Be a speed demon and a control freak. Walking the SuperHub, you can feel the need for speed. Planes land continually and disgorge oversized aluminum containers; parcels of all shapes and sizes zoom into processing centers on hyper-kinetic conveyor belts; and no fewer than 2,000 drivers of light trucks, forklifts, and small industrial vehicles swarm throughout the facility. To control it all, everything and everyone is UPC-tagged; everyone and everything is tracked.
Nothing illustrates the point better than the Small Package Sortation System, a vast, FedEx-designed machine that sits in its own warehouse. It cost $175 million to build and sorts an average of 1.2 million packages a night. It scans the bar code on every package at least 30 times. Any delays in the process can get detected in minutes. That’s why the U.S. Postal Service has become one of FedEx’s major accounts. FedEx’s SmartPost operation delivers much of the United States’ daily mail to the “last mile.”
Because FedEx is as disciplined and reliable as it is, standard items it ships include chemotherapy drugs, human hearts and other live human organs, artificial joints, contact lenses, surgical scalpels, fresh blood, heart monitors, circuit boards, auto bumpers, tractor parts, Swiss watch elements, rare manuscripts, aviation components, Maine lobsters, crickets, whales, snakes, Japanese cherries, Hawaiian flowers, tennis shoes, and European fragrances. Oh, and FedEx also transports the occasional Arabian race horse and antique automobile. Any large cargo, from 150 pounds to 2,000 pounds, is fair game.
It’s about the information, stupid. IT both created demand for FedEx’s services (Dell was one of FedEx’s first tech customers) and enabled FedEx to thrive. Smith realized that tracking packages—knowing points of origin, movement through the system, and estimated times of arrival—was nearly as valuable as the packages themselves. Today’s FedEx has made innovative uses of new data-tracking technologies, such as QR codes and RFID tags. The latter report on temperature and moisture conditions of individual packages as they move from origination point to destination.
If there were “Seven Wonders of the Industrial World,” FedEx’s SuperHub would easily rank among them, right up there with Toyota’s production centers, Google’s data centers, and NASA’s Mission Control.
Jeffrey F. Rayport is a former faculty member at Harvard Business School and the author of several books about electronic commerce. He is the founder of Marketspace LLC, a strategic advisory company. Currently, he is an operating partner at Castanea Partners, a Boston-based private equity firm.