Fedex Express: The Design & Evolution of a Delivery Network
Former Senior Vice President at Fedex
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Former Senior Vice President at Fedex
Interview Transcript
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Why are there so many different products?
It’s a great question. It would be one for the marketing folks to answer specifically. I think, selling into different parts of the market, in different price points. There are certain customers that just have to have the overnight service and some of them have to have it overnight, very early in the morning; that is why the company rolled out First Overnight. Even within the overnight segment, there is a Priority Overnight which generally has a 10:30 commitment, and a Standard Overnight, which has a later commitment. The commitment varies based on whether you are a commercial business or a resident.
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What is your view on the major challenges with FedEx’s network design?
There are a couple of things. With so many products and so many commitment times, it makes the planning of the network complicated. When you add constraints into any kind of modeling effort – there are lots of sophisticated algorithms and machine learning models that the team uses to plan with – the less desirable the result is going to be. That level of complexity creates, in my opinion, unnecessary cost for the network.
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What is your view on the major challenges with FedEx’s network design?
There is a level of design challenge. If the unit was set up to run multiple waves, like other companies do, you get a much better return on your invested capital when it comes to the facilities themselves. They could probably do with a lot fewer facilities and deliver a lot more packages.
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