The encyclopedia · Strategy & Leadership · Strategic decision · 1973–1997
FedEx built its network on operations research from its first flights.
Federal Express used OR to build origin-destination, simulation and route models that guided its network and fleet decisions from 1973.
Federal Express Corporation
the move
Federal Express began overnight package delivery in 1973 and quickly found that deciding the network by intuition failed.
It then built an origin-destination model, followed by models that simulated operations, finances, engine use, personnel assignments and route structures, which guided the business through periods of fast growth.
Founder Frederick W. Smith embedded OR and management-science staff into the company, and the practice became a reason for its growth.
why it works
- The network was new and impossible to run by intuition
- An origin-destination model showed where freight should fly
- Simulation let the company test operations before committing
- Founder Fred Smith made OR a permanent part of the firm
what transfers
A network business should model the whole system before building it, because an accurate model turns growth into a plan.
what came after
Federal Express became one of the best-known cases of a company built by operations research, with the models repeatedly used as the network, fleet and market grew.
references
- Absolutely, Positively Operations Research: The Federal Express Story
- Absolutely, positively operations research: The Federal Express story
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