FedEx and Overnight Success

FedEx and Overnight Success

March 19, 2018

Fred Smith, founder of FedEx, developed his now-ubiquitous hub-and-spoke distribution design based on a college term paper, and his experiences in Vietnam.

Mr. Smith understood the need for overnight guaranteed delivery of inventory as well as the intangible customer relief of having a valuable package safely arrive.  The brand’s image is based on that guarantee.

Logistics design is the heart of the FedEx empire. With Amazon entering the shipping business, how long before the empire will be under siege?

This post is based on the Ad Week article, How FedEx’s Founder Revolutionized Shipping With a Mediocre College Term Paper, by Robert Klara, March 13, 2018. Image source: Shutterstock / Lightspring.

Discussion Questions

1. Describe the hub-and-spoke supply chain network that FedEx pioneered.

Guidance: Students should review logistics, transportation, and location material.  It may be helpful for students to research FedEx to find all the “hubs”.  This could lead to a discussion of the utility of the center-of-gravity method to determine the next “hub”.

2. Identify the service package that FedEx created.

Guidance: Students should review service packages, service blueprint, service-profit chain.  They should easily identify the tangible aspects of the service package, Continue reading

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Supply Chain Failure: KFC’s Chicken Shortage

Supply Chain Failure: KFC’s Chicken Shortage

March 19, 2018

It seems hard to imagine that KFC would run out of chicken.  That’s their main menu item! How can they operate without chicken?

Turns out, they can’t. The majority of KFC’s UK restaurants were forced to close due to a chicken shortage.  Approximately 650 of the 900 KFCs closed in February 2018, while many of those that remained open, operated with a reduced menu.

The origins of the shortage: KFC decided to switch suppliers from Bidvest to DHL and QSL (a food distributor) in October 2017. They promised to “revolutionize the UK foodservice distribution market.”  Part of the promise included reducing logistics emissions to net zero over the life of the contract.

The change in distributors affected Bidvest and DHL.  Bidvest laid off 255 employees after it lost the contract, while DHL and QSL opened a new distribution center, and hired approximately 300 new employees.

Although improved performance was promised, not everyone saw such a rosy future.  GMB, the UK trade union for the displaced Bidvest employees, warned KFC of potential problems with the switch to DHL.  Mick Rix, the GMB’s national officer said:

“We warned them a few months Continue reading

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