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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After 100 Years, a Year is the Limit

After 100 Years, a Year is the Limit

February 18, 2018

L.L. Bean has changed its 106-year old return policy. Returns will now be limited to a one-year time period.

If that sounds generous, keep in mind that for over a hundred years, the company has offered an ‘unlimited’ customer return policy.

Over the last five years, the viral nature of social media has accelerated losses on returns to $250 million. These products are what the company calls “destroy quality”, items so used or damaged they’re sent to landfills.

This post is based on the CBS News article, L.L. Bean changes its unusually generous product return policy, by The Associated Press, February 9, 2018. 

Discussion Questions
1. How might the merchandise return policy change impact L.L Bean’s order winner(s)?

Guidance: Students should review the concept of order qualifiers/order winners.  Ask students to identify the order winner(s) that L.L. Bean had under the old customer return policy.  Students should then compare the new customer return policy to competing firms in the retail industry.  Does the new return policy change L.L. Bean’s order winner(s)?

2. With over $250 million of returns at L.L. Bean over the last five years, identify the supply chain issues created by Continue reading

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