®

MAKING
THE CASE

MAKING THE CASE FOR

FedEx Critical
Inventory Logistics®
 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

Making the Case

for FedEx Critical
Inventory Logistics ®

By working with FedEx Critical Inventory Logistics, companies can streamline and
drive costs out of their aftermarket service supply chains, consistently meet customer
service level agreements, and grow their bottom-line revenues.

A LEADING DEVELOPER of robotic technol- rather than taking the

BY do-it-yourself approach to
ogy must quickly deploy parts to a hospital where OUTSOURCING building and maintaining
mission-critical surgical equipment has to be up a parts distribution network
and running around the clock. A manufacturer of or service support network...
point-of-sale printers and scanners to the retail
arena must effectively and efficiently support its
firms can
$ 100
devices without making additional investments in effectively MANAGE
warehouses, DCs, and logistics networks. their HIGH-TECH,
DATA STORAGE PART
HIGH-VALUE,
TIME-SENSITIVE

20x15
What do these scenarios have in common? While highly to
INVENTORY that
ranges from...
$ 250,000
individual in nature, they share a common theme: a company
that must source, deliver, and install mission-critical parts and
ENGINE COMPONENT
equipment to their aftermarket customers on a consistent and
reliable basis.
That manufacturer of retail point-of-sale systems, for example, to this critical-inventory transportation need. This solution was
may promise a one-hour repair window via a customer service originally a part of FedEx’s supply chain offering. On June 1,
level agreement (SLA). That means technicians have to arrive 2017, several moves were made to realign FedEx operating
onsite, diagnose the problem, and have (or secure) the part companies and the portfolio of logistics solutions. GENCO
necessary to make the repair within an hour. Miss this mark was re-branded into FedEx Supply Chain and now manages
and the customer could lose thousands of dollars in sales and warehousing and fulfillment.
increased man hours due to manual processes. “Today, FedEx Critical Inventory Logistics is part of FedEx
To consistently meet and exceed their customers’ aftermarket Express and has access to the largest global transportation
service expectations, companies turn to FedEx Critical network,” says Tom Dale, FedEx Vice President of Global Solutions
Inventory Logistics for help. When investing in an inventory Marketing, “which allows us to better serve our customers with the
management system, distribution network, warehouse space, full portfolio of time-sensitive transportation offerings.”
and human resources don’t fall under the company’s core A flexible, efficient, and agile solution, FedEx Critical
business, FedEx Critical Inventory Logistics helps companies Inventory Logistics utilizes the FedEx Global Distribution Center
focus on their core competencies. (GDC) and a network of Forward Stocking Locations (FSLs) to
FedEx has been in the spare parts logistics business for over more efficiently support its customers. “We design solutions
40 years, and was the first in the industry to pioneer a solution to match a company’s unique requirements and service level

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

Optimized critical inventory solution

ORDER ON-DEMAND OPTIMIZED INVENTORY ALLOCATION, DISPATCH

PLACEMENT COST ESTIMATES SOURCING LOCATION RELEASE, AND OPERATIONS
AND QUOTATIONS AND MODE OF EXECUTION
TRANSPORTATION

BOOKING OF
ESCALATION PROACTIVE ALERTS MONITORING OF MONITORING, TENDERING TO NEXT-FLIGHT-OUT
MANAGEMENT AND EVENT ORDERS, DELIVERY, DELAY DETECTION, LOCAL COURIERS SHIPMENTS
NOTIFICATION AND RETURNS AND RECOVERY
FedEx Critical Inventory Logistics can elevate your critical inventory supply chain with the ideal combination of service,
locations and technology. It covers everything from order and transportation optimization, inventory management,
monitoring and visibility, and reverse logistics, giving you full visibility and control.

agreements (SLAs)”, Dale explains. “In addition to optimizing “Companies that try to manage their
our customers’ inventory, our technology streamlines the critical inventory themselves really
processes already in place to manage everything from order
have to look closely at whether their
entry to delivery to returns.”
aftermarket service margins are healthy
By outsourcing, rather than taking the organically-grown
approach to building and maintaining a parts distribution network
and growing, or not. If the answer is no,
or service support network, firms can effectively manage their then it’s time to look for a better way of
high-tech, high-value, time-sensitive inventory that ranges from managing this aspect of your business.”
the $1 computer part to the $250,000 engine component.
—Webster Guidoboni, FedEx Business Development Manager
“Companies don’t want to have duplicate equipment or extra
real estate to accommodate their critical inventory needs,” says and commitments, both of which lead to revenue drains
Webster Guidoboni, FedEx Business Development Manager. and customer service problems. The maker of hospital x-ray
“They want to get the most out of the equipment that they have machines, for example, can’t afford to miss the 90-minute
on hand, and we help them do that.” repair window outlined in its customer’s contractual obligations.
By serving as an integrated provider, FedEx Critical Inventory But that’s exactly what happens when a technician doesn’t
Logistics provides a long-term solution to short-term problems have the right part in his or her vehicle.
that can quickly bring companies to their knees in a world Add inventory write-offs due to the inability to “locate” the
where customer expectations are at all-time highs. inventory at the right time and technicians who hoard parts in
Guidoboni says critical logistics support helps companies their vehicles to the mix, and the case for outsourcing critical
address gaps within their supply chains while also allowing inventory logistics becomes that much stronger.
them to focus on what they do best: running their companies “Companies that try to manage their critical inventory
in the most profitable manner possible. A firm that has too themselves really have to look closely at whether their
much inventory, for example, or the right inventory in the wrong aftermarket service margins are healthy and growing, or not,”
locations, risks paying hefty fines for not meeting customer SLAs. Guidoboni advises. “If the answer is no, then it’s time to look for
The same company is probably also missing key deadlines a better way of managing this aspect of your business.” •

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

What is FedEx Critical Inventory

Logistics?
An inside look at the world of critical inventory logistics and the value that it provides
for today’s companies.

WHILE COMPANIES FOCUS ON their provider across the continuum of logistics needs—from
core competencies, FedEx Critical Invento- ocean freight forwarding to critical inventory to ground and
ry Logistics manages their most demanding express parcel. “FedEx Critical Inventory Logistics is part
aftermarket supply needs—from order incep- of a much larger organization, with a global reach we can
tion to delivery confirmation. Through its global leverage to improve more than just spare parts logistics.
network of DCs, FedEx allows companies to po- We can transform the entire supply chain with bundled
sition inventory wherever their customers, sales solutions of transportation, warehousing, logistics,
representatives, and/or technicians are located. customs brokerage, and more”.
Using the robust FedEx Critical Inventory Logistics
The FedEx Critical Inventory Logistics value proposition network, companies can reduce or eliminate
doesn’t end there. FedEx technology provides inventory completely the investment and expenses associated
management across the end-to-end aftermarket with maintaining the aftermarket services supply
supply chain, with both sourcing and delivery optimized chain infrastructure. Using its established, hub-based
according to the shipper’s preferred SLAs. Finally, the networks and worldwide coverage, the FedEx value-
Command and Control team monitors the company’s added solution provides dedicated support and
critical orders through the entire delivery process 24/7. advanced technology systems to support even the most
Dale says that companies derive the most value from demanding SLAs. In return, firms can refocus on their
FedEx Critical Inventory Logistics when they view it as a core strengths and allocate resources to serving their
own customers and growing bottom-line revenues.
A part of the FedEx Express network, FedEx Critical
Inventory Logistics was developed to fully support
companies’ time-sensitive, high-value service parts
inventory. With a strong network that encompasses more
than 220 countries, critical parts are delivered expediently,
thus allowing companies to hit required SLAs and meet
the exacting demands of their customers.
With more than 500 stocking locations in 26 countries
throughout FedEx Express and third-party provider
locations, FedEx Critical Inventory Logistics works to
make global parts distribution operations more efficient,
as well as improve its customers’ transportation networks
and provide long-term solutions. FedEx technology
helps companies select the optimum fulfillment location,
route, and mode of shipping; source from multiple
stocking locations (when necessary) to fill an order; and
gain predetermined original equipment manufacturer or
supplier stocking locations.

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

Companies can place orders by part number, serial WHAT IS

number, lot number, and expiration date; take advantage
of specialized packaging and labeling; and have FedEx
FEDEX CRITICAL
handle inspection, quality control, and returns processing. INVENTORY LOGISTICS?
By offloading these non-core—yet necessary—tasks, With a strong FEDEX ensures that
network that parts are DELIVERED
companies can effectively manage their critical parts EXPEDIENTLY, thus
encompasses
allowing companies to
inventory without the need for additional human resources
or warehousing investments. And because getting all of 220
COUNTRIES
HIT REQUIRED SLAs
and meet the exacting
these “extras” through a single provider can simplify a demands of their customers
company’s operations, FedEx Critical Inventory Logistics
FedEx Critical Inventory
also provides value-added services. With more than Logistics works to make global
FedEx works to make its customer service parts
distribution operations more efficient, as well as improve their
500 STOCKING
LOCATIONS
26 COUNTRIES
in
parts distribution operations
MORE EFFICIENT, as well
as IMPROVE its customers’
transportation networks
delivery network by providing service supply solutions. Its throughout FedEx Express and and provide long-term
third-party provider locations SOLUTIONS
dedicated Command and Control customer support teams
are available 24 hours a day, seven days a week to monitor
orders and manage inventory stocking levels. These teams THE COMMAND AND CONTROL TEAM
monitors the company’s critical orders
serve as an extension of your team so you don’t have to through the entire delivery process 24/7.
invest in staff to support a growing service business.
Because FedEx Critical Inventory Logistics helps
“By outsourcing the distribution of
companies consolidate inventory at the local level, there’s
no need to overstock in anticipation of a stock-out. So,
their parts, OEMs (Original Equipment
instead of keeping 20 SKUs of a certain part in one Manufacturers) can more effectively
warehouse, for example, a company may only need to service their install base and meet
keep five SKUs—and then rely on FedEx to manage the their critical SLAs.”
day-to-day inventory management.
—John Jasper, FedEx Marketing Specialist Advisor
“By outsourcing the distribution of their parts, OEMs
(Original Equipment Manufacturers) can more effectively critical logistics inventory process that much more efficient.”
service their install base and meet their critical SLAs,” According to Ron Gavran, FedEx Business Development
says John Jasper, FedEx Marketing Specialist Advisor, Manager, FedEx Critical Inventory Logistics matches
who adds that the company’s flexible network allows the companies with the most appropriate service for their
provider to ramp up as needed from a facility perspective to specific needs. And because FedEx offers a very targeted
accommodate customer demand. solution for the high tech, IT, healthcare, and industrial
Making the solution even more attractive for customers customers, it can effectively leverage the overall FedEx
is a transportation optimization platform that allows portfolio and its processes, people, and places. “Most of
companies to make quick decisions on critical shipments. our competitors only have a fraction of the capabilities that
“You can go online to process orders, then sort the FedEx can bring to the table,” says Gavran.
potential delivery solutions by time, speed, and cost, and “It’s the same customer experience the chairman
then make a decision that could add up to significant envisioned when he founded the company,” Gavran
savings over time,” Jasper explains. continues. “Just like you would hand off a FedEx Priority
On the backend, the platform enables efficient return, Overnight® envelope and know that it will get to its
exchange, and asset management. “It’s a closed-loop system destination the next morning, with FedEx Critical Inventory
that comes with high levels of visibility,” says Jasper. “This Logistics there’s not a lot for customers to worry about. We
can help further reduce inventory levels and makes the entire have it handled.” •

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

Making the Case for FedEx Critical

Inventory Logistics
All stakeholders benefit when companies outsource the critical inventory logistics
process to a competent third-party provider.

BENEFITS FOR SENIOR MANAGERS: his truck for fear of being caught without that item, for instance,
Charged with successfully implementing is unwittingly driving up inventory costs while also preventing
company policy, developing strategic plans, good supply chain visibility.
controlling budgets, and building and
maintaining an effective management team, today’s senior BENEFITS FOR SVP OF OPERATIONS AND
managers are seeking solutions that help their companies run CFOS: Tasked with cutting costs, growing
smarter, better, and faster. revenues, and staying compliant, today’s CFOs
Focused on processes, senior managers want to know and SVPs are increasingly turning their
that their companies are functioning in the most efficient and companies’ aftermarket business into a profit center.
profitable manner possible. FedEx Critical Inventory Logistics “CFOs want to increase revenues and decrease expenses,”
helps them retain customers, eliminate the top-down approach says Guidoboni. “They’re focused on net present value,
to managing parts inventory under manufacturing, and align and looking for ways to enhance it while maintaining strong
the logistics function organizationally in the service division. customer service levels and meeting customer SLAs.”
Outsourcing critical logistics management to FedEx also To help CFOs and SVPs achieve these goals, FedEx Critical
allows senior managers to focus on inventory accuracy, first-time Inventory Logistics provides aftermarket supply chain services
fix rate, service to cash, enforceable maintenance practices, and that improve profitability, bolster a service company’s strength,
tighter obsolescence guidelines. This, in turn, leads to improved and increase customer satisfaction.
inventory performance, lower service inventory investments, For SVPs and CFOs, the ROI in outsourcing critical inventory
increased inventory turns, and improved fill rates. logistics also lies in leveraging a global provider like FedEx and
Working with a dedicated account management team, the many different value-added services that it provides. “By
senior managers know that everything from their day-to-day working with a company that’s technology-driven and that
issues to their special inventory management requirements is provides global visibility,” says Guidoboni, “corporate CFOs can
addressed quickly and efficiently. effectively improve throughput while reducing inventory and
“Whether they’re looking to bring on another business unit carrying costs. That’s where the money’s at.”
or customer,” says Gavran, “we’re able to quickly expand
the network, optimize locations, add new support, and do BENEFITS FOR CEOS: The highest-ranking
anything else that a frontline manager would be swallowed up executives in any organization, CEOs have to
by trying to accomplish.” That director is then able to focus make major corporate decisions, manage their
on his or her company’s core competencies and business companies’ overall operations and resources,
management and leave the rest to the FedEx Critical Inventory and serve as the liaison between their organizations’ board of
Logistics experts, technology, and systems. directors and corporate operations. Not always on the “front
According to Gavran, senior managers are also concerned lines,” but definitely aware of what’s going on in the aftermarket
about inventory levels, and maintaining a healthy balance service supply chain, CEOs may be seeing freight/shipping
between “enough” and “too much” critical parts inventory. costs, service costs, and logistics costs rise and customer
“They want to have the right part, at the right place and at service levels drop.
the right time,” says Gavran, noting that inventory visibility is Focused on making bottom-line improvements while also
equally as important. A technician that hoards critical parts on enhancing their companies’ stock value, CEOs want to be

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

able to address these issues quickly while also driving

improvements and enhancements, and reducing inventory
Trust in FedEx
levels. FedEx Critical Inventory Logistics gives CEO peace of
FedEx Critical Inventory Logistics dedicated
mind through its global transportation and stocking location Command and Control customer support teams are
network, delivery capabilities, multiple stocking locations, and available 24/7/365 to monitor orders and check
myriad value-added services. Managing all of these elements stock levels. The provider’s teams serve as an
would require a full staff, technology, multiple warehouse extension of their customers’ teams, so the latter
locations, and a worldwide transportation network that most never has to staff up internally to support their
corporations lack. growing businesses. Here are some of the key
“FedEx Critical Inventory Logistics helps CEOs drive features that customers are leveraging:
efficiencies and provide high levels of service to their
• O rder processing
customers by always being in the right geographical location
• O n-demand cost estimates and quotations
based on their unique demand requirements,” says Gavran.
• O ptimized sourcing location and mode of
“That’s a real differentiator for FedEx, which focuses on
transportation
building a stocking network based on these demands, as
opposed to having a static set of stocking locations, and
• O rder entry, inventory allocation, release, and
driving the customer into those static locations.”
execution
Because most CEOs live and work by their boards’ • Dispatch operations
expected revenues and the company’s controllable expenses, • Booking of next-flight-out shipments
FedEx provides a way to bridge the gap between the two and • Tendering to local couriers
keep everyone happy. “When you improve customer service, • M onitoring, delay detection, and recovery
you can increase revenues,” says Gavran, “and when you • M onitoring of orders, delivery, and returns
increase revenues, you’re decreasing costs. All of sudden • P roactive alerts and event notification
stockholders take notice and start driving your company’s • Escalation management
stock up. That’s music to the CEO’s ears.” •

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 MAKING THE CASE FOR
FEDEX CRITICAL INVENTORY LOGISTICS

Leveraging the Power of FedEx in the

Critical Logistics Arena
IT’S NO SECRET that FedEx is a power- world, you have a lot of leverage in the marketplace,” says
house in the global shipping arena and that it Gavran. “We extend that leverage out to our customers, thus
executes in a world-class manner that compa- enabling them to meet their critical inventory needs while
nies around the world have come to rely on to enhancing revenues and improving customer service.”
get their shipments from Point A to Point B in an Guidoboni says the provider is especially focused on helping
efficient hub-and-spoke logistics network. companies better utilize their existing inventory while keeping
their “safety stock” reserves to a minimum. This, in turn, helps
FedEx Critical Inventory Logistics takes that commitment companies cut costs and avoid the customer service issues
to the next level by elevating the critical inventory supply that arise when critical parts are out of stock or unavailable.
chain with the optimal combination of service, locations, Nationwide, FedEx has over 200 domestic FSLs where
and technology. Covering everything from order and parts and equipment are stored and ready to ship within
transportation optimization, inventory management, even 2- to 4-hour delivery commitment windows. From its Global
visibility, and reverse logistics, FedEx maintains control of the Distribution Center (GDC) in Memphis, the provider handles
asset/part throughout the entire process. late cut-off orders (up until 11:30PM) for both Freight and
Express shipments. If a point of sale device goes down at a
retail location during the day, for example, a technician can
assess the problem and get the critical parts to make the
repair within four hours or less.
Using its order management platform (which incorporates
an event management feature), FedEx Critical Inventory
Logistics can then “watch” as that part order is placed for
repair, see it move through the process of being picked up
or delivered, and take the necessary steps to expedite the
process (i.e., if a technician doesn’t come to pick up the order
within the allotted timeframe).
“This gives us the flexibility to stay on top of these critical
shipments and meet the customer’s deadlines,” says Brent
Mohair, FedEx Managing Director of Operations. This, in
“From the outset, our goal is to understand the individual turn, helps to improve visibility and control in a fast-paced
customer’s real requirements, needs, and challenges,” says business environment where every second counts. In
Gavran. “Then, we customize a proposal and network solution addition, the logistics provider utilizes a proprietary Order
based upon that customer’s unique set of requirements.” Management System (OMS) and a Warehouse Management
With more than 500 stocking locations in 26 countries System (WMS) for tracking and controlling all customer
throughout its FedEx Express and third-party provider inventory and order data.
locations, FedEx Critical Inventory Logistics works to make “Our WMS has global reach,” says Mohair, “and connects
its customers’ distribution operations more efficient, as well our entire FSL network to enable our customers to save
as improve their transportation networks and provide long- money, leverage the flexibility of scale, and rely on the
term solutions. traceability of their parts as they move through the system and
“When you’re one of the largest air cargo companies in the out to their own customers.” •

A report commissioned by FedEx fedex.com • FedEx • 8

MAKINGMAKING
THE CASE
THE
FOR
CASE FOR
FEDEX CRITICAL
FEDEX CRITICAL
INVENTORY
INVENTORY
LOGISTICS
LOGISTICS

Case Study
Fulfilling Customer Demands by Having the
Right Parts in the Right Place at the Right Time
AS A PROVIDER OF INFORMATION TECHNOLOGY transportation service supported by a robust global IT infrastructure.
support for Fortune 500 companies across the U.S., Essintial When a repair call comes in, Essintial’s call center management
Enterprise Solutions knows that its ultimate success hinges upon
sm
team can better control service occurrences through the FedEx
the ability to meet all aspects of each customer’s SLA. This requires a Critical Inventory Logistics customer portal, a web-based application
flexible solution with global visibility to in-transit and at-rest inventory, that provides the best sourcing location, mode of transportation,
so that field service technicians and call center representatives are and cost calculations. Heck says the solution allows Essintial to
empowered to make quick sourcing decisions.Craig Heck, Essintial flex, scale, and “ramp up” new customers—all while effectively
Chief Operating Officer, says Essintial started running into challenges responding to fluctuating demand shifts in its business.
in the early-2000s, when computer repair requirements shortened to Since beginning to work with FedEx Critical Inventory Logistics,
same-day/4-hour. “Because many of those repairs require some kind Essintial has experienced extreme growth and now faces even higher
of IT service part,” he explains, “we obviously couldn’t advance in that expectations when it comes to getting the right part to the right place
market without offering a service that put the parts within a couple of within a very tight window, as promised to the customer. With FedEx
hours of—or, right down the street from—our customer locations.” Critical Inventory Logistics, the company has decreased field service
With the goal of redesigning its existing distribution model in a technician trunk stock (i.e., the parts that technicians have to store in
way that would exceed customer expectations, Essintial evaluated their vehicles) by 80 percent and reduced its overall inventory carrying
all the available alternatives in the service parts logistics market costs thanks to the provider’s FSLs.
and selected the FedEx Critical Inventory Logistics solution in 2002. At the time, Essintial owned 100% of the service parts that it
Designed to support companies that handle vital inventory, the solution was selling. Today, roughly 70-80% of those parts are consigned
incorporates proactive shipment monitoring, event notifications, and inventory parts from its suppliers. As a U.S. service arm for a large
Chinese telecom manufacturer, for example, Essintial receives parts
on consignment from the company and then pools those parts in the
Three Ways FedEx Helps You Win FedEx network. “We’re a logistics duo in a scenario where FedEx
in the Competitive Business World lands multiple direct flights daily to and from China,” Heck explains.
FedEx Critical Inventory Logistics helps companies “That helped us seal the deal with the customer.”
achieve these key goals:
One of Essintial’s largest customers, an air transport
1. Improved delivery performance. Choose from a
wide range of transportation services to match your communications and IT specialist company, initially approached FedEx
unique requirements — from on-demand local couriers about developing a critical logistics strategy. Knowing that Essintial
to a broad portfolio of FedEx transportation services. was already helping similar firms meet and exceed their critical
2. Focus on your core competencies. Leave transpor- inventory logistics needs, FedEx served as the conduit for what has
tation and logistics to FedEx, and focus on what you since become a long-term relationship for the customer and Essintial.
do best. By doing so, you’ll be able to allocate resourc-
“We were able to provide a portfolio of services that the customer
es to the most important business functions, increase
efficiency, and maximize your human resources. You
needed,” says Heck, “and grow them into a substantial customer
already trust us with your packages, let us handle your over time.”
service parts too. Working with FedEx Critical Inventory Logistics, Essintial has been
3. Greater cost savings. Skip the investment and ongo- able to grow into a national IT support powerhouse and is now on
ing expense associated with building and maintaining track to expand even further in 2018. “We can literally be anywhere in
your own supply chain infrastructure and order-man-
the U.S. with a product or support item within minutes or hours,” says
agement system and rely on ours instead. FedEx® can
Heck. “As our business continues to evolve, and as more companies
support the worldwide movement of your most critical
service parts and finished goods, as well as provide move away from carrying inventory, we’ll continue to rely on FedEx
end-to-end supply chain visibility. Critical Inventory Logistics to help us rise up and thrive in a very
dynamic marketplace.” •

A report commissioned by FedEx fedEx.com • FedEx • 9