Federal Express Tracks Customers on the Move

Snapshot

 

Organization Federal Express Corp.

Profile Global shipping, logistics, and supply chain solutions company

Headquarters Memphis, Tennessee

The Challenge To improve the ability of analysts to access information about activity levels and profitability of 46,000 drop points and service centers in the United States. Previously, analysts had to wait up to two weeks for custom reports using data from FedEx's Cosmos mainframe-based package tracking system.

Results A self-service data warehouse that gives analysts direct access to shipping data via FedEx's intranets

Information Builders Solution WebFOCUS

Federal Express Corp. is famous for keeping track of overnight packages as they whiz from point A to point B. It's one of the most important things the company does. In fact, there's only one thing that's more important for FedEx (FDX) to track – its customer base.

 

But until recently, FedEx wasn't doing a great job of quickly getting its business managers the information they needed to keep up with the company's fast-moving customers.

 

So, in June, the $13.3 billion Memphis, Tenn., company rolled out a new system that uses its intranet and a self-service data warehouse to help company executives make up-to-the-minute decisions about where it should locate the service centers and drop boxes that customers use every day. The payoff, FedEx officials say, will be better customer service and lower operating costs.

 

"We want to be located where our customers are, and now we think we have a better way of doing that," says Ron Houston, manager of systems and support with FedEx's retail division.

 

Although FedEx maintains a massive network of 46,000 U.S. drop-off points, the company wasn't always sure that those points were in exactly the right locations. There are a couple of reasons for that. First, the company's customers keep moving around. As businesses move from urban centers to suburban business parks, and as more and more individuals telecommute, FedEx has had to work hard to make sure its drop points – from large service centers to drop boxes – are where customers can easily find them.

 

On top of that, until recently, FedEx managers haven't had easy access to information about which drop locations are most heavily used.

 

FedEx uses its proprietary, mainframe-based Cosmos tracking and billing application, which collects massive amounts of operational data, including where packages are picked up. But it has been difficult for FedEx analysts to get to that data. Analysts have had to submit requests for custom reports to a staff of eight programmers, then wait for up to two weeks for a report. FedEx has used a mainframe version of New York-based Information Builders' FOCUS decision-support database to produce the reports.

 

"The old system took too long, and it didn't allow analysts to ask follow-up questions," Houston says. "It just didn't support quick decision making."

 

So FedEx decided to give analysts direct access to information. In June, the company deployed a Web-based version of the FOCUS database, WebFOCUS, which allows 120 analysts to tap directly into up-to-the-minute drop site usage data from any PC equipped with Netscape Communications Corp.'s Navigator browser. Data is downloaded from the Cosmos mainframe system to the WebFOCUS server running on a Hewlett-Packard Co. dual-Pentium 200 Windows NT system. Analysts can query the data either using a set of preconfigured reports or by creating their own ad hoc queries.

 

Although FedEx evaluated several Web-based decision-support systems, it selected WebFOCUS primarily because the company already had programmers with FOCUS experience. That experience helped FedEx get an initial release of the intranet-based application deployed in just three weeks.

 

Houston says that redeploying the decision-support application on the intranet has already paid off in quicker access to information – and quicker decisions.

 

"Analysts can now get reports on their screens in a matter of seconds rather than having to wait weeks," Houston says. "With that information, we will be able to begin more actively managing the location of our service centers and drop points as populations shift and customer habits change."

 

In addition to more accurately tracking drop point usage, FedEx analysts will be able to get fresh information on the profitability of each service center and drop box. Although FedEx has no immediate plans to cut the number of drop boxes or service centers, doing a better job of placing them should help cut costs, Houston says.

 

Turning the decision-support system into a self-service, intranet-based application will have another major benefit for FedEx: It will be easier for the company to get a more complete view of population shifts and other customer trends by combining its own drop point usage data with demographic data purchased from vendors such as Dun & Bradstreet Corp. Programmers who had previously been developing reports from FedEx's mainframe FOCUS database are now integrating such external data with the data in WebFOCUS. That will allow analysts to anticipate – and more accurately track – customer trends.

 

Being able to anticipate customer trends is increasingly critical not only to FedEx also but to other companies in the distribution and logistics business. As companies such as FedEx try to link their distribution services directly into the supply chain operations of their large corporate customers, they need to make sure they have the support centers, trucks and people in the right place at the right time.

 

"Historically, these companies haven't been able to predict the inflow of packages into their systems very well," says Barbara Herman, an analyst at A.T. Kearney, in Cambridge, Mass. "They tend to sit there every night to see what kind of volumes hit them on the head, then they scramble to deploy to deal with it." Doing a better job of anticipating demand and planning will allow companies such as FedEx to cut operating costs and improve service, Herman says.

 

FedEx will be expanding the new self-service data warehouse system over the next 18 months. First, the WebFOCUS database, which currently stores three months of historical shipment information, will be extended to store 25 months of data. That will increase the warehouse's capacity from the current 21 million records to 260 million records and require a hardware upgrade. The plan is to replace the dual-Pentium 200 hardware with a dual-Pentium 400.

 

FedEx also plans to improve the system's reporting capabilities. The company is now in the process of rolling out the managed reporting features of WebFOCUS. That will allow analysts to schedule and create more predefined reports. FedEx also plans to write new applications, using Information Builders' Cactus development tool, which will allow analysts to update and enhance drop point data in the WebFOCUS database, not just read it.

 

With the new self-service data warehouse and planned enhancements, FedEx will have a better handle on tracking its fast-moving customers.