As jolly and industrious as the seven dwarfs from the movie, ‘Snow White and the Seven Dwarfs’, somewhere beyond the walls of the FedEx warehouse walls, we imagine that the same applies to this hard working crew, as their team of agents clad in their prominent and world-renowned purple and dark-colored customized uniforms set off each and every day with the following focus in mind – to work towards the fulfillment of the Purple Promise: “I will make Every FedEx experience outstanding.” And that’s just how you’re greeted. With their bright smiles and clearly their overload on sugar, there’s no doubt why this company, known as one of the most recognizable corporations serving communities, companies, localities, countries and nations, FedEx would always be known as one of the major players in the package delivery markets.
Founded by Mr Frederick ‘Fred’ Smith in 1971 during his studies at Yale University in 1971, Federal Express was born from the concept submitted as a ‘Term Paper Topic’ (go figure!) to facilitate the movement of cargo from pick up location to destination point, with the use of its own (1) transport, (2) storage bases and warehouses, and (3) delivery vehicles.
However, this could not have been achieved without some serious ‘dough’, and he certainly had it! With a $4 million inheritance and $91 million venture capital, Fred focused his energies using his knowledge and financial backing into an air operation in 1973 with 20 jet aircraft and the movement of packages within 25 cities in the United States (U.S.). Its first profit in 1976 was $3.6 million, managing 19,000 packages, and with the deregulation of the airline industry in 1977 Federal Express purchased an additional number aircraft enabling an expansion to its city and customer profile with profits soaring to $8 million. Further to the company becoming public in 1978, the move facilitated in the development of additional capital and subsequently a profit of a whopping $21.4 million, managing 65,000 packages and servicing 89 cities across the United States.
The listing on the New York Stock Exchange was born and the competition was too real! Rivaling the United States Postal Service (USPS), failure and decline in providing a reliable service, ensured loyalty shifted to FedEx. With the introduction of the ‘OVERNIGHT LETTER’, at a flat, low rate, Federal Express generated the largest sales of any U.S. air freight company.
Through the acquisition thereon, of multiple other courier companies that stretched and developed its overseas market portfolio acquisitions in Britain, the Netherlands, the United Arab Emirates (UAE), Montreal, Toronto, Brussels, London, and Tokyo.
Operating in over 220 countries and territories, ‘linking more than 99% of the world’s Gross Domestic Product (GDP)’, FedEx now comprises of five (5) major operating companies:
1. FedEx Express – world’s largest express shipping company;
2. FedEx Ground – 2nd largest provider of shipping small packages in North America;
3. FedEx Freight – provides regional freight deliveries on a less-than-truckload basis;
4. FedEx Custom Critical – serves critically timed shipment customers; and
5. FedEx Trade Networks – provides a variety of consulting, customs brokerage, and IT services.
With principal competitors such as: DHL Worldwide Express; United Parcel Service, Inc. and the United States Postal Service, HOW DOES FEDEX STILL REMAIN AT THE FOREFRONT? Maybe it’s because FedEx delivers more than just packages……As a true testament to their claim;
FedEx delivers JOY during the holidays!
FedEx delivers HOPE to survivors of natural disasters!
FedEx delivers expanded potential for GROWTH and JOBS
by helping business reach NEW MARKETS!
What remains clear is that FedEx is able to maintain this outstanding experience and consistently delivering exceptional customer results via the development of a quality system based on quality philosophies and methodologies, including Six Sigma, Lean, Total Quality Management, Design Thinking and Agile. Through the amalgamation of the aforementioned philosophies that centralized the focus in an excellent way to incrementally deliver solutions whilst ensuring user needs are kept front and center throughout the entire design and development process; the theories also allowed for the theories concepts in their effective application, to facilitate in the reduction of defects, contributing to a better approach to lowering costs and customer loyalty.
And this has resulted in meeting two (2) critical goals that are achieved:
- Delivery of superior experiences; and
- Driving superior business performance, improving safety and eliminating waste, cost and effort.
It’s in their DNA and the proof is in the pudding!
The quality system, although flexible in nature, is an organization-wide system called the FedEx Service Quality Index allows for the organizations to address any challenge or opportunity that may arise due to economic changes and ongoing innovation developments. This focus is simple – direct all energies on the things that matter most to their CUSTOMERS and their quality system employed, allows for FedEx to reduce errors, improve safety, drive consistent customer experience, and provide the following principles and tools that mitigate issues and expand the potential of the organization:
QDM Principles are six fundamental concepts that guide our thinking and actions every day:
Principle #1: Customers define quality. Take an outside-in perspective.
Principle #2: Be scientific. When your business is at stake, it’s no time for guesswork. Analyze challenges and opportunities like scientists and use root-cause analysis.
Principle #3: Measure, measure, measure. It’s impossible to improve or gauge success without measurement. Put a stake in the ground and then track your progress.
Principle #4: Optimize business performance. In our view, quality is determined by the customer.
Principle #5: Quality involves teamwork. Every team member in the company — from the chairman to our newest hire — owns QDM.
Principle #6: View failures as opportunities. Help people see failure differently — through the lens of process, not blame. When people are less fearful, they take the kinds of chances that can change the game!
BUT WHY IS QUALITY SO IMPORTANT TO A BUSINESS?
We can define the term “quality” in many ways, but the ISO family of standards, established by the International Organization for Standardisation, give a very concise definition: “Quality – the degree to which a set of inherent characteristics fulfills requirements.” (ISO 9000:2003 – 3.1.1). Within the family of Quality Management Systems (QMS), these standards assist organizations in ensuring they meet customer and stakeholder needs within statutory and regulatory requirements.
According to the Chartered Quality Institute (CQI), quality is “an outcome – a characteristic of a product or service provided to a customer, and the hallmark of an organization which has satisfied all of its stakeholders.” With the emergence of e-commerce, it is obvious that the platform for new businesses emerged and therefore increased competitive environment, and we all know that the primary focus for a company is to stay alive and gain profit. Therefore, with social media at your fingertips, we certainly know that companies who do not meet the “quality” of products or services don’t stand a chance to live and / or stay on the market, and so QUALITY is very important to every business! The internal processes of an organization then become very important for delivering quality products or services, but in not just one area, but in eight (8) using the following quality management principles any organization must take into account:
- Customer focus
- Leadership
- Employee Engagement
- Process approach
- System approach to management
- Continual improvement
- Factual approach to decision making
- Mutually beneficial supplier relationships
As we have alluded to above, CUSTOMER FOCUS may be considered one of the most important principles, as any organization depends on its customers, and that the organization cannot exist unless there are clients who buy its products and services. Ultimately, the organization must understand the requirements of its customers and should focus to exceed those expectations and understand their requirements even further.
For the purpose of this blog, we have chosen to focus specifically on the achievement of FedEx in the execution of the four (4) of the eight (8) principles: CUSTOMER FOCUS; ENGAGEMENT (INVOLVEMENT) OF PEOPLE; PROCESS APPROACH; AND CONTINUAL IMPROVEMENT.
CUSTOMER FOCUS
Customer focus, the orientation of an organization towards serving its clients’ needs is an important core value to FedEx as they are committed to providing the best possible service to their customers. In 2010, the German unit of FedEx Express, a subsidiary of FedEx Corp was rated as one of the top ten companies in Europe for customer satisfaction. This came after winning the award for outstanding customer focus at the prestigious European Business Awards ceremony in Paris. The company was awarded the prize in recognition of the high level of importance they place in ensuring that customer satisfaction is the priority of all FedEx Express business processes.
As the entire company is shaped by the Purple Promise: “I will make every FedEx experience outstanding,” providing unmatched customer experience is at the core of the FedEx Express corporate philosophy as stated on their website (Fedex.com 2019) Delivering a great customer experience is part of their customer experience strategy as its main objective is to consider FedEx services across all functions and levels from the customers’ viewpoint. In doing so, they would achieve a high level of customer satisfaction as they would gain a better understanding of customer wishes and requirements.
According to the IOS’s quality management principles, there are listed actions that can be adopted by a company to improve the organization’s performance when applying the principle of customer focus. Some of these actions which were already incorporated into FedEx’s operations such as:
1. Recognize direct and indirect customers as those who receive value from the organization.
Customers define the quality of any product or service of a company whether they are directly or indirectly dealt with. According to FedEx, the customers’ needs are always put first by delivering the Purple Promise in everything they do. They build trust, create loyal customers and a brighter future for the company and in return the customers would receive value from the organization.
2. Understand customers’ current and future needs and expectations.
The company adopted a customer centric approach by introducing a one stop shop model which is responsible in ensuring customers are served by one employee from start to finish when dealing with any inquires. FedEx has launched an internal scheme to drive the full potential of their QDM tools and principles. This scheme includes providing regular training and skills reinforcement programmes to ensure the effective use of quality tools. This will enable team members to fully understand the customer needs and enable them to develop effective quality solutions.
3. Link the organization’s objectives to customer needs and expectations.
The Purple Promise which is carried out by FedEx to its customers, shapes each job function in the company from the front-line employees to the team member focused behind the scenes on simplifying how customers do business with FedEx. This promise was created based the customers’ needs and expectations of the company so a standard would have to be maintained throughout the organization.
4. Communicate customer needs and expectations throughout the organization.
Quality driven management (QDM) is taught and practiced throughout the company from front line staff to management. Customers would define quality and FedEx would then deliver the quality through QDM principles. Through the quality system that would be implemented to its subsidiaries worldwide, the global workforce would find a common approach in customer service.
5. Plan, design, develop, produce, deliver and support goods and services to meet customer needs and expectations.
FedEx has developed its company to provide prompt and reliable service. Dependable services such as speedy delivery times and free returns to its customers are the result of designing and delivering an excellent courier service. The company also designed different delivery options so customers can appreciate having a choice of different delivery options to suit their needs. FedEx Home Delivery offers the service of choosing the delivery options. Evening, time-specific and by-appointment delivery are just some of the options that let you match your shipping to your customers’ busy lives.
ENGAGEMENT OF PEOPLE
We deliver 15 million+ packages a day with 675 aircraft and 180,000+ vehicles. But the way I see it, our most important number is 450,000. That’s the number of FedEx employees around the world who come to work for the same purpose ,to make every FedEx experience outstanding”
Rajesh Subramaniam, President & Chief Operating Officer, FedEx Corp
Workforce engagement is strongly related to customer satisfaction and, ultimately, to business performance. Today, organizations seeking a competitive advantage in the marketplace through differentiation are learning that to satisfy customers, they must first satisfy the workforce.
The principle of PEOPLE ENGAGEMENT can also be argued as one of the most critical Quality Management Principles as it states, “People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization’s benefit.” Organizations that put into practice the Engagement of People principle in their Quality Management System have systems, processes and procedures that ensure employees:
• Understand the importance of their contribution and role in the organization;
• Identify constraints to their performance;
• Openly discuss problems and issues;
• Are empowered to accept ownership of problems and their responsibility for solving them;
• Can evaluate their performance against their personal goals and objectives;
• Have avenues to actively seek opportunities to enhance their competence, knowledge, and experience; and
• Freely share knowledge, experience and lessons learnt.
When employees are given the tools, the freedom and encouragement to participate in work-related decisions and improvement activities, this creates a work environment that improves employee motivation, fosters employee engagement and solidifies employee commitment to achieving the organization’s quality objectives.
Why Engagement Matters
An engaged workforce is achieved when there is a high number of employees whose hearts and minds are aligned to both the job they do and the organization they work for. Employees that are fully engaged in a company’s success can be the pivotal factor that propels it to surpass competitors. They are energized to come to work each day and feel connected to and supported by their organization. Their sense of personal attachment to their work and organization is demonstrated by their desire to give of their talent, energy and discretionary effort to help the organization move forward and succeed. And in today’s challenging marketplace, the edge that passionate employees bring is more essential than ever- employees both willing and able to go that extra mile to exceed customer expectations can make all the difference.
Where is the evidence?
Organizations and teams with higher employee engagement and lower active disengagement perform at higher levels . For example, organizations that are the best in engaging their employees achieve earnings-per-share growth that is more than four times that of their competitors. Compared with business units in the bottom quartile, those in the top quartile of engagement realize substantially better customer engagement, higher productivity, better retention, fewer accidents, and 21% higher profitability. Engaged workers also report better health outcomes.
How FEDEX uses Employee Engagement to Gain the Quality Advantage?
FedEx doesn’t just talk about quality, they live it every day. One way they achieve this is by creating a work environment that lets employees know they matter. This is the premise behind FEDEX’s corporate philosophy, people- service- profit and its Purple Promise, a series of three (3) behavior-based core values, that unmasks the behaviors frontline and executive must demonstrate in order to “to make every FedEx experience outstanding.”
The People-Service-Profit philosophy (P-S-P) is based on the belief that by creating a positive working environment for employees, they will provide better service quality to customers, which would then lead to customers using FedEx products and services.
The people priority acknowledges the importance of employee satisfaction and empowerment to making employees feel secure enough to take risks and become innovative in pursuing quality, service and customer satisfaction. FedEx demonstrates its commitment to people- first through the following policies, processes and programmes aimed at boosting employee engagement:
• An annual employee satisfaction survey, which rates performance and forms a basis for improvement (Survey-Feedback-Action)
• A policy of promotion from within and the Advance into Management (AiM) programme.
• An employee recognition and reward program that- The Purple Promise Awards
• The Leadership Evaluation and Awareness Process for progression to management level
• The Tuition Assistance Program courses to assist employees develop their career at FedEx.
• Regular employee communication through both print and broadcast programming
• Pay for performance based on management-by-objective and project-by-objective goal-setting processes
• The Open Door Process for dealing with employee questions or complaints regarding corporate policy
• The Guaranteed Fair Treatment Procedure- An employee appeal process for having an issue or complaint heard
“The term quality at FedEx means delighting our customers by providing the highest service level. It’s ingrained in everyone’s job, from the front line all the way up to the chairman. It is manifested in what we call the Purple Promise, the commitment “to make every FedEx experience outstanding.” Our customers have high expectations, and we firmly believe that our quality standards are not set by us, they are determined by our customers. Our customers demand that their shipments arrive on time and with the visibility of precision tracking. Customer experience metrics drive continuous improvement all the time. We use voice of the customer data and analytics to home in on our opportunities and drive our innovations and improvements. Quality means exceeding our customers” Rebecca Yeung, Managing Director, Service Experience Leadership, FedEx.
What has been their return on investment?
FedEx’s commitment to quality by creating a work environment that gives employees satisfaction with their job and their employer is paying off. FedEx (FDX) has been lauded for being a great place to work by a number of high-profile corporate-performance lists. For 19 consecutive years FedEx has ranked among the top 20 in the FORTUNE Most Admired Companies List, with 15 of those years ranking among the top 10.
• 2016- Ranked No. 8 overall in the “World’s Most Admired Companies” and No. 1 in the delivery industry.
• 2018- Ranked No. 9 overall in the “World’s Most Admired Companies”
• 2019- Ranked No. 16 among large organizations on the list of the 100 “ Best Place to Work in Information Technology (IT)”
• 2019- Ranked No. 10 Spot on the FORTUNE World’s Most Admired Companies List. This year that challenges their IT staffs while providing great benefits and compensation. In October 2019, FedEx also achieved another quality milestone, having maintained an effective quality management system and ISO 9001 certification for over 25-years with Lloyd’s Register .
PROCESS APPROACH
The effectiveness of FedEx entire system has been determined by the effectiveness of each process and the interactivity of these processes within their systems. By establishing quality objectives and auditing how effectively the processes fulfill those objectives, FedEx has determined whether the processes continues to add value or need to be improved. Using the Process Approach while designing and developing a quality management system enables this to happen. FedEx has enlisted the support of a third-party logistics provider (3PL), which freed up time and resources otherwise spent managing the delivery of your goods and keeping up with ever-changing transportation regulations and ensuring the customers packaging are delivered in a timely manner. As a 3PL with expertise in transportation logistics, FedEx Supply Chain understands the stringent regulations, constant changes in market conditions, and fluctuations in cost and capacity that is common to the industry.
FedEx Supply Chain as this is linked to the their process approach will handle every aspect of moving your product, while keeping your supply chain running smoothly, efficiently and cost-effectively. Our non-asset-biased model provides the right solution at the right price.
FedEx has proven to align and clarify their goals through excellent quality through programs, policies and great customer solutions from all levels of management. Even as the world evolves, FedEx promise remained constant and has always stayed a step ahead to meet the high expectations of the world. FedEx is ISO9001 certified at putting their customers first and ISO 13485 certified which is harmonized with ISO 9001 and this demonstrates the drive for continuous improvement that we share with our many customers in the manufacture of healthcare devices and components. FedEx process approach has enabled the organization to meet customer requirements and deliver continual improvement.
CONTINUOUS IMPROVEMENT
Continuous Improvement speaks to seeking ways on an ongoing basis to making all business processes effective, efficient and adaptable by anticipating changes, innovating, investigating and eliminating issues and incorporating lessons learned. Issues or problems can be categorized into five (5) main groups:
1. Compliance
2. Efficiency
3. Product design
4. Process design
5. Unstructured
To address such problems, there are four possible strategies that can be employed for improvement:
1. Repair
2. Refinement
3. Renovate
4. Reinvent
FedEx has developed an internal system they call Quality Driven Management (QDM). This system was developed to ensure that they always deliver superior customer service and to encourage efficiencies in every aspect of their operations by improving safety and eliminating waste and reduce cost and effort. All staff members are involved in QDM, every member has to both learn the principles and teach the principles. The system is flexible and can be adapted to multitudes of scenarios. It allows for the FedEx staff to be innovative. (FedEx n.d.)
Utilizing their QDM system FedEx was able to come up with innovative initiatives like the SameDay Bot, an autonomous delivery robot designed to enable retailers to provide same-day deliveries to customers. FedEx has also embarked on a multi-year digital transformation strategy to grow, strengthen and secure its IT capabilities that they refer to as Renewal (FedEx Newsroom 2019). The renewal project thus far has used technologies to increase employee productivity and improve customer satisfaction. They introduced robotics to automate processes and leveraged on artificial intelligence technologies that improved their clearance processes. Their innovation is quite evident and they even have a few patents in IOT technologies which provide real time tracking data of shipments.
Another way FedEx encourages continuous improvement is through their social learning platform. Employees voluntarily interact on a social media platform similar to Facebook. There, team members can post problems and solutions as well as just basic feedback from customers. They also make suggestions and present ideas. This way all employees have access to the information which allows for learning and a quick way to find solutions.
Additionally, FedEx conducts an annual employee survey which allows for them to gather the opinions of their 100,000+ employees. They also have performance standards titled The Purple Promise. A key behaviour of this promise is “Stay one step ahead”. What this seeks to do is create a culture of anticipating the evolving needs of the customers to continuously improve the way they work.
CONCLUSION
It is evident that to deliver QUALITY products and services it is essential that an organization applies the requirements of the ISO 9000 family of standards. Through its correct application and use of Quality Management Principles, a company would be able to achieve and increased competitive advantage, as well as, improve its’ products, processes and outcomes, whilst reducing cost. Therefore, ensuring ‘QUALITY’ SHOULD NEVER BE IGNORED’. FedEx sets that example and would always be that real-life example in accomplishing the same.
REFERENCES
Federal Express. Accessed November 24, 2019. https://www.thebalancesmb.com/federal-express-fedex-2221098
FedEx Corporation. Accessed November 24, 2019. https://www.referenceforbusiness.com/history2/5/FedEx-Corporation.html
FedEx. n.d. FedEX About Us. Accessed November 19, 2019. https://about.van.fedex.com/our-story/quality-driven-management/.
FedEx Newsroom. 2019. September 16. Accessed November 19, 2019. https://about.van.fedex.com/newsroom/fedex-is-an-honoree-in-fast-companys-2019-innovation-by-design-awards/.
“How We Deliver the Purple Promise.” Purple Promise. Accessed November 24, 2019. http://purplepromise.van.fedex.com/how-we-deliver-the-purple-promise/.
“Which of Your Friends Needs to Learn This Term?” BusinessDictionary.com. Accessed November 24, 2019. http://www.businessdictionary.com/definition/customer-focus.html
“Why FedEx.” FedEx. Accessed November 24, 2019. http://www.fedex.com/lv/shipping-services/industry-solutions/supplychain/why-fedex.html#tab1.
https://supplychain.fedex.com https://the9000store.com/iso-9001-2015-requirements/iso-9001-2015-context-of-the-organization/what-is-a-process-approach/
Strat Matters 