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Saturday, September 11, 2004

Fred Smith on the Birth of FedEx Via BWeek

Without a question, FedEx Corp. has been one of the great entrepreneurial success stories of the past quarter-century. From the legendary college term paper in which Frederick W. Smith first advanced his idea of an overnight-delivery service to the infamous trip to the Las Vegas casinos -- where he won enough hands of blackjack to help meet a payroll -- the story of how Smith built FedEx into a $27 billion delivery juggernaut has become a part of Corporate world is highly interesting and inspiring. Smith is passionate and rational when he outlines FEDEX's growth in a lively manner -"I knew the idea was profound. There wasn't any doubt in my mind about that. The fundamental forces that were driving it were inexorable. But I don't know if I foresaw the way things evolved. I think you meet circumstances the way they come, and then you adapt to them.In addition to the fundamental idea, and the deregulation that went on, a companion thing happened that was very important for FedEx and for the business world. It occurred to me very shortly into this proposition that it was self-limited if we couldn't constantly improve what we were doing. If people were going to use FedEx in lieu of having incalculable amounts of money tied up in inventories, it "absolutely, positively" had to be there when promised. The business had to operate with a level of precision and reliability that heretofore had not been possible in the service business.
And that led to the very simple recognition that we had to use information technology to an extent that had never been done before. We had to basically create a whole industry to do that". Smith further writes about several Fedex first -It wasn't just the tracking system. We had to develop a completely new printing methodology. Nobody had ever crash-printed sequential, bar-code-readable numbers. They'd printed lots of universal product codes for soup cans. But they'd never printed "multiform, sequentially numbered" things that could be machine-read. And no one had ever contemplated building a handheld computer that was this small [holds his hands close together] and then communicating that information on a real-time basis. We had to assemble all these radio frequencies and put the equipment in the truck. When we developed this tracking system, it meant you could actually keep up, for the first time ever, with inventory that was moving as well as inventory that was stationary. Combined with the deregulation,this has allowed just monumental change in the way businesses run their supply chains.
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