Fedex Case

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Describe FedEx’s corporate philosophy and explain how FedEx’s systems fit in the context of its corporate philosophy.

FedEx’s corporate philosophy
- People-Service-Profit (P-S-P) philosophy: relied heavily on management’s ability to create an environment that encouraged and allowed people to choose to deliver superior service. i. Believed customer satisfaction begins with employee satisfaction. James Barksdale aware that keeping the promise to customers required employees to work harder => “People first” philosophy ii. Attention to quality service emerged early in FedEx’s history:- 1. 1975: “Federal Express. Twice as Good as the Best in the Business.” 2. 1970s: service was measured by percentage of overnight deliveries that were made on time 3. 1980s: FedEx managers concluded that high service percentages would not sufficient in the future

- To strike the best movement toward 100% customer satisfaction. (as Frederick Smith mentioned – “The first time you tolerate anything other than a movement toward 100% customer satisfaction, you’re on the road to mediocrity.” i. It attains this philosophy from both focus and broad views. It is broad in that it covers all the areas from Leadership, Information Technology, Human Resource Utilization, Quality Assurance of Products and Services, Quality Results and finally, Customer Satisfaction. It is focus in a sense that it excels in all these areas. FedEx was the first company to win in the service category in 1990, since the award was established in 1988 – Malcolm Baldrige National Quality Award (MBNQA), with 160,000 requests altogether. ii. FedEx only recognized the highest rating of “completely satisfied” as an acceptable level of customer satisfaction in its Customer satisfaction surveys, aligned its measurement improvement towards its goal of 100% complete customer satisfaction.

- FedEx Quality =Productivity philosophy - Recognized the correlation between doing things right the first time and productivity: good relationship between customers and suppliers

The ways FedEx’s systems fit in the context of its corporate philosophy

- In 1980s it adopted quality-improvement process (QIP) to support P-S-P i. Recognized the correlation between doing things right the first time and productivity (quality = productivity) ii. Defined quality service not in statistical terms, but as performance to the standards of the customer: 100% satisfaction ⇨ FedEx implemented “quality-improvement programs” in 1990 even at tough economic times – with oil prices had more than doubled between August and December 1990. This could reflect the persistence in aligning the corporate philosophy of the management.

- As support to its “quality-improvement” philosophy, by mid-1987, FedEx selected consulting firm – Organizational Dynamics Incorporated (ODI) at times when FedEx struggling with problems internally (rapid growth in overnight service) to initiate a companywide education program on quality, focused more on the thought processes in quality improvement. i. Led workshops for senior vice-presidents and managing directors ii. Trained managers to facilitate workshops for employees

- As support to its “quality-improvement” philosophy, it implemented framework of ideas in the modules above, it set up “quality action teams” (QAT) – to help employees to change the way they did their job i. FADE framework: Focus -> Analyze -> Develop -> Execute ii. Extensive training given to QAT members

iii. Focused on small, incremental changes
Outcomes:
i. Creative solutions through employee involvement and careful analysis. E.g. devised mnemonic devices to help new employees remember the...
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