Reducing Complexity in Fedex

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Interview

Mike Cooke

Reducing Complexity in An Interconnected World A Conversation with FedEx CIO Rob Carter

Contact Information Beirut Ramez Shehadi Partner +961-1-336433 ramez.shehadi@booz.com Canberra David Batrouney Principal +61-2-6279-1235 david.batrouney@booz.com Chicago Mike Cooke Partner +1-312-578-4639 mike.cooke@booz.com Kumar Krishnamurthy Principal +1-312-578-4613 kumar.krishnamurthy @booz.com Frankfurt Stefan Stroh Partner +49-69-97167-423 stefan.stroh@booz.com Olaf Acker Principal +49-69-97167-453 olaf.acker@booz.com London Louise Fletcher Partner +44-20-7393-3530 louise.fletcher@booz.com New York Jeffrey Tucker Partner +1-212-551-6653 jeffrey.tucker@booz.com Washington, DC Jordan Milner Senior Associate +1-703-902-7186 jordan.milner@booz.com

Booz & Company

EXECUTIVE SUMMARY

FedEx Corporation, the $38 billion package delivery company, operates in a highly competitive business environment, where speed is, literally, of the essence. Yet speed isn’t just about getting customers’ packages to their destinations quickly. Rob Carter, FedEx’s longtime CIO, likes to quote FedEx Founder and Chairman Fred Smith: “The information about the package is as important as the package itself.” Getting that information to customers as fast as possible, by every means possible, is critical to the company’s present and future success. To that end, Carter is engaged in a major renewal of FedEx’s technology architecture with the goal of reducing complexity and increasing connectivity. Complexity is the enemy of speed: It slows down the delivery of vital information to customers wherever they are, and it hampers the speed at which new information solutions can be brought to market. By reducing the number of technology platforms, and the plethora of redundant applications based on those different platforms, Carter hopes to simplify the development of new information products and give customers the consistent information they need. At FedEx, reducing complexity involves completely rethinking the company’s business processes to keep them aligned with the new architecture. Carter’s team has taken the lead in that effort, because it alone possesses the overall perspective needed to understand the complete business process picture. That approach might lead to friction at many companies, but thanks to FedEx’s strong technology-oriented culture, Carter’s business partners fully support his efforts.

Booz & Company

1

INTRODUCTION

Top executives have recited the cliché hundreds of times: “We’re not a bank, or a store, or a widget maker. We’re a technology company.” If that claim is true of any company, it’s FedEx Corporation, the package delivery giant with sales of $38 billion in 2008. Every business day, FedEx’s 290,000-plus workforce handles more than 8 million shipments to and from 220 countries, with the help of close to 700 airplanes and more than 80,000 vehicles. Despite the tremendous volume, customers can easily learn the whereabouts of every one of those packages. The monumental task of developing and maintaining the technology that knits it all together falls to FedEx CIO Robert B. Carter. Carter likes to

quote his boss, Frederick W. Smith, FedEx’s founder and chairman, who said back in 1978, “The information about the package is as important as the package itself.” A 15-year veteran of FedEx who became CIO in 2000, Carter lives and breathes that truth every day. Carter’s greatest challenge? Using IT to maintain FedEx’s competitive advantage over its aggressive rivals. To that end, he has undertaken a major renewal of his firm’s technology architecture in hopes of reducing complexity and increasing connectivity. His success so far is a tribute both to his hard work and to the willingness of his business colleagues to support his efforts. Mike Cooke, a partner in the Chicago office of Booz & Company, recently chatted with Carter in his Memphis office about FedEx’s IT renewal program and how the...
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