Dive Brief:
- FedEx will shut down the final 20% of its mainframes within the next two years, leaning on its cloud-native architecture to run business operations, FedEx CIO Rob Carter said during the company’s 2022 investors meeting Wednesday.
- The move toward a zero data center and zero mainframe environment will save the company $400 million annually, Carter said. FedEx declined to comment further on its move to the cloud.
- FedEx plans to use its cloud architecture to unlock siloed data and provide more visibility internally and externally.
Dive Insight:
The unveiled strategic plan, “Network 2.0,” focuses on optimizing resources whether that’s consolidating routes and stations, increasing visibility of the supply chain or fostering collaboration between its operating companies — Express, Ground and Freight.
FedEx will invest $2 billion in the new initiatives and expects a return of $2 billion each year following the increased efficiency, CIO Dive's sister publication Supply Chain Dive reports.
The company has also started optimizing data insights with help from its subsidiary FedEx Dataworks and other data platforms in hopes to unlock new revenue streams.
Data insights from FedEx’s SenseAware IDs have enabled the company to reach 99% delivery reliability for critical medical and priority overnight shipments in the U.S., Carter said.
“Inventory placement optimization is a critical example of what happens when you share this kind of data and harnessing their data helps us to continuously tune our network,” Carter said. “This is the network effect that we're achieving through the power of big data.”
The increased modernization efforts are no surprise to those following FedEx’s digital transformation, which dates back to more than a decade. The most recent plans build upon FedEx’s 2021 investments in AI and automation, which culminated in fully automating more than 150 facilities.
