By: Joe Zvanut
Director of Marketing
A3 Technologies, Inc.
It was really nearly 30 years ago that Federal Express became a large part of my life. Until I was transferred 17 years later, FedEx was my customer. When I first started working with them they were flying small business jets. When I finally had to give them up, they were a global company delivering millions of packages overnight, every day with a fleet of jets rivaling the largest airlines.
They were doing something right.
Working side-by-side with FedEx managers and executives taught me a lot and what I learned is that virtually everything that makes FedEx successful can be applied to any company in any market. The purpose of this article is to introduce warehouse and distribution center managers to just 3 of the things FedEx does that they could use to make their operations better.
IT ISN’T “YOUR” PACKAGE
Strange at it seems, guaranteed next-day package delivery by 10:30 AM isn’t what made FedEx successful. It wasn’t a revolutionary nationwide wireless data dispatching system or purple and orange planes or a central hub in Memphis, Tennessee.
It was something much more basic: It isn’t YOUR package. It’s OUR’s.
It was the concept of Custodial Possession. I describe this way: To FedEx employees, it isn’t YOUR package; it’s OUR package. WE are responsible for it from the time we take possession of it until it is delivered.
There is an obligation when you take custodial possession: Since it is OUR package, WE have to do whatever we can to make sure it package is delivered.
Custodial Possession didn’t just apply to the couriers, sort hub employees, pilots or drivers. It became part of the FedEx culture from customer service operators to dispatchers to computer operators to network managers to the company’s founder. Everyone understood that no matter what their job title was, they played an important role in making sure OUR package is delivered on time. It applied every day of the week; every week of the year.
Custodial Possession was a radical departure from the philosophy and business practices found in the package deliver industry. FedEx wasn’t just different; they were setting a new, higher standard for the industry.
And the business community loved it.
The founder of FedEx, Fred Smith, realized to make sure millions of packages were delivered by 10:30 AM the next business day, everyone at FedEx had to believe that every package they picked up, loaded on a plane, ran through the sorting system, loaded on the outbound plane, put on a truck and delivered to the customer wasn’t THEIR package; it is “MY” package. I think of things differently when they are “MINE.”
That commitment to deliver MY package is best illustrated by a story.
Once working in the main sort hub I saw a package bumped off the secondary sort conveyer. When it was found, it was brought to the sort manager. (BTW, during and after every sort the entire hub and flight line is inspected from top to bottom and end to end to locate any packages that may have been bumped.)
The sort manager at FedEx didn’t have to think about it. He bought a first class ticket on the next commercial flight out to the destination city, put an employee on the plane with the package, who then hand delivered it to the recipient. And he did it before 10:30 AM.
Do your warehouse operators, procurement managers and customer service people treat inventory as though it were MINE?
Is everyone committed to making sure that MY inventory is ordered in the right quantities and delivered before it’s needed to fill orders or used manufacturing? Is MY inventory received carefully and checked against outstanding orders to ensure quantities and part numbers are right? Is MY inventory staged in such a way that put away can be done quickly? Is MY inventory put in the right inventory location and does MY inventory count get entered accurately? Do I pick MY inventory carefully to the customer orders or movements to manufacturing are accurate and timely?
Or does THEIR inventory get a “lick and a promise” as my grandmother used to say?
If you want to gain a really unique competitive advantage, don’t copy your competition, think about Custodial Possession and use it to set the standards (and customer expectations) way up high and keep it there.
A SENSE OF URGENCY
Here’s the situation: You’re in a hurry. You WANT something to eat, but don’t have time to go in, order, wait for it, sit down and eat it. Yet there you sit in the drive-thru line, waiting for someone to ask “May I take your order?”
Why? No urgency in taking your order. You can wait.
Everywhere you go there seems to be employees who are simply not in a hurry. The attitude goes something like this: “I get paid for being here 8 hours. It’ll get done when it gets done.”
Sadly, in a lot of business operations there is no sense of urgency. In the worst cases that lack of urgency is communicated to employees by management.
Not at FedEx. The first day I met with the Manager of Courier Operations at FedEx I noticed a sign on his desk: “If we don’t do our job today, we’ll be out of business tomorrow.” It was true. Fail to deliver packages on time when your motto is “It’s delivered by 10:30 or it’s free” and quite possibly you could be out of business in a day.
It wasn’t the only place I saw that sign. It was everywhere.
If you are visiting FedEx your become aware of one clock. It’s a digital clock counting down in hours, minutes and seconds, the time left before all the aircraft have to be in the air to deliver their packages on time. Below it is a counter: The number of packages expected that night in the hub. The count is increasing in real time as packages are being picked up by couriers. Next to it is a series of smaller clocks, each showing the time left before last pickup in every time zones around the world served by FedEx. Negative numbers meant planes were already in the air in route to Memphis. The only thing missing was a ticking noise. It wasn’t necessary.
Talk about creating a sense of urgency!
One glance and everyone at FedEx knew exactly how much time was left to get packages picked up and delivered to the FedEx hanger; how much time was left to pre-sort and pack containers; how much time was left to load the aircraft for the flight to Memphis; how much time was left to deliver the packages the next day.
After the last package is delivered, the clock starts counting down again.
Does your warehouse, distribution center or central inventory crackle with a sense of urgency? Are orders entered with speed, accuracy and efficiency? Are they routed and prioritized so picking is faster and more accurately? Does inventory get staged where the most frequently ordered items and most urgent items are closest to shipping? Is your pre-ship staging area set up to meet impossible deadlines each and every day?
One of the benefits of the sense of urgency at FedEx is that it fosters teamwork: Everyone works together because they all have the same goal: I have to deliver MY package. They share the same obligation: I can’t let MY customer down by failing do MY job.
You want a real competitive advantage? Nothing beats a company driven by a contagious sense of urgency.
COMMITMENT TO QUALITY
It’s funny, but many companies treat quality as a given. Their slogans and tag lines drip with it: “We deliver quality.” “Our products are the highest quality.” “Quality is our only job.” “Quality goes in before the name goes on.”
Even in their mission statements are filled with quality-isms. “We strive to deliver products and services that set new standards for quality.” “Our mission is to raise the bar in quality products and services.” “We are committed to the highest quality standards.”
An east Tennessee friend calls statements like these “Chin Music.”
It’s not a complement.
FedEx is obsessed with delivering quality at every level. One reason is that they know what quality means. It’s defined. It’s part of their culture from bottom to top.
Here’s their secret from one FedEx poster: “We CANNOT be satisfied with delivering 99.9% of OUR packages on-time every day. If we are, it means we have FAILED in our commitment. If we are, 8 million packages this year won’t get there when we said they would.”
A quality rating of 99.9% is unacceptable.
What level of performance is unacceptable in your inventory management operation?
Quality improves performance and safety, too.
Early on I learned that FedEx couriers have a set procedure for entering and exiting their trucks. It was implemented companywide because it was demonstrated to be the most efficient way to get in or out of a vehicle and keep both it and its contents secure. It was also proven to be the safest.
Why mandate a procedure as simple as getting in and out of a truck? Simple: Injured drivers can’t deliver packages. Drivers who don’t lock their doors have their packages (and sometimes the truck) stolen.
Does a procedure like this work?
FedEx drivers seldom get injured and they don’t get their packages stolen. They follow the procedure without fail. And they practice it in local, regional and national competitions sponsored by FedEx.
Yes, FedEx is serious about quality.
Over the years FedEx has spent millions of dollars and man-hours developing and implementing LEAN and Six Sigma improvements. The result is a level of quality from one end of the organization to the other. What’s startling is that the process of improving quality in any area never stops. Employees are encouraged to develop new and better ways to get their job done. They are driven to eliminate wasted time, wasted motion and wasted effort. Procedures are documented, reviewed, tested and analyzed before being put into the operations manual.
Is your inventory management system quality driven?
How are orders for raw materials or components generated? Entered? Verified? Routed? Received? What causes an item to be flagged for Quality Inspection in receiving? How is it tracked from receiving, to inspection and back either into stock or return to supplier? Is your put away application developed so the operator is routed to an alternative location when he or she empties the primary location? Does your system automatically cycle count inventory locations at put away or at picking? Is your warehouse organized so the highest volume inventory, whether for customer orders or manufacturing are located at the point nearest where they will be used?
Are your people focused on eliminating waste and improving processes to deliver higher quality results both for the company AND its customers?
Do your employees feel a sense of ownership and obligation to improve quality and deliver the highest quality results?
There is a lot that can be learned from companies like FedEx.
Future Articles:
TOTAL CUSTOMER SATISFACTION: THE MOTOROLA REVOLUTION
A3 Technologies, Inc. is a systems integrator. We are in the business of developing and delivering supply chain management solutions to customers in the distribution, warehousing and manufacturing markets. Our flagship software, Fontana IMS, is a fully automated, error-free, end-to-end inventory management solution developed specifically for those markets.
For more information: Shalonda Williams, A3 Technologies
Tel: (704) 708-3871
Fax: (704) 708-8557
Email: sales@a3-tech.com
Website: www.a3-tech.com
If you have any questions or comments regarding this article
please contact rlryan@a3-tech.com |
