Executive summary
This report investigates the current information technology systems being used by Fedex Corporation and evaluates the effects of the adoption of these systems on the performance of the company in terms of productivity and profitability. The investigation has been carried out through evaluating the information systems that the company has adopted over the years and the benefits that have been derived from the use of these systems.
The annual expenditures of the company on IT systems have also been presented by use of a graph. The investigation reveals that the company has been using various information systems and is in fact among the industry leaders in terms of IT use. Comparisons with the industry leader i.e. UPS have been carried out and conclusions have been drawn.
Introduction
Fedex Corporation is a US Multinational courier services Corporation. The company was incorporated in 1997 and has its headquarters in Memphis, Tennessee. The acquisition of Caliber Systems Inc, another US company, by Federal Express in 1998 resulted in the founding of Fedex Corporation as is known today. After the acquisition of Caliber, the company introduced new business services.
These were an addition to the existing express shipping line of operation. The company’s services portfolio include transportation services, business services and e-commerce services and are available to customers across the globe. The company records annual revenues in excess of $43 billion and employs more than 300,000 team members (Fedex, 2013).
Use of IT in Fedex
Over the years, the company has been experimenting with new information systems. For example, in 2010, the company introduced a system that sought to expand its capabilities to carry out frozen shipping activities in the life sciences sector. Using the new and improved technology makes sure that products being shipped remain in frozen conditions for a longer period of time.
This is normally not the case with dry-ice shipping which, in most cases, requires re–icing of products while they are on transit. The company also carried out a complete overhaul of the online tracking system by installing an advanced system that improved the visibility of ships while on- transit using the web and computers.
Another major technological advancement associated with the company is the use of a new and improved avionics system for their aircraft. This system is expected to improve the efficiency of the aircraft during takeoff and landing (Avnish, et al., 2010).
Productivity in Fedex
Productivity can be defined as the average measure of the production efficiency of a company (Griliches & Jorgenson, 1966). It is the ratio of the output from production to the input used in the production process (Balk, 1998).
Productivity and IT services at Fedex
For Fedex and the courier services industry in general, there are various attributes that can be used to measure the overall productivity of the company. These attributes may include the organization and management of inventory, well monitored delivery schedules and timely delivery of shipments.
The measures of productivity mentioned above do not only represent the achievement of labour productivity in the company but also represent the profitability of the entire company. This is because efficiency leads to improved performance and profitability. A business transaction in a courier service company like Fedex commences when a prospective customer places an order for delivery services with the company.
In such a case, the reputation of the company in terms of success and efficiency in delivery is determined by how the company goes around executing the transaction. Some of the useful measures of efficiency include accuracy, dependability, and on- time delivery of the parcel or shipment. Such a reputation attracts more customers to the company and therefore increased business opportunities.
If the company continues to deliver services to the satisfaction of their customers, then, the company builds a strong reputation and brand name. Satisfied customers are therefore expected to rely on the company for courier services even in future. Building customer trust and confidence through optimal service delivery ensures retention of customers and therefore profitability of the company in the long run (Bartelsman & Mark, 2000).
Conclusion
In conclusion, it is evident that Fedex Corporation continues to perform well and position itself competitively in the courier services industry. However, the company is behind United Parcel services (UPS), the industry leader in the US, in terms of the adoption of advanced information technology and in terms of performance in general. The good performance is attributed to the use of advanced information technology systems by the company leading to improved productivity and efficiency (Alghalith, 2005).
Appendix
Expenditure on New technology and other investments by the company in Millions of USD
References
Alghalith, N. (2005). Competing with IT: The UPS Case, Journal of American Academy of Business, Cambridge, 7(2), 7-15.
Avnish, C., Satyendra, S., Ankur, J. & Rajeev, K. (2010). High-Tech Courier Services as an E-Courier services in India Prospective, Report and Opinion, 2(5), 25-28.
Balk, B.M. (1998). Industrial Price, Quantity and Productivity Indices: The Micro-economic Theory and an Application, Boston: Kluwer Academic Publishers.
Bartelsman, E. & Mark, D. (2000). Understanding Productivity: Lessons from Longitudinal Micro-data, Journal of Economic Literature, 38(3), 569-594.
Fedex, (2013). Company Overview. Web.
Griliches, Z. & Jorgenson, D.W. (1966). Sources of Measured Productivity Change: Capital Input, American Economic Review, 56(2), 50-61.