Run Your Company Like a Hungry Start-up: FedEx Does
A Business Operations and Technology Best Practice
FedEx is made up of several divisions. The most significant division, and market leader in its segment is its FedEx Express unit. The FedEx Express unit is the world's number one express service carrier. FedEx Express delivers three and a half million packages every day to two hundred and twenty countries. FedEx owns a fleet of six hundred ninety airplanes, and fifty thousand motor vehicles and trailers. FedEx Office retail outlets and shops offer document-related and business services. These retail outlets also function as hubs for other FedEx units.
It would be difficult, if not impossible for a company to launch a new shipping business today and suddenly be able to substitute what has taken FedEx forty years to perfect. Where UPS, DHL and others have fallen short of the capacity for growth and competitive advantage is in their lack of ability to put excellent customer service as the top priority – as the most important business strategy. Hence, while it may be possible to launch a new shipping company, it would be hard to beat “the purple promise” and the way that FedEx manages to continue to delight customers. In 2015, Fortune magazine designated FedEx as one of the top fifteen most admired companies in the world. FedEx earned the number twelve spot because the company’s leadership continues to make customer connectedness and superior customer service a priority.
In fact, FedEx operates as a company whose top business priority is providing excellent customer service. The company claims that excellent customer service is THE business strategy. Every employee that works at FedEx and the operations strategies that they use are designed and implemented with excellent customer service as the purpose.
FedEx was founded by Frederick Smith, its current CEO forty years ago. What has made FedEx a great success story is their ability to continually reinvent themselves in order to meet the changing times and to keep up with the demands of their customers. What has made FedEx flourish is the unfaltering purple promise above all, while innovating the technology infrastructure and continually putting people first with every single component of the company’s operation.
Unlike other companies who have recently started and may not be encumbered with brick and mortar operations, FedEx started at a time where they not only needed office space and warehouse; but also needed to purchase and maintain a fleet of transportation vehicles such as trucks. The best practice and lessons to be learned from this company is how they have leveraged innovation and technology to transform a component of their operations to be e-commerce based.
There are many reasons why FedEx has been successful for forty years, here is a list of some of those reasons:
- FedEx enjoys positive cash flow
- FedEx growth trajectory builds equity
- FedEx has a good credit rating and can borrow, if necessary
- Hub and spoke model continually refined
- Locations that are where they can best serve the customer base
- Continual modernization of fleet and aircrafts
- Forty years of operations
- Innovation drives growth
- Addition of e-commerce and applications
- Same CEO since inception of FedEx forty years ago
- FedEx veterans of thirty plus years in key management roles
- FedEx is a large, global multinational, but they still operate their company as if it were a hungry, customer-focused start-up. That is a best practice for any company, whatever its size, or however large
- It strives to grow. In the case of FedEx, they use technology and operations to continually reinvent themselves, but they ultimately still operate the way they always have: with the customer as the top priority