FedEx: Leaping to future points on the innovation curve
Image: Oliver Holzbauer/Flickr
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FedEx: Leaping to future points on the innovation curve

Jessica Twentyman — August 2020
In the face of soaring, pandemic-fueled demand, the global delivery services company has jumped forward to new places on its technology roadmap. Nik Puri, FedEx’s SVP, International IT, describes how that has helped create ‘value at speed’ for customers throughout the crisis.

• Don’t miss FedEx’s Nik Puri in the keynote sessions at Fujitsu’s ActivateNow digital event, 14-15 October 2020 — Register (by region) here

“In 2020, the future arrived early for us,” says Nik Puri, senior vice president of international IT at global logistics and transportation giant FedEx.


He’s referring, of course, to the impact on the company of the Covid-19 pandemic. This has sent global demand for delivery services soaring to unimaginable levels, with many consumers and businesses now counting on couriers such as FedEx to fulfil online orders and keep their lives and operations running.

At the same time, Puri observes, there’s been a noticeable surge in expectations on how those services should be executed, at a time of stay-at-home orders and social distancing. Customers are increasingly looking for greater visibility into how a delivery schedule is progressing, for example, while expecting much-reduced human-to-human contact at the handover stage.

“Trends that we’d been observing in the market for some time were suddenly accelerated,” says Puri. “The future arrived maybe two to three years early and we realized we didn’t have until 2023 to execute on our strategy. That strategy is still intact, but we knew we had to move faster on it; we had to start ‘leapfrogging.’”

 

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Nik Puri, SVP of International IT, FedEx (Image: Mark van den Brink (courtesy of FedEx))


His choice of the term ‘leapfrogging’ is an interesting one. In business economics circles, it’s used to refer to the process by which start-up companies and emerging economies deploy new technologies to gain an advantage over more established competitors that have been forced to work through previous iterations of older technologies.

Take, for example, the way that some developing countries have adopted mobile phones and skipped almost entirely the stage of installing copper-wire infrastructure for landlines; or how mobile payments are enabling consumers to purchase goods and services online in regions of the world such as China, where credit cards and their underlying payment systems are far less entrenched.

Puri’s leapfrogging perspective is about accelerating FedEx to achieve a fast track to the future. Already an innovation leader in its sector, the company is now looking to skip certain stages in its previous technology rollout plans, in order to attain business value faster.

He directly references a 2018 report from the World Economic Forum and global management consultancy firm AT Kearney, which puts it this way: “Most leapfrogging efforts begin with a differentiated (and typically specialized) competitive edge in technology and innovation. Leaders preparing to leapfrog must clearly foresee and define how they will nurture focused and continuous technology development and diffusion.”
Timely modernization

None of this would be possible for FedEx, says Puri, were it not for the fact that he and his team spent two years between 2017 and 2019 working on an extensive modernization of the company’s internal systems, laying a rock-solid foundation for future innovations.

That kind of scale of change is matched by the scope of Puri’s responsibilities: from his offices in the Netherlands, he leads almost all aspects of IT activities in Europe, Africa and Asia. At the same time, he’s heading up the company’s ongoing IT integration of TNT, a European carrier that FedEx acquired for €4.4 billion in 2016.

There were three main themes to the modernization phase, he says. The first was adopting “architecture-driven thinking,” to help eliminate complexity in both systems and business processes.

 

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FedEx: ‘Designing big; implementing small’ (Image: FedEx)


“In everything we do as regards our overall architecture, we think big; we design big, but we implement small. The idea here is that you want to have a big vision of where you are going and where you want to be in three to five years. But at the same time, you need to know how the things you design for the next 10 to 12 weeks will fit into that bigger vision,” he says.

“So you’re always keeping your desired end-state in mind and eliminating any technical debt that you know will slow you down in the future.”

In this context, Puri is not talking about IT architecture but also about business architecture. “Because what are IT systems but the codification of existing business processes. So when you’re designing a business architecture, you want to think about all your business processes and how you want them to run, end to end.”
Value at speed

The second strand to that comprehensive modernization focused on applying an ‘API-first’ strategy, based on a service-oriented architecture. This means that many of FedEx’s underlying applications have been broken down into componentized services — ‘chunks’ of code that isolate specific functions or business capabilities and can be connected with other ‘chunks’ via application programming interfaces (APIs) to assemble new services or expand the scope of existing ones.

“This has helped us reduce complexity and technical debt but it has also made us much faster because of the way we can reuse components and APIs quickly and at enormous scale to deliver business value at speed,” he says.

 

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FedEx: ‘Connecting components to deliver business value at speed’ (Image: FedEx)


Finally, Puri and his team have rid FedEx of a great deal of legacy technology that might otherwise have presented an obstacle to its leapfrogging ambitions. This includes older proprietary systems, which had delivered decades of good service but were ready for retirement.

“These could stand in our path when it comes to delivering value faster. If you’re not able to eliminate the anchors of your legacy estate, you’ll never achieve the kind of speed you’re looking for,” he says. “As for the applications they previously hosted, we’ve generally migrated these to the cloud or to more modern computing platforms within our hybrid cloud set-up.”

T
echnology acceleration is by no means restricted to the International FedEx operation that is Puri’s domain.

In the US, FedEx Office — the retail outlet for FedEx Express and FedEx Ground shipping, as well as for local printing, copying, and binding services — has embarked on a digital transformation designed to enhance customer experience across its 2,200 US stores. At the center of this effort is a single point-of-sale transaction engine, driven by the Fujitsu Market Place omni-channel retail platform. Implementing such a single selling system across different end-points and devices simplifies the transactions performed by store associates, freeing them up to spend more time focused on customer needs.

As Puri observes: “Our cooperation with Fujitsu on the FedEx Office side allows us to compete more effectively in that space, both physically and digitally.“
Responding to Covid-19

With much of the IT modernization complete at FedEx International, Puri and his team were well prepared for some major leaps forward in 2020 as the scale and impact of Covid-19 became clear. “With the modern IT foundation we needed in place, we were able to reach some big milestones at remarkable speed,” he says.

 

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FedEx’s Asia-Pacific hub, Guangzhou, China (Image: Getty Images)


One of the first priorities was to get as many FedEx employees as possible working from home. An effort that began in China was extended to Italy as the virus spread, and then to other regions of the world. Within just a week, Puri says, almost 100,000 team members and partners were fully equipped to work from home, with the company able to exploit its own vast logistics network to deliver computing equipment where needed. To support that dispersed model, virtual private network (VPN) capacity was increased threefold over the course of two weekends, he adds.

The amended processes and related technology changes to support contactless delivery, meanwhile, were delivered across the FedEx network within 10 days of the request from executive management. This service — already available to some North American customers — allows recipients to customize their interactions with delivery workers ahead of time, requesting for example that a package is left in a safe place or on a customer’s doorstep. For obvious reasons, demand for this service soared, with the underlying message shifting from the typical ‘I may not be home at that time’ to ‘I’d rather not risk contact with a delivery driver.’

Says Puri: “Again, this was something our modern systems enabled us to roll out to a far wider customer base in very short order, so we could address their very real concerns around proximity.”

“We’ll keep leapfrogging, because it’s a purposeful way to stay ahead through the pandemic — and in any situation.”

In terms of giving customers greater visibility and regular updates on a package’s journey, the company is rolling out the FedEx SenseAware ID service. This offering is designed for time-critical deliveries of high-value packages and will improve the safety, security and timeliness of deliveries — key attributes for packages that contain critical contents such as life-saving pharmaceuticals and emergency medical supplies.

 

Packages equipped with the SenseAware ID sensor are tracked hundreds of times versus dozens of times with traditional package scanning protocols, which provides an unprecedented amount of real-time data about the location of the shipment. Says Puri, “We’re at the start of our journey with SenseAware ID but we now predict that it’s going to be a faster, shorter journey since more of the market is now demanding that kind of visibility.”

 

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Nik Puri, SVP, International IT, FedEx (Image: Mark van den Brink (courtesy of FedEx))


While Covid-19 may have provided the catalyst for this kind of leapfrogging, Puri sees his team harnessing that new approach well into the future. In other words, a vital part of the company’s immediate response to the pandemic is now seen as playing an invaluable role in FedEx’s long-term market differentiation.

“Right now, we’re prioritizing work that provides quick value and differentiates us to customers in the context of a specific situation. But asking what we can do to meet the changing needs of the market and, preferably, what we can do that our competition cannot — these aren’t questions that will diminish in importance at any time. We’ll keep leapfrogging, because it’s a purposeful way to stay ahead, in any situation.”

First published September 2020
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