a problem may have arisen in this scenario.
The company cannot control the rate at which customers change their demands. Some clients may change package information, and this may not always get to the ground personnel on time. Clearly, Anita did the same for her package, but the company respondents did not relay the information to the shipping personnel. In certain circumstances, however, customers may not always be right.
Although FedEx’s mistakes may cost their clients numerous business opportunities or may increase their overhead costs, it is not possible to compensate clients for these inconveniences. For a company that delivers 2.9 million packages a day and listens to thousands of complaints daily, the firm would go out of business if it paid customers for all their troubles.
Customers may not always have this knowledge and may request for more than is due to them. Company policies show that the organization only compensates a person for transportation charges. Anita is asking for more by talking about booth fees as well as telephone expenses. These unrealistic expectations constraint FedEx’s ability to deliver satisfactorily.
An external environment reveals that IT advances are being made in the package delivery or transportation business very frequently. As a result, the organization must stay abreast of these issues almost immediately. It is likely that the firm may have invested in new technology at the time of delivering DI’s package. FedEx also operates in a highly competitive market.
North America has a numerous transportation service providers such as UPS and DHL. Furthermore, some of these companies control crucial aspects of the sector such as mail boxes. One such organization is UPS. This company also has a higher share of ground services than FedEx. It also boasts of superior ground services.
Many competitors are merging and acquiring new portfolios that make it difficult for FedEx to stay ahead. As if this is not enough, some of the biggest FedEx clients happen to be competitors. One such organization is the US Postal service. FedEx has to collaborate with this company, but it also takes away most of its clients.
In addition to the strong competitive environment, the organization must make a name for itself in the global arena. This can sometimes entail a thorough investment in the consolidation of the air freight market by investments in planes and other infrastructure. Therefore, dynamics in the air industry can also affect the company. Infrastructural investments in the road sector also alter business at FedEx.
A SWOT analysis can assist one to understand the internal dynamics that affect this company and hence the case study. One of the major strengths of the company is that it is a household name in the US and Canada. Consequently, it is unlikely that a customer will abandon the business owing to first mistakes.
Additionally, the company operates independently thus enabling it to respond to consumer demands collectively. On top of this, the company’s finances are in order.
The organization has a huge network of pilots and crew members to transport its packages. It is also highly innovative by investing in research and development. The firm has pioneered a number of services in the package delivery industry. Additionally, it has a global presence and invests heavily in technology.
Its major weakness was manifested in this case study; it has a disjointed customer service. The firm seems to think that having a large employee base is all it takes to meet customer expectations, yet this strategy is not working. There are challenges with coordination between various customer service employees.
They also have trouble with following up and giving customers feedback on their packages. Additionally, although the company does relatively well in air freight, it does not have a strong force on the ground. Its technological investments are quite costly. It also makes many late deliveries and must deal with numerous refund requests.
Implementing the money back guarantee is a problem for the firm because so many discrepancies arise. Customer requests for refunds are overwhelming to the company, so it must use various legal strategies to minimize these requests. Many clients feel that the company sometimes promises more than it can deliver because of these conditions.
FedEx has significant opportunities in its industry. First, it can expand into other global markets and thus tap into a larger market. Additionally, it can streamline its internet services so as to minimize the need for contact with consumers. On top of this, the firm can also heighten demand within the logistics industry.
The threats that affect the company are competition from other companies, especially those that offer more superior services than it does. Clients might defect from FedEx owing to frustrations from their poor responses rates and defective customer service.
Analysis of alternatives
The organization has the option of using this complaint as a wake call. It can take the positive criticisms about its customer service and thus conduct a system overhaul. DI’s complaints are not the first, as many other repeat clients have experienced the same problem. If the company takes this route, then it will retrain its workers about the importance of proper customer service.
It will set aside resources to achieve this. Training should involve several business related objectives such as the company goals and the importance of paying attention to customer requests. However it should also involve some practical aspects such as instating a system in which employees who promise to get back to employees can do so as soon as possible.
It seems many of the customer care respondents tend to dwell on dealing with as many incoming calls as possible. The company can make it mandatory to follow up on calls when an employee promises to do so. This means that they need to record the number and details of every customer that needs feedback.
During shift changes, employees can offer the complaint details, contacts and names to the next group of workers so that they can follow up as soon as possible. If the firm pays its people for every phone call handled, then it can also pay them for the number of follow ups done. This would act as an incentive to always get back to clients immediately.
Alternatively, the company may respond to this problem by expanding its workforce and thus deal with burnout issues. It seems that the firm handles too many complaints and it becomes difficult to offer in-depth solutions if a customer care respondent has too much on his or her plate.
The individuals may have developed an apathetic attitude owing to burn out. FedEx can solve this problem by designating certain areas of service provision to certain members. This would make them specialists in that area. Furthermore, customers should be required to remember the name of their previous customer care attendant and thus be directed to them the next time they call the center.
This would reduce time wastage owing to the explanation of problems repeatedly. Additionally, it would provide a much-needed personal touch, since clients would be talking to the same person every time they call the company.
The third alternative that the company may consider is treating this complaint as any other typical one. It could simply give the customer what she was looking for. In this regard, the organization can require the supervisor – Chris – to call this disgruntled customer and admit that the company was wrong.
He should make a verbal apology to the client and could ask the client to make some suggestions about what she would like the company to do. Sometimes all a customer wants is to be heard. It should validate the client’s claims and thus take responsibility for its mistake. The company is restricted by its profit goals to pay for other losses that customers encounter during delivery of their packages.
The supervisor and the customer service head can explain that they are limited by company policies to compensate Anita for the $600 worth of booth fees. As the customer service manager and the supervisor talks to Anita, they need to be as sincere and as apologetic as possible. Nonetheless, they can assure her that all the employees involved in the tracking of her package will be warned about their failure to honor their promises.
The first alternative would be the most feasible; carrying out a customer service overhaul through training and incentives. As explained earlier, one of the constraints in the company is profit making. Hiring more workers would be quite costly to the organization, and this would hurt its bottom line, which implies that the second alternative is out of question.
If the company chooses the third option, then it will not have dealt with the root of the problem. As explained earlier, Anita Kilgour is not the only customer to make such a complaint. Numerous clients experience the same problems, yet the company has done nothing about it. This should be regarded as a wake up call. Although training would cost the company money, it would not be as much as the rehiring on new staff.
Furthermore the company would protect itself from possible loss of business or defections that stem from poor customer service. It should think of the training as an investment in its repeat clients. Option three would send the message that this is an isolated incident, yet it is not. The company can let Anita Kilgour and other similar customers know that it has instated those changes.
Implementation and action plans
The implementation should start as soon as possible; preferably in one month’s time. The more the firm delays, the more customers it will loose. The action plan should entail a six-week training program in which customer service employees in Canada will participate. This should take one hour per day and employees should start practicing what they learn immediately on the job.
The end of the training program should be characterized by a visitation of the company goals and the role of customer care respondents. All staff members should implement a follow up program that will take three months for completion. The payment system will also be changed after 6 months training so as to include follow ups.