FedEx at Forty: Pushing Boundaries

FedEx innovators lead the way in bold advances.

by

When Rob Carter “bombed out” of pre-med studies at the University of Florida, he enrolled in a few computer classes. “I’d never seen a computer before,” he says and adds with a laugh, “I had a calculator but that was about it.”

Clearly the man who heads FedEx’s innovation team made the right move. During his 20 years with the company and 13 years as Chief Information Officer, he has sparked major advances that have kept FedEx at the top of technology applications, infrastructure, and global support of FedEx products. One of only four CIOs since the company’s founding, Carter credits his predecessors and his boss for FedEx’s reputation as an innovator. Though a CIO’s role isn’t always popular — “utilization and management of technical budgets, especially against business expectations, is often difficult,” he explains — Carter says he has a “dream job” of working with Fred Smith and driving his vision of innovation through technology. “As the company has grown and the footprint has expanded,” he adds, “the only way to manage that effectively is through good information systems and processes. Virtually every aspect of the business runs on a foundation of technology.”

 

 

 

“Website? What’s a website?”

Recalling a 1978 quote from Smith that 
“the information about the package is as important as the package itself,” Carter says one of the firm’s first advances was creating an in-process quality control system that tracked the location of packages. Then in the early 1980s, FedEx moved ahead with hand-held computers. “There was nothing like it at the time,” says Carter, “having this device to let us trace packages as they moved from point A to point B.”

The mid-1980s saw the company erecting radio towers coast to coast, on highways and atop buildings. “The handheld computers were in the trucks, and data moved over a radio network out to the couriers.” Towards the end of the decade, the tracking system took a big leap when customers, through CompuServe and America Online (now AOL), could dial in and track packages themselves — a step that eventually led to the first version of FedEx online.

In the 1990s, shortly after Carter was hired, the firm’s innovators met with Bill Joy, the founder of Sun Micro systems and one of a group of young tech stars that included Bill Gates and Steve Jobs. “Bill Joy was here reaching out to companies at the edge of innovation and challenged FedEx about its website. I was like, ‘Website? What’s a website?’” Though he wasn’t involved in the creation of fedex.com, Carter describes it as “pretty edgy.” While most corporate websites in that era were messages from CEOs, FedEx’s showed a flying package leaving a trail behind with a small block in which customers could key in their tracking number. “Ours was the first instance of a transactional website,” says Carter. “That move started with us. We had been doing it with PC software and CompuServe and America Online, but this was the first on the Internet.”

 

 

 

“The tale of two networks.”

At the dawn of e-commerce came eBay 
 and Amazon.com, affording new avenues for Fed-Ex’s growth. “We tend to think of these sites as Internet phenoms,” says Carter. “I call them the tale of two networks. You have the physical networks that underlie e-commerce and digital transparency. Nobody would go on those sites and buy a product in the digital context if it didn’t bring about a [corresponding] action in the real world.” As the 1990s progressed, FedEx integrated its technology with the e-commerce revolution. “And as those orders came in online,” says Carter, “customers had visibility that gave them confidence that their product would be delivered or received.”

This “deep technology integration” has helped fuel the information explosion of the past decade. Carter quotes Google’s Eric Schmidt saying that “from the beginning of civilization to 2003, five exabytes [units of storage equal to one quintillion of bytes] of information were created and catalogued. Now we create that much every two days on the Internet.” As information increases and innovation continues to blaze new trails, says Carter, “the key is creating opportunities in the real world to make things happen we could never have done in the past.”

That opportunity recently led to the creation of a web-based tool that simplifies the shipping process for business owners who use eBay, Amazon, Etsy, Google Checkout, and other online stores. Once the customer logs in,  fedex.com’s Integration Manager automatically gathers and consolidates orders, and gives the owner an easy way to organize, review, and process their shipments.

Another tool is FedEx Ship to Friends, an app that lets Facebook users share information with friends about packages. Once the shipment is complete, users can post that information to the friend’s timeline and can include a customized message. The app, which is available on desktop and mobile devices, lets users select the speed of service desired, from “Premium Choice” to “Best Deal.”

 

 

 

“This is our brand. 
It’s what we do.”

Among the many FedEx innovations 
receiving international recognition is SenseAware, which in 2012 garnered the company two World Mail awards for excellence in the global express industry. Using wireless communication, this multisensor device collects and transmits data from inside FedEx packages, trailers, and warehouses. It monitors not only a product’s location but provides real-time temperature, light exposure, relative humidity, and barometric pressure within the package. Using SenseAware, customers can follow a shipment’s journey to its destination, receive alerts if it experiences environmental changes or has gone off-route, and intervene if problems arise.

Carter says the product’s earliest prototype came out in 2006. “But we weren’t just sitting there waiting for somebody to do something with it. We were working to get FAA licensing and with a company to design a sensor mote that has vibration and velocity and light and temperature on a sensory array.” Today, though similar products have been developed, “we hold most of the patents for what’s called sensor-based logistics into a network. We didn’t want to cede this to anyone; this is our brand. It’s what we do. We create the first wave of innovation.”

SenseAware is especially helpful to certain industries, including healthcare. Carter describes a situation for which the innovation was life-saving. “We had a customer shipping bone marrow transplants and they weren’t using our networks. They were shipping it on the first flight out on another carrier,” he says. The carrier said it landed in Houston at M.D. Anderson Cancer Center — but instead it was misdirected and landed in another city. “We’re talking bone marrow, with people’s lives at stake,” says Carter, “and donating marrow is not a fun process for the donor.” Through SenseAware, FedEx was able to locate the shipment, determine that its temperature was completely viable, and direct it to its proper destination. “And all the time that carrier was saying it’s here, we just have to find it,” says Carter. “The consequences of looking where it wasn’t could have been quite high.”

 

 

 

“Greener and more efficient.”

FedEx now ships goods of every stripe,
 but it garnered fame in the 1970s for its overnight letters, which Carter describes as “wonderful jump-starts for the company.” Today, print documents still play vital roles in business, and the digital network enhances print possibilities. Take, for instance, FedEx Office Print & Go, which lets customers access and print documents directly from mobile devices and USB flash drives at retail locations. And FedEx Office Print Online offers previewing, archiving, reordering, and tracking features as well as the ability to retrieve files from Google Docs. For these services FedEx was recognized in 2011 with the “Most Innovative New Tech-Enabled Product” award by the publication Information Week, which consistently ranks the company in its top 500 U.S. technology innovators.

At a recent conference in Washington, D.C., Carter used FedEx Office Online to distribute a document. “We were meeting with top execs of companies from around the world,” he recalls. “I had a document I wanted to share with everyone.” So his staff found a FedEx Office near the hotel and had it printed and delivered to the hotel the same day. “That was much greener and more efficient than having people stuff things into envelopes or folders and then toting a box of documents on the plane. This document,” he continues, “could live most of its life digitally. But it needed an off-ramp that allowed it to pop out into the physical world just at the right time and place. FedEx Office Print Online lets us do that.”

 

 

 

“Innovation has to be 
in a company’s DNA.”

When Carter speaks to groups,he often 
shares his insights on the notion of  “the Four Horsemen,” that is, servers, networks, storage, and software that basically — to simplify a hugely complex process — make up cloud computing. “A cloud is rather nebulous, with no clear borders or boundaries,” says Carter, “and that’s really not a bad name for the whole spectrum of technology because we seem to have no boundaries. We live in a world where we are able to tap into so much, from stars in space, to the light exposure inside a FedEx package.”

 “As we look ahead at changes,” he adds, “they look like chaos, but when we look back, we see the significant unifying and empowering capabilities that came forward. Technology undergirds everything we do.”

While FedEx is widely recognized for helping shape the world of information technology, Carter himself, who worked for GTE (which became Verizon) prior to joining FedEx, has earned his own bragging rights: He’s been ranked 18th on Fast Company magazine’s “100 Most Creative People in Business” list; has thrice received Information Week’s Chief of the Year award; and was a charter inductee into that publication’s CIO Hall of Fame. He was also recently named to Fortune magazine’s Executive Dream Team.

But he credits his 25-member innovation team — who represent IT, technology, and business disciplines within FedEx — for always pushing the boundaries. “Innovation has to be in the DNA of a company. You can’t just flip a switch and say we’re going to be innovative. You’ve got to have people who constantly seek the edge of what’s possible. That’s the kind of people we have and what they’re doing every day.”