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How FedEx sustains tech innovation

At the start of the Tibco Live virtual conference, FedEx CIO Rob Carter was asked how he helps the business drive innovation

The Tibco Live virtual conference kicked off on 23 September with a keynote presentation looking at the idea of sustainable innovation, featuring Rob Carter, CIO of FedEx (Federal Express).

The idea is that an organisation cannot survive on just one great idea, but needs to continually innovate to provide new features and experiences for customers.

A recent McKinsey survey with business leaders reported that, following the coronavirus crisis, many companies are deprioritising innovation to concentrate on four things: shoring up their core business; pursuing known opportunity spaces; conserving cash and minimising risk; and waiting until “there is more clarity”.

However, McKinsey urged business leaders to take more urgent actions, such as adapting the core business to meet shifting customer needs, re-evaluate their innovation portfolio and identify new growth opportunities.

FedEx has been a pioneer and early adopter of technology since its inception in the 1970s, and has used Tibco for many years to power the messaging services behind its global package track-and-trace system.

Rob Carter has been CIO of FedEx for 20 years, and was recently described as the Beyonce of CIOs. Carter has a seat on the FedEx board and sees the role of IT as a partnership with the operating company of the business, to connect more than 200 countries.

Borrowing a quote from Isaac Newton, during a pre-recorded discussion with Tibco CEO Dan Streetman, Carter said: “I stand on the shoulders of giants at the company.”

In 1978, said Carter, the company’s founder and CEO, Fred Smith, described why he believed the information on a package was as important as the package itself. “Tracking systems were the digital instantiation of the package,” said Carter.

Evolving tracing visibility

For Carter, the track-and-trace system provides FedEx with a digital twin of the package being sent. “We were early innovators,” he said, “You can’t manage what you can’t measure.”

Over time, some of the internal metrics used by FedEx were exposed to customers. In the early days of online services and the internet, said Carter, this data was exposed to the customer via services such as Aol or Compuserve. “They dialled in with modems to get tracking information,” he added. “This evolved over time to give a richer set of experiences for customers.”

As an example, Carter described FedEx’s SenseAware extension to its tracking system. “We have been building sensor-based logistics for real-time visibility,” he said.

Internet of things (IoT) sensors for measuring temperature, light, vibration and velocity are used to provide enriched data about the package during its journey through FedEx from when it is collected to its final destination.

When the service was developed almost a decade ago, it relied on the somewhat cumbersome technology of the time, based on mobile phone networks for communications. But this has now progressed as emerging technologies such as BLE (low-energy Bluetooth) became mainstream.

FedEx uses Tibco’s message bus to handle billions of transactions a day, as it continues to build out tracing metrics and surfaces these to customers. The Tibco-based messaging bus enables it to provide its customers with real-time tracking data associated with a FedEx shipped package.

Aligning with business goals

The coronavirus crisis has meant IT has been called upon to keep business operational. Carter said the pandemic has meant that FedEx needed to support both its back-office teams and the much larger logistics workforce. “At this unusual time, we have 100,000 people working from home, but we have several hundred thousand people delivering goods to people’s homes,” he said.

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Discussing IT and business alignment, Carter said: “In the 40 years of doing IT, when business and IT pull together, all I have to do is get out the way and great things happen. But when there are issues, things move at glacial speed. You need to have trust with business partners. They are not our customers; they are not users, either. That term seems condescending to me.”

For Carter, sustainable innovation means staying relevant. “I have a technology degree from 1981,” he said. “I engage with the incredible world of tech and innovation. It is how I work to stay relevant.” It is this engagement with the IT industry that helps Carter to advance the role of IT at FedEx.

Handling emerging tech

Blockchain is one of the emerging technology trends that promises to revolutionise logistics. Quoting FedEx’s founder in a 2019 article on Linkedin, Carter wrote: “If you are not operating at the edge of new technologies, you will surely be disrupted.”

Carter believes blockchain is one technology that has the potential to transform cross-border commerce by reducing friction and increasing integrity in how things move around the world. “Our greatest realisation this past year is that for blockchain to be transformative, it will need to be much bigger than us,” he wrote.

In 2020, Carter updated his case for blockchain in an article for the Wall Street Journal (WSJ). Moving beyond the existing SenseAware service, Carter said embedded IoT sensors can be used to transmit data to a blockchain ledger automatically as a shipment moves from point of supply to point of demand.

He said this can be used to enable carriers, regulators and customers to track goods, combat illegal and counterfeit products, and simplify the cross-border shipping process.

An interesting observation from Carter is his attitude to the risk of failing when experimenting with innovation. In the WSJ article, he wrote: “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.”

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