With constant evolutions and innovations, companies are
looking at every possible way to optimize their supply chain networks and
target a global outreach. One of the alternatives
is Mergers.
In this article, I have considered the delivery service
industry to analyze the alternative of Mergers to achieve optimized and
effective supply chain networks.
Analyzing the outlined articles and videos in the course
content, I see that there are four key points that a company considers while
designing a supply chain network (prioritized based on specific industry):
- Cost
- Pricing
- Customer Service
- Flexibility
For example: UPS and FedEx main goal is to attain customer
service, followed by keeping the price and cost low. Both the companies have a
major sorting facility at Kentucky and Memphis respectively. In the videos, we
see that how they have designed the facilities to deliver the packages to
customer as fast as possible and to keep the error rate minimized. These goals
are achieved using different technologies (evolving continuously) and processes
such as Telecoding department to handle any barcode errors/damages.
The concern that I see is a future abrupt increase in the
volume of packages and the need to exploit other demographics. Additionally, with
these companies promising same day deliveries (result of promises made by their
key partners such as Amazon), they need to further look at optimizing their
sorting and delivering facilities. I see that their current facility is able to
handle peak loads especially during Christmas season, but future time holds the
multifold network extension of e-Commerce network and hence, more orders to be
shipped.
Now, FedEx and UPS being competitors are looking at
alternatives to possess warehouse and sorting facilities around the world. To achieve
that, setting up of facilities will cost them a fortune. Instead, as seen they
tie up and acquire the local delivering companies, and use their facilities to
achieve the demand. As the current trend, there have been quite a few mergers,
providing the parent companies a bunch of warehouses and ground transportation set
ups around the demographics, helping them to increase their coverage areas.
Let us look at the below history of FedEx mergers in past
few years:
2011
FedEx Express acquires
the logistics, distribution and express businesses of AFL Pvt. Ltd. and its
affiliate, Unifreight India Pvt. Ltd. This acquisition provides FedEx more
robust domestic transportation and added capabilities in India.
FedEx Express acquires
the operations of MultiPack in Mexico. MultiPack's existing operations include
its pick-up and delivery network, warehousing and logistics services, 48
distribution centers, 13 warehouses and more than 500 retail outlets, all of
which will be consolidated into the FedEx business.
2012
FedEx Corp. acquires
the Polish courier company Opek Sp.z o.o. (Opek) for $54 million. This
acquisition gives its FedEx Express business unit access to a nationwide
domestic ground network with an estimated $70 million in annual revenue and
12.5 million shipments annually.
FedEx Corp. acquires
TATEX, a leading French business-to-business express transportation company,
for $55 million. This acquisition gives its FedEx Express business unit access
to a nationwide domestic ground network which carries 19 million shipments and
produces approximately €150 million in revenues annually.
FedEx Corp. acquires
Rapidão Cometa, one of the largest transportation and logistics companies in
Brazil. This acquisition brings more than $500 million of annual revenue, and
is the latest step in the company’s strategy for profitable growth in FedEx
Express's Latin American and Caribbean (LAC) region
All the above mergers and acquisitions by FedEx have been
made to support their operations in different countries. Through all deals they
acquired transportation and logistics companies to increase their customer
outreach and become the industry leader.
Mergers are happening in every industry and it is
interesting to see how supply chain networks play a vital reason in making them
realistic.
Questions:
Will mergers solve the supply chain network
problem in the long term?
What criteria should be used by firms when
deciding to go for a merger or invest in a demographic, particularly to
increase their supply chain network?
References:
FedEx and UPS Documentary - https://www.youtube.com/watch?v=JZu_gxi3sbs
National
Geographic Ultimate Factories UPS Worldport 1 of 3
National Geographic
Ultimate Factories UPS Worldport 2 of 3
National Geographic
Ultimate Factories UPS Worldport 3 of 3
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