How does FedEx hope to become an integral part of the build to order revolution?

Question

What will be an ideal response?

Answer 1

Goods shipped as a result of sales over the Internet would go from $20 billion in 1999 to $180 billion in 2005. The volume of parcels to residential destinations should rise from 3 million to 8 million a day. UPS claim that business to residential deliveries added profits and filled its network. FedEx was building an entirely new business delivering to homes that would cover 50% of the US by 2005. Over the long-term FedEx believed that a build to order revolution was underway in manufacturing similar to that epitomized by Dell Computer. Components would be shipped out from various businesses to the consumers in little brown boxes and FedEx aimed to carry a majority of this traffic. The key would be to ensure that all the packages arrived together or in a predetermined order or as desired by the merchant. Transportation and warehousing costs account for 10% of the cost of all goods. FedEx aimed to cut these costs for manufacturers using sophisticated Internet based logistics and supply chain management systems. FedEx was willing to do anything it took to get big customers to ship with them and use their logistics systems. FedEx spent $100 million on just such a system for Cisco to allow Cisco to deliver their routers in coordinated shipments. It would allow Cisco to eliminate warehousing costs and the overall cost would be 50% of the normal shipping method. It also gives Cisco a great deal of flexibility about where they put their factories around the world. FedEx hoped to do this with a number of large companies and eventually be the kingpin in coordinated delivery based supply chain management systems.