HP has a consistent presence at FedEx Ground's headquarters, so the vendor knows what equipment its customer needs and how to configure it. "When Mike called up and said, 'We need servers,' we knew exactly what to give them," says Katilius because FedEx Ground has worked closely with HP to ensure that new equipment fits its IT standards. "I have support engineers who know the FedEx environment. When they go into the data centre, they know where the [HP] rack is and they know exactly what network connector and what power connector to use to plug in computers," he adds.
HP came through for FedEx Ground because the vendor trusts its customer. "They knew we were going to pay them," says Aiello. And FedEx Ground's IT department doesn't cry wolf unless it really needs help, says Hmel.
The goodwill between FedEx Ground and its trusted partners allows vendors to expedite some of their processes when problems requiring immediate attention crop up. "I can pick up the phone and tell one of my strategic business partners: 'I need someone for X amount of time.' They give me a rough dollar amount of what it will cost to have that extra person and we agree without having to sign a paper," says Hmel. "We can prepare contracts and agreements that are open-ended without lawyers on top of us at every step." Not having to barter over contract negotiations saves days or weeks for Hmel.
Forging close ties with vendors gives FedEx Ground access to innovative new technologies that save the IT group time and the company money. For example, FedEx Ground needed to implement disaster recovery capabilities at FedEx Corporate's Memphis data centre. In the event that the TMS in FedEx Ground's Pittsburgh data centre went down, the company could bring up the same functionality in Memphis within one to two hours. It was shaping up to be an enormous project that the IT department thought it had no choice but to do on its own. EMC got wind of the plan when FedEx Ground started purchasing storage from it to use in the Pittsburgh data centre. Instead of just selling the storage, EMC showed FedEx Ground packaged solutions that could help speed the project. It was just what FedEx Ground needed.
"We grabbed it and implemented it in eight months," says Hmel. He estimates it would have taken FedEx Ground twice as long to plan the architecture, develop the software in-house and make sure the data in Pittsburgh was in sync with the data in Memphis. Instead, it "turned out to be a no-brainer" because EMC understood what it was striving for. Hmel adds that FedEx Ground probably saved $US500,000 by purchasing packaged solutions.
A More Perfect Union
FedEx Ground's strong vendor relationships help it innovate and stay on the cutting edge of technologies that drive revenue for the company. At the same time, its technology partners have come to appreciate the processes that keep them connected to the business.
"FedEx has one of the best attitudes and processes in place for governing and maintaining strong vendor relationships," says HP's Katilius. "They've allowed me to visit their facilities and participate in their business. I can load and unload vans. I've been at their 'sortation sites'. I understand their business so that I can quickly recommend the right solutions that will make them more flexible."
Speed and flexibility are precisely what Hmel wants from his partners. He says it's hard to quantify FedEx Ground's overall financial gain from focusing so much attention on vendor management. What the company has earned, Hmel says, is agility and a reputation throughout FedEx for meeting milestones on mission-critical IT projects.
"We're a growing company, and there's a ton of stuff to get done. By finding partners that move at the speed we do and working with them, I can deliver value to the business," he says.
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