FedEx CEO, CIO Discuss Challenges and Plans

Today, with 650 aircraft--the largest fleet owned by any carrier in the world--and 92,000 vehicles, FedEx handles more than 5 million shipments daily to more than 200 countries.

"I don't know what I was thinking in 1973," laughed Smith, founder and CEO of FedEx. "I certainly didn't envision FedEx being a $21 billion company. But the forces were so powerful for it, it was like grabbing a hold of a tiger."

Smith, joined by FedEx executive vice president and CIO, Robert Carter, discussed a range of topics Tuesday during the annual spring conference held by InformationWeek, a sister publication of VARBusiness.

Those topics included FedEx's technological achievements and challenges, management style, customer service improvements and advice for IT executives to consider as a result of the attacks on Sept. 11.

From the introduction of online package tracking in 1994 to online signature proof of delivery in 2000, IT projects have been a top concern for FedEx executives.

"I've always felt that what a CEO does indicates where his or her priorities are and there is no higher priority inside FedEx than our IT initiatives," Smith said.

On the wireless front, FedEx's latest initiatives surround customers, couriers and corporate.

For customers, wireless technology allows them to use their own PDAs and cell phones to track shipments and obtain drop-off location information in any zip code area. Other applications are also accommodated, such as voice-activation and pro-active notification.

PowerPad, a new handheld device, was recently built for couriers so they can upload from the network the latest information about a shipment.

Wireless LANs have also been installed throughout FedEx hubs, operation centers and headquarters so, for example, enabling sales executives to provide customers instant information on pricing for shipments.

But size is often a problem with an organization like FedEx.

"We learn to take things in bite-size pieces," said Carter, regarding the need to pilot projects on a small scale.

The next challenge for FedEx is to create multi-node visibility among its various divisions, such as FedEx Express, FedEx Freights, FedEx Ground and FedEx Custom Critical, Smith said.

"Our goal is to create a common set of tracking information across all our operating companies," he said. "A customer wants to view his or shipment at one Web site as it moves across various operating companies instead of having to look at each company's Web site as is the case today."

The idea is for customers to have a single interface point at FedEx.com, regardless of the shipment's transportation mode or where the shipment travels with the operating companies.

"At the corporate level, we believe that working collaboratively across our departments, operating companies and, in fact, across various technologies can launch us into a new technological frontier with significant competitive advantages for our company, which is after all, what we're all about," Smith said.

Customer service--and finding new ways to improve it--also ranks as a high priority within FedEx, and much time is spent with customers with upcoming FedEx implementations, Carter said.

"We go out and talk to our customers, we test things and give customers access to special new version of the Web site prior to it going online in an alpha/beta format," he said. "Because it is information technology, we can watch our customer's behavior as they come and visit FedEx.com. We can see where they go, what they like as they return and how frequently they do the same functions over and over again."

FedEx.com has been reorganized many times over the last several years because of detailed customer feedback, Carter said.

Smith noted that these and future advancements are not possible without a management team that shares the same ideas, beliefs and goals.

Collaboration and communication between the CEO, the CIO and the chief marketing officer is paramount, especially when there's difficulty in finding a direct return on investment with needed applications, Smith said.

"This has been overused, but to use the Wayne Gretsky statement, 'You've got to skate to where the puck's going to be, not to where the puck is,'" he said. "Those are the qualitative processes that separate great companies--the ability to see where that puck's going to be, and then making the investment to move the organization to the desired state."

One of various undesirable states occurred after the Sept. 11 attacks on New York and Washington, DC.

As a result of government orders to ground all planes on Sept. 11, FedEx managed to keep its ground trucks rolling and its U.S. shipments moving.

Noting one New York-based bank's disastrous failure as a result of the Sept. 11 attacks, Smith stressed the need for well-equipped back-up facilities.

"I think everyone in this audience needs to address those issues and look at a disaster recovery and crisis management activity around events like that," he said. "That's something each of you needs to take back to your organizations and really think through whether you've done the right job."

As for Carter and his role as CIO, he said his relationship with Smith regarding technology issues is a solid one. He humorously suggested the two executives share a Kumbaya--like relationship, which caused the audience of about 200 to laugh.

"The reality is we don't have many significant disagreements of debate about this kind of thing,:" Carter said. "At the end of the day, guess what, he's the boss. That's quite important, and sometimes we forget about that. And he's got the right to say, 'Let's go do this.'"

As Smith reflected on those first early years of Fed Ex's operation, he said he didn't think there would be a time when one package would be scanned between 12 and 14 times or that package handlers would wear small ring scanners to zap information around networks in a nanosecond.

"But I can say that very early on, information about the shipment was as important as the package itself," Smith said. "And that technology was the key to gathering, organizing and sending that information right along with the package and the people who need to know about it."