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FedEx Inventory & Pricing Strategies

FedEx uses inventory logistics to focus on maintaining lower inventory levels. It leverages information systems to optimize inventory replenishment through techniques like cross-docking and consolidated shipments. FedEx also handles inventory management for other parties to achieve economies of scale. Specifically, FedEx Critical Inventory Logistics caters to after-market parts and helps companies avoid penalties by reducing inventory costs through services focused on inventory monitoring, reverse logistics, and transportation optimization.

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138 views3 pages

FedEx Inventory & Pricing Strategies

FedEx uses inventory logistics to focus on maintaining lower inventory levels. It leverages information systems to optimize inventory replenishment through techniques like cross-docking and consolidated shipments. FedEx also handles inventory management for other parties to achieve economies of scale. Specifically, FedEx Critical Inventory Logistics caters to after-market parts and helps companies avoid penalties by reducing inventory costs through services focused on inventory monitoring, reverse logistics, and transportation optimization.

Uploaded by

DebeshiSS
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

INVENTORY

Sales-Channel Analytics + Warehouse Management Systems (WMS) assists in balancing the inventory levels

• Leverages the extensive information system to obtain the


predictive demand, which helps optimize inventory
replenishment, through cross-docking and consolidated
shipments
• Able to achieve economies of scale as it handles inventory
management for other parties
• Focuses on maintaining lower inventory levels by slowly
replacing inventory with information and fast-cycle
logistics

FedEx Critical Inventory Logistics: Majorly caters to the after-market,


repair or service components.
- Ideal combination of service, locations and technology
- Includes inventory management, monitoring and visibility,
reverse logistics and ordering and transportation optimization
- Helps avoid service-failure penalties and thereby helps reduce
inventory-carrying costs
SOURCING

• E-procurement tools like Ariba play a


major role in the sourcing activities at
FedEx

• Several supplies are set-up on the


catalog, which helps requisitioners find
what they need and place an RFP,
thereby initiating the sourcing process

• Ariba also helps track receipts as FedEx


receives products and services at many
different locations and hence maintains
a complex system.
PRICING
• Initially, FedEx had a pricing policy of charging a package on the basis
of its weight. However, a light weight package could sometimes
occupy a larger space during transportation, incurring higher costs.

• In 2015, FedEx changed its pricing policy to dimensional weight


pricing.

• The weight of the package is calculated by multiplying the length,


breadth and height of the package and further dividing by the
dimensional factor.

• The price is usually charged on the higher of the actual and the
dimensional weight.

• The dimensional factor for domestic shipments is 166 and for


international packages is 139.

• However, FedEx also makes use of variable rate plans like flat rate
shipping where the customers are not required to weigh or measure
shipments under 50 lbs.

• Special rates are applicable in case of same day FedEx and FedEx
International Next Flight.

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