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FedEx uses Kinko's stores as parts distribution centers(Commercial Appeal, The (Memphis, TN) (KRT) Via Thomson Dialog NewsEdge) Jun. 14--FedEx Corp. is turning its Kinko's stores into mini warehouses for companies that need emergency replacement parts -- even biomedical supplies -- on short notice. Through FedEx Critical Inventory Logistics, introduced Tuesday, customers will be able to locate cities in the FedEx network closest to the emergency and have semiconductors, heart valves or telecommunications routers, for instance, ready for pickup or sent quickly by courier to the site, said Tom Schmitt, president and CEO of Memphis-based FedEx Global Supply Chain Services. "Customers realize this service will significantly lower their costs by reducing inventory," Schmitt said. "It will provide them more efficient network planning and the ability to choose shipping options based on timing and cost." FedEx started with 18 Kinko's stores -- or depots -- strategically located across the country. Within a year, it will bump the network to 100 depots in 70 U.S. markets. Each will operate around the clock. It is focusing on high-tech industries, such as telecommunications, semiconductor manufacturers and biomedical suppliers. In Memphis, goods will be stored at FedEx's 500,000-square-foot warehouse at 5025 Tuggle, where the company stocks key inventory for 25 clients, many of them pharmaceutical suppliers or manufacturers. Although FedEx competitors have warehouses, none has given customers access to inventory through a retail venue, said Frank Quinn, chief editor of Supply Chain Management Review. "You're not going to see bulk chemicals or big rolls of copper tubing," he said. "But it's a good value-added option to offer customers, and gives them another reason to turn to FedEx." FedEx says the first step is helping customers position their critical inventories in the network. Once in place, clients manage inventory through fedex.com. "The magic is not going to be getting rid of warehousing for regularly scheduled shipments," Schmitt said. "The magic will be in eliminating what I lovingly call the million-dollar cars," which he describes as the personal vehicle of a company salesman loaded with high-value parts in case of an emergency. "Then the next year, a new generation of heart valve comes out, and the company ends up sitting on hundreds of thousands of dollars in writeoffs," he said. Although Donald Broughton, A.G. Edwards analyst in St. Louis, expects Kinko's will gain business from the venture, the more important aspect is "that this extends the platform of Kinko's. "When FedEx bought Kinko's, everyone wanted to compare it to The UPS Stores," he said. "There is no comparison. The UPS Store is a place where you can mail stuff and copy something on a small copier in a business owned by a franchiser." Kinko's, he said, offers a line of services from teleconferencing to large-scale printing. But Kinko's has not performed as well as FedEx expected since its purchase in early 2004. In early January of this year, Kinko's CEO Gary Kusin resigned with little comment from FedEx. He was replaced by Ken May, a Memphian who rose quickly through the FedEx ranks. He was senior vice president of FedEx Express U.S. operations when he was named chief financial officer at Kinko's in 2004. Kinko's posted $501 million in revenue for the third quarter, ended Feb. 28, 2006, up slightly from $499 million in the year-earlier period. Operating income fell 36 percent to $7 million. FedEx will announce fourth-quarter earnings June 21. |