Research Paper on "Telecommunications the Business Case FedEx Gains Competitive"

Research Paper 6 pages (1786 words) Sources: 0

[EXCERPT] . . . .

Telecommunications

The Business Case

FedEx gains competitive advantage from its existing information system. The existing system is an over-the-air system that functions outwardly like a cellular network, allowing drivers in the field to send data to a centralized network, while allowing dispatchers to communicate with drivers. The current system is an upgrade on the company's original system, which relied on fixed consoles in the trucks in order to transmit and receive data. The new system uses handheld devices. The devices upload automatically every five minutes, and this information is available almost immediately not only to managers but to customers via the FedEx website. FedEx is also committed to scanning packages more frequently than competitors, and combined with this system the company gains a competitive advantage from having superior information flow than competitors.

However, the technology on which the current system is based in now antiquated, given the rapid advancements in mobile technology in the past few years. While it seldom occurs, there is the possibility that the network can experience backlogs during peak times. In addition, bandwidth limitations could prevent the company from scanning advanced visuals. In the current system, the handheld devices scan an image of the waybill for transmission. The system does not adequately support advanced imaging. Compared to a modern smartphone, which can transmit photographs of anything (not just barcodes) and videos instantaneously, the FedEx devices are antiquated. The company could offer better service to customers by leveraging the current technological capabilities enjoyed by consumers in the market to deliver additional or superior services to consumers.

One example would be scanning the actual package to upload onto the Internet for customer viewing. This is not something that is necessary for most shipments, but in cases where the package has become damaged or otherwise compromised, this service could help the company in two ways. The first way is that the company can protect itself from actions taken by clients for allegedly damaged shipments, by logging the state of the package before it is delivered to the customer. Additionally, such a feature could provide better customer service, as customers could request images of packages that are reported damaged en route.

Voice services could also be added. The current devices are strictly data devices, whereas voice can help in ensuring that there are no communication misunderstandings. Additionally, voice links can help customers, front-line employees and sales representatives work more closely together to meet customer needs. As with other customer service functions, improvement is valuable because it gives the company competitive advantage. That this technology is now widely available is an important motivator for FedEx. When it first launched the DADS units, which were the fixed boxes in trucks that allowed communication over the air between the trucks and the dispatch center, the technology was revolutionary and represented a clear technological advantage. Now, any company seeking a technological advantage in mobile communications could achieve that simply by equipping their employees with low-end smartphones. FedEx, once a leader, is now operating with outmoded technology that any existing or prospective competitor could leapfrog with a minimum of effort.

Additionally, upgrading the system could provide the company with additional bandwidth, something that might avoid backlogs in data transmission, not only improving customer service but also improving efficiency. Instead of uploading data from the employees in the field every five minutes, the information could be uploaded constantly, again providing information to customers and managers more quickly, improving the service that FedEx is delivering.

It is important to continue to upgrade the communications system, because that system is an important part of the customer service element that the company has long used as a source of competitive advantage over UPS, USPS and local courier companies. This information is also used by FedEx managers for better planning of routes, and better scheduling of employees. One of the outcomes of superior information tracking is that more customers get later pick-ups, something that again, because customers value this, is a source of competitive advantage that can be cultivated.

Description

FedEx can utilize existing 3G and 4G networks. The company's existing system already functions with a data provider, but the existing system is designed for early 2000s technology. The back-end hardware therefore, is simply the existing telecommunications networks as they exist. Each of the major mobile telecommunications providers should be able to meet FedEx's needs, including its existing provider (different in each country). The major change with respect to hardware therefore is the handset itself. The current handsets are large, bulky and have very little in the way of functionality. They are the size of a Gordon Gekko cellphone, rather than a modern smartphone.

It is envisioned that FedEx would use a smartphone to perform its functions. From a hardware perspective, the company would want to find one that was durable in the field, or could be equipped with a very solid protector. A lower end smartphone would be ideal, to reduce loss and theft. The device would include a camera much the same as the existing camera, but perhaps with enhanced functionality. It is likely that an off-the-shelf solution can be found and that the company can use immense buying power to save money on the purchase.

Using a modern smartphone, FedEx would need to make some software adaptations to the device in order to allow it to function in the manner the company needs. The current device runs on a variant of Windows Mobile, but whatever operating system is chosen, it should be locked so that only the company's it department can download apps and that only pre-installed apps are allowed. An application, for example, can be used to enable the camera to gather, store and manage the bar code information that is on the waybills. The camera could also be used strictly as a camera, in situations where that is warranted.

Another change to the software is the uploading function. Using a platform for a modern messaging system, FedEx can have a two-way information flow near instantaneously. The system can appear differently on the screen to the user than a messaging system, for example there could be inbox and outbox screens so that one-way communication, such as data uploads, is not mixed in with two-way communication, such as conversations with dispatchers.

With respect to services, most of the services would be contracted. Outside companies could be responsible for managing the system, especially since it is going to use existing 3G and 4G networks. The data in the information can be stored by FedEx, and this system already works much like a cloud. The data today is stored centrally and then accessed remotely using the tracking number, so that customers and employees alike can access the information for any given shipment from a number of locations. Using proprietary software, this cloud can be used to deliver information more quickly to end users, especially to customers who will have external access to the cloud, albeit limited to their own shipments.

Management of the updated system will be the same as it is with the old system. FedEx will retain control of the system. There will be service level agreements with all of the third-party providers who provide the hardware, software and network, and FedEx will have staff dedicated to ensuring that the standards are upheld. There does not appear to be any ethical, social or environmental considerations. The new system is, in terms of its management, the same as the old system so any such issues would have been resolved when the old system was introduced. There is some environmental waste associated with starting over with a new system, so FedEx should have a plan in place to recycle the old handheld devices, so that they do not just become landfill material.

Security is an important consideration with this new system. Because the information will travel over normal 3G and 4G networks, it will be vulnerable to interception. FedEx does have the option of encrypting the information -- especially if it chooses Blackberry as a provider - and some form of encryption is recommended to at least maintain current levels of security integrity. There are few privacy issues with respect to this recommendation. In addition, there are few regulatory requirements as well. Essentially, FedEx will be using common devices, networks and software applications. Most of this would be considered to already be on the market, and given that, nothing recommended here is likely to contravene existing federal communications laws. CIP is not relevant because FedEx is not a financial institution, HIPAA is not relevant because this is not the medical business, GLBA also applies to a different industry, the program does not have anything to do with SOX and FISMA also does not apply to FedEx in this context.

Implementation Issues

Perhaps the biggest impediment to implementation is the cost. While there are clear benefits both in terms of customer service and in terms of staying ahead of the competition to upgrading FedEx's mobile communications technology, the benefits may… READ MORE

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