Building a World Class Logistics, Distribution and Electronic Commerce Infrastructure

A b s t r a c t This paper takes a retrospective look at FedEx, a third party logistics intermediary that sought to capitalize on the rise of electronic commerce. By integrating virtual-world information technology and electronic commerce capabilities with real-world physical delivery of products through its air and ground transportation network, FedEx sought to exploit the new opportunities emerging in the digital economy. Through a process of strategic acquisitions in late 1997 and early 1998, FedEx consolidated its position as a leader in the express package delivery business. This set the stage for rapid growth in the fast-emerging industries of electronic commerce and supplies-chain management – a new domain in which long-time competitors UPS and DHL were also quickly gaining ground. Simultaneously, many large American firms were beginning to revamp their logistics strategies in order to integrate other elements of the supply chain into their own systems. This significant market trend, in conjunction with several other industry developments at the time, created numerous new outsour-cing opportunities for key players in the delivery, freight, and express transportation business. The authors examine the motivations behind this industry phenomenon and the resulting shift industry leaders made in their business and IT strategies. The paper explores several of the strategic choices FedEx needed to make in order to compete in this new domain. We present an overview of various solutions offered by the firm, the role of IT and organizational culture at the company, and major competitive challenges. A u t h o r s Bharat Rao ([email protected]) is Assistant Professor of Management at the Institute for Technology and Enterprise, Polytechnic University in New York City. His research focuses on e-commerce strategies, retailing and supply chain management, and the impact of new technologies on business practice. City. Prior to joining ITE, Mr Navoth held positions at a number of new media companies including Pixel Multimedia. He is also a captain in the Israeli Defense Forces.