In-Depth

Issues and Insights: Putting The "Express" Into FedEx

• By Bob Lewis
• 01/01/2001

I am constantly amazed at some of the niches that have been invaded by b-to-b e-commerce technology.

One of our local corporations, Kinetic Corp. (Louisville, Ky.) has enjoyed a business relationship with FedEx Corporation for the past 20 years, being the developer of all FedEx 'images' (read artwork related to all facets of Fed Ex worldwide businesses), and was one of the first suppliers to provide FedEx with an online ordering capability.

Kinetic has recently partnered with FedEx in a Web-based replacement for the ordering-shipment-billing-payment system that had been used by both trading partners and FedEx employees for many years. The software that drives the new system is from Ariba Inc.

In this newly created Ariba/Kinetic environment, FedEx employees are given access to all of the approved FedEx graphics and images that are stored on the Kinetic databases. This access is on a 24x7 schedule, therein allowing all worldwide branches unlimited around the clock access. The procurement process starts with a FedEx employee, or FedEx approved trading partner, logging on to the Ariba system, and executing a "punch out" (accessing an imbedded link) to the Kinetic catalog.

An order for any item of artwork is created, the total value of the order is calculated, forwarded to Ariba for budgetary checks, and either approved or routed up the authority chain. If approved, an electronic purchase order is then transmitted to Kinetic; the selected graphics are either transmitted electronically, or shipped out via FedEx. Upon receipt of the order, the FedEx employee accepts the order via Ariba, and instantly the Accounts Payable process is begun.

Over lunch with Ray Schuhmann, the CEO of Kinetic, I was given some of the major benefits of this new e-commerce system.

Schumann says, "Because the Ariba program is enterprisewide, the Wall Graphics Program will automatically be accessible by everyone within FedEx. This will insure that Global Brand Management standards are utilized all over the world. As a FedEx supplier, we cannot get an order from the system without it being pre-approved, so the A/P process is shortened. Kinetic will still maintain and easily change the catalog offerings, but a conventionally printed catalog, with all it's time and expense will never need to be produced again."

During our conversation, some other interesting technical facts came to light. Schumann explains "While we currently have about 48 gigabytes of images online, and we have 130 gigabytes in off-line storage. Together, they represent thousands of images, including historically important images that can only be accessed and distributed by select people."

With the success of this newly installed system, Kinetic plans to expand this type of service to other clients. Schumann says, "Kinetic services a number of large firms that will be implementing an Enterprisewide Procurement System in the future. Having already gone through the process with such a prestigious firm as FedEx should allow us the opportunity to assist others in the process. I think that every Fortune 1000 firm will, sooner or later, be moving to this model. It just makes economic sense."

According to Ariba Inc.,the Sunnyvale, California supplier of Internet/intranet b-to-b solutions, FedEx completed the first phase of the Ariba solution installation in August, 1999. FedEx was quoted as saying that it expects to have their intranet-based system Ariba ORMS available to thousands of its 145,000 worldwide employees by the end of 1999, as well as deploying Ariba Network during 2000. Ariba has several "Blue Chip" customers, including General Motors, Hewlett-Packard, MCI and Visa.

The preceding appears to be one of the success stories that can occur when you put together the formula of knowledgeable customer + progressive supplier + third-party software that works.