IT Challenges faced by FedEx India

Information technology is very critical for FedEx. FedEx India by integrating its information technology
infrastructure and commerce capabilities with delivery of products by its air and ground network, FedEx
aims to utilize the maximum amount of opportunities emerging in rapidly digitizing Indian Economy. But
in India FedEx is facing some major IT challenges which can be given as-

1. Difficulties in filling out online air bills, entering and storing addresses, and record keeping, due
to poorly designed menus, besides the lack of and ease of use

2. The lack of a single systems and data transfer standard means that the integration process would
not be smooth for all customers.

3. Problems in package tracking mainly due to-

• Lost packages

• Damaged Packages

• Stolen Packages

• Return Packages

• Wrong or incomplete destination addresses

• Unavailability of receiver

4. Customers cannot define a specified delivery time, while its competitors like DHL provide such
services

5. Customer demand patterns change with the explosive growth of e-commerce. The recent changes
in India like GST, growing internet penetration etc. pot a lot of pressure on FedEx servers and as
a result there were constant outages

6. Acquisition of Blue Dart by DHL leading to loss of ERP systems like COSMATll and SMART. Blue
Dart accounted for nearly 20% of FedEx services in India along with access to 16 states and 140
stores around India

Problems in implemented IT Solutions

With Innovation in infrastructure comes problems, the 47-year-old delivery company is the leader and
first to introduce global tracking network for packages, the first automated shipping system and the first
state of the art automated customer help centre.

BUT the system built on Information Technology is rarely sufficient to sustain the business. Over the years
many acquisitions had made FedEx portfolio of applications to more than 2600+ applications which
consisted more than fourteen thousand custom interfaces by 2009. This led to wastage of millions of
dollars and impeded flexibility.
CIO of FedEx and Information Services EVP (Executive Vice President)
Robert Carter had devised a strategy to eliminate the overpriced
legacy systems and outdated technologies with better efficient
systems.

Robert Carter in his keynote speech at a conference in San Diego said

"We're trying to weave business value into this mess but we simply
can't do it this way," as reported by CIO US. He further said “We had
created a world where we spent too much time looking out the
windshield ahead of us and not looking in the rear view mirror and
recognising that we were collecting technical debt as we went along”

Technology Business Management

He mapped all the organization applications and
interfaces to get to know the current situation. It was a
daunting task as the systems are complicated but it provided
a sense of clarity. In the transformation phase the focus was
not only on IT innovation but to create IT which provides
value to the business. To implement this he had a meeting with Apptio CEO Sunny Gupta in 2010. Apptio
is a leadig developer in TBM a SaaS application. It provides a platform for the managers such as Carter in
decision making based on data to maximize the business value.

This tool provides a dashboard of installing costs, maintain and developing each software and hardware.
Carter used this information to identify & remove the inefficiencies in the huge number of existing
collection of applications.

For example, consider aircraft maintenance of FedEx. Its expenses were $ 10 million per year on plane
inspection system that sent engineers getting into plane for inspection and then they need to travel on a
golf cart to a shack so that data can be entered into inventory management system.

Present the engineers are entering the data of inspection directly in their mobile device through mobile
app – Workbench at an annual cost of $ 2 million per year.

Saving costs to focus on innovation

The costs saved by the implementation of new systems are invested in emerging technologies. Take the
example of TRON – Bluetooth enabled sensor which tracks the shipments at much less cost, also, the data
generated by this will help in guiding the strategies in future as the FedEx moves towards Developer
Operation practices and agile development.
References
 Macaulay, Thomas December 23, 2016 “How FedEx saved hundreds of millions of dollars by
transforming its IT systems” retrieved from https://www.cio.co.uk/it-infrastructure/how-fedex-
cut-hundreds-of-millions-of-dollars-from-its-it-costs-3652235/
 Boulton, Clint November 23, 2016 “How FedEx is shaving millions from its IT costs” retrieved
from https://www.cio.com/article/3144504/software/how-fedex-is-shaving-millions-from-its-it-
costs.html
