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eCommerce Merging eCommerce and the Supply Chain
Merging eCommerce and the Supply Chain Presented by
Brett Buckhold Integrated Technology Consultant FedEx e Supply Chain Services
May 10, 2000 ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
1
eCommerce
Agenda
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy Key Business Trends FedEx’s eSupply Chain Perspective Response to the Marketplace Case Study Examples Questions
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
2
eCommerce Merging eCommerce and the Supply Chain
1
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
FedEx Corporation Overview
3
Who is FedEx Corporation?
eCommerce Merging eCommerce and the Supply Chain
Headquarters: Memphis, Tennessee
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples
Time-definite express delivery Headquarters: Memphis, Tennessee
Exclusive-use, expedited, door-to-door delivery Headquarters: Akron, Ohio
Small-package ground delivery Headquarters: Pittsburgh, Pennsylvania
Tower Group International Custom brokerage/consulting
Integrated logistics, technology and transportation solutions Headquarters: Memphis, Tennessee
Foremost less-than-truckload freight carrier in the western US
Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Consolidated sales, marketing and information technology supporting a single, global FedEx brand Headquarters: Memphis, Tennessee
4
FedEx Corporation Provides...
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview
FedEx Corporation
A Networked Economy (Key Business Trends)
Worldwide Services
FedEx’s eSupply Chain Perspective A Response to the Marketplace
Network Management
Physical Based Services
Information Based Supply Chain Solutions
Case Study Examples Summary
Ÿ Transportation to and from 90% of the world’s GDP Ÿ Complete management of related information and logistics services
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
5
eCommerce Merging eCommerce and the Supply Chain
2
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A Networked Economy - Key Business Trends
6
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Three major trends shaping a “networked economy” • Providing fast, global reach • Speeding the supply chain
Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
• Conducting business electronically
7
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
Fast, Global Reach • World’s economy has become more fully integrated (a ‘business without borders’ environment) • Ability to source and sell globally is a critical success factor • Framework for global commerce is essential
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
8
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Key Business Trends Speeding the Supply Chain • Fast-cycle logistics is increasing as companies of all sizes discover the power of supply chain velocity • Information-intensive services will power the supply chain
Case Study Examples Summary
• Ability to manage inventory at rest while managing inventory in motion is an intricate step of the supply chain • Adding value, visibility and velocity throughout the supply chain will be expected
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
9
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
Conducting Business Electronically FedEx Corporation Overview A Networked Economy (Key Business Trends)
• Electronic commerce in general is the best way to minimize time and distance
FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples
• Convenience, accessibility, connectivity, and reliability are the prerequisites of conducting business electronically
Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
• Business-to-business e-commerce is the largest growing segment of this trend (estimated to top $100 billion in sales this year and exceed the trillion-dollar sales mark by 2003) 10 - Forrester Research 1999
eCommerce Merging eCommerce and the Supply Chain
3
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
FedEx’s eSupply Chain Perspective
11
eSupply Chain Management What is it?
eCommerce Merging eCommerce and the Supply Chain
The coordination and movement of products, information and currency from the suppliers’ suppliers through manufacturing to the customers’ customers
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective
Suppliers
Manufacturers
Distributors
Retailers
Consumers
A Response to the Marketplace Case Study Examples Summary
• •
• ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A cross-functional business process Increasingly driven from the right to the left, from the consumer and customer to the supplier and manufacturer Competitive focus is no longer a product vs. product, but rather supply chain vs. supply chain
12
eSupply Chain Management What is the value?
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
• Richmark study respondents expect supply chain solutions: • To drive savings of 3-6% of revenue • Are willing to invest 18-25% of these savings over 3-5 years • Are willing to invest $10M annually for operations
Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
•
Additionally, a PRTM study finds for mid-market companies (typical - $500M revenue): • $5-15M in annual supply-chain cost reduction benefits • 10-15% improvement in on-time commitment performance • 12-40% increased volume flexibility 13
eCommerce Merging eCommerce and the Supply Chain
4
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Response to the Marketplace
14
eCommerce
FedEx eSupply Chain Approach
Merging eCommerce and the Supply Chain
Monitor Monitor and and Manage Manage
FedEx Corporation Overview
Service Service Recovery Recovery Proactive Proactive Reporting Reporting
A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
Plan Plan Demand Demand Co-Planning Co-Planning Manufacturing Manufacturing Distribution Distribution Network Network
Transportation Services Orchestrate Orchestrate & & Optimize Optimize
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Right Right Product Product Right Right Time Time Right Right Place Place Right Right Price Price
15
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
FedEx eSupply Chain Approach Plan • Two approaches • Integration of planning software tools with visibility • Collaborative planning applications and services for mid-market companies
• Need addressed • To balance supply and demand
• Value • Planning collaboration results in more demand-responsive, accurate forecasts and production schedules (this improves order fill rate, delivery performance, and reduces inventory)
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
16
FedEx eSupply Chain Approach Orchestrate and Optimize
eCommerce Merging eCommerce and the Supply Chain
•
The ability to time-phase the express and non-express distribution of products and orders on a global basis. “The right product at the right place at the right time.”
•
Need addressed • To optimize supply chain performance
•
Value • One source coordination that optimizes pick location, mode selection, carrier selection and management, international trade, and warehouse activities
•
DCSS components • Order Management System • Warehouse Management System • Multi-Carrier Shipment Automation • Trade Compliance Expertise • Transportation Management and Optimization • Merge-in-Transit Capabilities • Multiple Processing Facilities • Billing & Invoicing • Web Enablement
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A customer is able to provide on-time delivery commitment to their customer at time of order and coordinate the shipment with other components to arrive at the same time. 17
eCommerce Merging eCommerce and the Supply Chain
FedEx eSupply Chain Approach Monitor and Manage •
Ability to view in-transit and static inventory and order status, coupled with real-time exception alerts. Provides monitoring services with proactive recovery and ongoing metrics for continuous improvement.
•
Need addressed • To know what is happening across the supply chain; to access and share data across the supply chain
•
Value • Less reliance on inventory, improved customer service and retention
•
DCSS Components • GIV • SC3 • FedExNet 2 • Customer service
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A customer is informed by their FedEx Command & Control Monitor that her order is in jeopardy due to a freight forwarder error. Shipment is diverted to another transportation mode or carrier. Shipment is on time. Plan integrity is maintained. 18
eCommerce Merging eCommerce and the Supply Chain
5
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Case Study Examples
19
How is the customer using eCommerce? eCommerce EDI - INT Merging eCommerce
KPMG - FedEx Alliance Recap
Benefits
Before
Customer Service
FedEx Corporation Overview Worldwide Services Market Approach
FedEx Partnering for Success Ground
FedEx Customer Corporation
and the Supply Chain
•
Eliminates approximately 40% of the tracing calls received by customer each day (13,000 total - all carriers)
•
Reduces FedEx customer service calls • Improved asset utilization (FedExNet) • Breathes life into FedEx synergistic value proposition
After Viking
FedEx Express
Next Steps
Solution/Challenge
Web Page
Q&A
•
•
Enable customers to trace orders from inception to delivery via customer web page Populate customer order system and web page with secure shipment data linked to customer order number
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
ECXpert ECXpert Encryption Encryption
FedEx Ground
Viking
FedEx Net
20 FedEx Express
How is the customer using eCommerce? eCommerce Orchestrated Delivery Management Merging eCommerce
DC
Component 1
5
3
1
4
Customer
FedEx Corporation
2
Benefits
Before
Customer
and the Supply Chain
• Growth without additional infrastructure • Inventories cut • Cash flow accelerated • Unique (turnkey) replicable solution • Consultation fees • Incremental transportation volume
After
Solution/Challenge
Total days in transit and awaiting installation = 24
• •
Reduce global inventory Reduce circuitous shipments and transit miles
•
Global merge
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
22
5
3
Component 1
1
4
Customer
21
Total days in transit and awaiting installation = 5
FedEx Solution Engine
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Worldwide Services
A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Information
FedEx Corporation Overview
Case Study Examples
SAP
Operating Entities
Transportation ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
eSCS
Network FDX Logistics Logistics
Physical
Summary
Enabling Technologies
Integrated Solutions 22
eCommerce Merging eCommerce and the Supply Chain
6
Questions
Thank You
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
23
Merging eCommerce and the Supply Chain Presented by
Brett Buckhold Integrated Technology Consultant FedEx e Supply Chain Services
May 10, 2000 ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
1
eCommerce
Agenda
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy Key Business Trends FedEx’s eSupply Chain Perspective Response to the Marketplace Case Study Examples Questions
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
2
eCommerce Merging eCommerce and the Supply Chain
1
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
FedEx Corporation Overview
3
Who is FedEx Corporation?
eCommerce Merging eCommerce and the Supply Chain
Headquarters: Memphis, Tennessee
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples
Time-definite express delivery Headquarters: Memphis, Tennessee
Exclusive-use, expedited, door-to-door delivery Headquarters: Akron, Ohio
Small-package ground delivery Headquarters: Pittsburgh, Pennsylvania
Tower Group International Custom brokerage/consulting
Integrated logistics, technology and transportation solutions Headquarters: Memphis, Tennessee
Foremost less-than-truckload freight carrier in the western US
Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Consolidated sales, marketing and information technology supporting a single, global FedEx brand Headquarters: Memphis, Tennessee
4
FedEx Corporation Provides...
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview
FedEx Corporation
A Networked Economy (Key Business Trends)
Worldwide Services
FedEx’s eSupply Chain Perspective A Response to the Marketplace
Network Management
Physical Based Services
Information Based Supply Chain Solutions
Case Study Examples Summary
Ÿ Transportation to and from 90% of the world’s GDP Ÿ Complete management of related information and logistics services
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
5
eCommerce Merging eCommerce and the Supply Chain
2
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A Networked Economy - Key Business Trends
6
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Three major trends shaping a “networked economy” • Providing fast, global reach • Speeding the supply chain
Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
• Conducting business electronically
7
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
Fast, Global Reach • World’s economy has become more fully integrated (a ‘business without borders’ environment) • Ability to source and sell globally is a critical success factor • Framework for global commerce is essential
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
8
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Key Business Trends Speeding the Supply Chain • Fast-cycle logistics is increasing as companies of all sizes discover the power of supply chain velocity • Information-intensive services will power the supply chain
Case Study Examples Summary
• Ability to manage inventory at rest while managing inventory in motion is an intricate step of the supply chain • Adding value, visibility and velocity throughout the supply chain will be expected
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
9
eCommerce
Key Business Trends
Merging eCommerce and the Supply Chain
Conducting Business Electronically FedEx Corporation Overview A Networked Economy (Key Business Trends)
• Electronic commerce in general is the best way to minimize time and distance
FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples
• Convenience, accessibility, connectivity, and reliability are the prerequisites of conducting business electronically
Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
• Business-to-business e-commerce is the largest growing segment of this trend (estimated to top $100 billion in sales this year and exceed the trillion-dollar sales mark by 2003) 10 - Forrester Research 1999
eCommerce Merging eCommerce and the Supply Chain
3
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
FedEx’s eSupply Chain Perspective
11
eSupply Chain Management What is it?
eCommerce Merging eCommerce and the Supply Chain
The coordination and movement of products, information and currency from the suppliers’ suppliers through manufacturing to the customers’ customers
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective
Suppliers
Manufacturers
Distributors
Retailers
Consumers
A Response to the Marketplace Case Study Examples Summary
• •
• ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A cross-functional business process Increasingly driven from the right to the left, from the consumer and customer to the supplier and manufacturer Competitive focus is no longer a product vs. product, but rather supply chain vs. supply chain
12
eSupply Chain Management What is the value?
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
• Richmark study respondents expect supply chain solutions: • To drive savings of 3-6% of revenue • Are willing to invest 18-25% of these savings over 3-5 years • Are willing to invest $10M annually for operations
Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
•
Additionally, a PRTM study finds for mid-market companies (typical - $500M revenue): • $5-15M in annual supply-chain cost reduction benefits • 10-15% improvement in on-time commitment performance • 12-40% increased volume flexibility 13
eCommerce Merging eCommerce and the Supply Chain
4
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Response to the Marketplace
14
eCommerce
FedEx eSupply Chain Approach
Merging eCommerce and the Supply Chain
Monitor Monitor and and Manage Manage
FedEx Corporation Overview
Service Service Recovery Recovery Proactive Proactive Reporting Reporting
A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
Plan Plan Demand Demand Co-Planning Co-Planning Manufacturing Manufacturing Distribution Distribution Network Network
Transportation Services Orchestrate Orchestrate & & Optimize Optimize
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Right Right Product Product Right Right Time Time Right Right Place Place Right Right Price Price
15
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
FedEx eSupply Chain Approach Plan • Two approaches • Integration of planning software tools with visibility • Collaborative planning applications and services for mid-market companies
• Need addressed • To balance supply and demand
• Value • Planning collaboration results in more demand-responsive, accurate forecasts and production schedules (this improves order fill rate, delivery performance, and reduces inventory)
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
16
FedEx eSupply Chain Approach Orchestrate and Optimize
eCommerce Merging eCommerce and the Supply Chain
•
The ability to time-phase the express and non-express distribution of products and orders on a global basis. “The right product at the right place at the right time.”
•
Need addressed • To optimize supply chain performance
•
Value • One source coordination that optimizes pick location, mode selection, carrier selection and management, international trade, and warehouse activities
•
DCSS components • Order Management System • Warehouse Management System • Multi-Carrier Shipment Automation • Trade Compliance Expertise • Transportation Management and Optimization • Merge-in-Transit Capabilities • Multiple Processing Facilities • Billing & Invoicing • Web Enablement
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A customer is able to provide on-time delivery commitment to their customer at time of order and coordinate the shipment with other components to arrive at the same time. 17
eCommerce Merging eCommerce and the Supply Chain
FedEx eSupply Chain Approach Monitor and Manage •
Ability to view in-transit and static inventory and order status, coupled with real-time exception alerts. Provides monitoring services with proactive recovery and ongoing metrics for continuous improvement.
•
Need addressed • To know what is happening across the supply chain; to access and share data across the supply chain
•
Value • Less reliance on inventory, improved customer service and retention
•
DCSS Components • GIV • SC3 • FedExNet 2 • Customer service
FedEx Corporation Overview A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace Case Study Examples Summary
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
A customer is informed by their FedEx Command & Control Monitor that her order is in jeopardy due to a freight forwarder error. Shipment is diverted to another transportation mode or carrier. Shipment is on time. Plan integrity is maintained. 18
eCommerce Merging eCommerce and the Supply Chain
5
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
Case Study Examples
19
How is the customer using eCommerce? eCommerce EDI - INT Merging eCommerce
KPMG - FedEx Alliance Recap
Benefits
Before
Customer Service
FedEx Corporation Overview Worldwide Services Market Approach
FedEx Partnering for Success Ground
FedEx Customer Corporation
and the Supply Chain
•
Eliminates approximately 40% of the tracing calls received by customer each day (13,000 total - all carriers)
•
Reduces FedEx customer service calls • Improved asset utilization (FedExNet) • Breathes life into FedEx synergistic value proposition
After Viking
FedEx Express
Next Steps
Solution/Challenge
Web Page
Q&A
•
•
Enable customers to trace orders from inception to delivery via customer web page Populate customer order system and web page with secure shipment data linked to customer order number
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
ECXpert ECXpert Encryption Encryption
FedEx Ground
Viking
FedEx Net
20 FedEx Express
How is the customer using eCommerce? eCommerce Orchestrated Delivery Management Merging eCommerce
DC
Component 1
5
3
1
4
Customer
FedEx Corporation
2
Benefits
Before
Customer
and the Supply Chain
• Growth without additional infrastructure • Inventories cut • Cash flow accelerated • Unique (turnkey) replicable solution • Consultation fees • Incremental transportation volume
After
Solution/Challenge
Total days in transit and awaiting installation = 24
• •
Reduce global inventory Reduce circuitous shipments and transit miles
•
Global merge
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
22
5
3
Component 1
1
4
Customer
21
Total days in transit and awaiting installation = 5
FedEx Solution Engine
eCommerce Merging eCommerce and the Supply Chain
FedEx Corporation Worldwide Services
A Networked Economy (Key Business Trends) FedEx’s eSupply Chain Perspective A Response to the Marketplace
Information
FedEx Corporation Overview
Case Study Examples
SAP
Operating Entities
Transportation ©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
eSCS
Network FDX Logistics Logistics
Physical
Summary
Enabling Technologies
Integrated Solutions 22
eCommerce Merging eCommerce and the Supply Chain
6
Questions
Thank You
©2000 FedEx Corporation - Briefing at Annual NDIA Conference
CONFIDENTIAL
23
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