IT renewal delivers value for FedEx

April 30, 2020

A blog post by Rob Carter, EVP and CIO, FedEx

For nearly half a century, technology has underpinned critical business and logistics operations on which FedEx customers depend. Almost a decade ago, we committed to an expansive technology renewal initiative based on an ongoing vision for cloud and everything-as-a-service. We began a journey to simplify and modernize our monolithic legacy systems by creating a collection of orchestrated microservices.

We’re wrapping up the primary phase of the IT renewal initiative, and it’s nothing less than a complete refactoring of legacy software applications that typically have long development, testing, and deployment cycles. Our new service-oriented, cloud-based model is more value-driven. The technology team manages software functions as interoperable microservices that can be used across multiple platforms. They are smaller, incremental, and modular, with iterative delivery cycles that enable us to rapidly adapt to ever-changing business circumstances and help us remain in alignment with our customers as they adopt API- and service-driven architectures and workflows.

As the internet of things (IoT), advanced analytics and blockchain emerged, we were able to leverage them to sustainably develop innovative new products and services for our customers. We’ve been able to position ourselves ahead of the curve on these and other emerging technologies. For example, we developed and are testing small, embeddable IoT sensors—each about the size of a pack of gum—that provide drop-in connectivity using Bluetooth Low Energy (BLE) wireless networks. This allows us to dramatically expand the amount of shipment data we collect beyond date, time, and location stamps to include temperature, speed, and a host of other measurements. The application of real-time analytics to the sensor-collected data improves visibility into the transportation network, automatically predicts the flow of shipments, and optimizes delivery routes by dynamically routing shipments to bypass network clog points.

When IoT and analytics are combined with blockchain, they have the potential to improve existing chain-of-custody systems and processes. Embedded IoT sensors can automatically transmit data to a blockchain ledger as a shipment moves from point of supply to point of demand, enabling carriers, regulators, and customers to track the provenance of goods, combat illegal and counterfeit products, and simplify the cross-border shipping process. Ultimately, we expect the impact of these technologies to extend beyond product shipments to the end-to-end life cycle of a product as it moves through the supply chain.

To stay ahead of the innovation curve, we must be responsive, which requires an agile framework that allows us to rapidly and iteratively adapt, deploy, and pivot when the market demands it. For instance, our experiments with sensor-based logistics stretch back more than a decade with the launch of our SenseAware device. Initially, we deployed sensors that relied on cell phone networks, migrating to BLE network technology when it proved more efficient. Large and expensive, the original sensors had to be reclaimed and reused. As IoT capabilities matured and became more cost-effective, we were able to roll out smaller, less expensive sensors at scale.

We also embrace risk-taking innovation when the potential reward outweighs the risk. For example, we calculated that the cost of experimenting with blockchain—and potentially concluding that it wasn’t useful—would be a fraction of the cost of not making an early blockchain move at all. Our willingness to take an early risk paid off. As a charter member of the Blockchain Research Institute and current standards chair of the Blockchain in Transport Alliance, we have access to invaluable contacts and resources in the blockchain industry.

We know this is a continuous journey—we can’t ever stop transforming. New competitors are agile and technologically savvy, so we plan to continue to evolve our analytics capabilities and to integrate AI into the logistics network. And there are a few more legacy systems whose long tentacles haven’t been fully pried out yet. But because we can’t predict the next innovation or market force, we haven’t locked ourselves into processes, investments, or technologies that aren’t adaptable to future unknowns. I don’t always know what’s coming next, but with an adaptable set of services and the ability to be agile and iterative, I know we’ll be much faster at delivering value.

This article first appeared on the WSJ.