FedEx executives said Wednesday that the company will become more efficient over the next five years, eliminating redundancies across divisions and boosting revenue.
Billed as “delivering today, innovating for tomorrow,” the strategy was born when the company led CEO Raj Subramaniam to hold its first investor day. The company says the new strategy will improve operating margins and earnings over the next five years.
Speaking at the company’s Investor Day in Memphis, Subramaniam said:
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According to The Wall Street Journal, the new strategy and its accompanying financial projections help the company deal with inflation and pressure from activist hedge fund investor DE Shaw, who has upset the company’s board of directors. was born inside
The company reported strong earnings last week, showing increases in revenue and operating profit.
Here are three takeaways from FedEx’s Investor Day in Memphis.
Plans to eliminate duplication between operating companies
The operating companies of FedEx, specifically FedEx Ground and FedEx Express, have overlapping delivery networks.
Company executives spent a good deal of time Wednesday detailing how the various operating companies will work together to improve efficiency.
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“We are approaching this strategically, both regionally and product-wise. For example, Express in the 48 continental US evaluates the lowest density rural markets… [Ground CEO John Smith’s] FedEx Express CEO Richard Smith said: It’s our reason for existence, if you will. And second, it improves Ground’s delivery density and asset utilization in non-peak months. ”
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Subramaniam was faced with a question from Barclays transport analyst Brandon Oglenski as to why it would not accelerate its plans to optimize the overlap between Ground and Express.
The new CEO said that if the company could accelerate its plans, it would.
Data can be “transparent”
FedEx executives are part of the company’s new technology strategy.
Robert Carter, Chief Information Officer of Subramaniam and FedEx, highlights FedEx’s focus on artificial intelligence and machine learning technologies to become a more efficient company and execute on new strategies announced this week. Did.
“As we look to the future, leveraging our data and digital assets will drive value realization,” said Subramaniam.
Carter said AI and machine learning are starting to help the company understand its business and historical businesses in ways it never could before, and could become almost “clairvoyant.” rice field.
“In this data-driven world, perhaps most importantly, using the data power of AI and ML will start to become clearer when the data actually starts to answer questions we never thought of. The past, the present, its projections, and the ability to find patterns in the world are the intersection of optimization,” Carter said.
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Carter outlined how the company will continue to migrate data to cloud-based storage and eliminate the rest of its mainframe computer infrastructure network.
Carter said moving to a cloud-based platform could save $400 million a year.
FedEx does not anticipate ‘severe and prolonged recession’
Speculation has been rife in recent weeks about a slowdown in global and domestic economic growth. The Federal Reserve has raised interest rates to cool the US economy and stem rampant inflation.
FedEx’s Investor Day included the company’s projection that it could grow revenue by about 4% to 6% annually over the next five fiscal years. Subramaniam’s responses to questions about the company’s forecasts and how the recession will affect them reveal how the company thinks about economic growth.
“These numbers don’t assume a deep and prolonged recession. That’s another matter,” Subramaniam said. “If we have a reasonable economic scenario, we will slow down to a mild recession, but we can weather it,” he said.
Samuel Hardiman covers Memphis City Government, Politics and FedEx for The Commercial Appeal. Contact him at his email at samuel.hardiman@commercialappeal.com or follow @samhardiman on Twitter.
