DIRECTV CASE STUDY FedEx Helps DIRECTV Handle Explosive Growth. • By integrating FedEx systems DIRECTV, Inc., has been selling customers and third-party resellers. But with DIRECTV systems and television satellite systems since its the acquisition meant that shipping outsourcing warehousing, founding in 1994. With over 225 channels, volumes would drastically increase, DIRECTV and FedEx rapidly the company offers an extensive practically overnight. “When we acquired created a scalable solution with programming selection to homes and Primestar, we had to convert subscribers minimum capital investment. businesses across the country. Initially, to DIRECTV service within 24 months,” • Through the FedEx network, equipment to receive DIRECTV service explains Jerry Littman, DIRECTV DIRECTV is able to simulta- was sold to customers primarily through Director, IT Business Relationship Group. neously communicate order third-party retailers such as major “FedEx responded by creating a scalable data to multiple departments, electronic stores and independent dealers. solution that took us from handling 25 decreasing lag times, speeding But when parent company Hughes shipments a day to 10,000 per day without order fulfillment, and increasing Electronics acquired Primestar—one of skipping a beat.” data accuracy. DIRECTV’s major competitors—in 1999, To manage higher shipping volumes, it was necessary for DIRECTV to begin DIRECTV needed to increase both ® • Integrated FedEx NetReturn dealing directly with end customers in shipping and warehouse capacities. In API enables customers to converting Primestar’s subscriber response, FedEx created a high-volume conveniently arrange their equipment. stocking and shipping process that own return shipments via the The purchase expanded DIRECTV’s networked Synapse, a Warehouse Internet or phone—reducing customer base by approximately 2 million Management System (WMS), and error and streamlining the subscribers, and DIRECTV established a FedEx® Ship Manager Workstations using process for both DIRECTV 24-month plan for the conversion. In FedEx Net®. FedEx Net is a value-added and its subscribers. order to transfer these customers, network (VAN) that enables information DIRECTV would have to send each exchange between disparate computer subscriber the requisite DIRECTV systems. By integrating shipping and satellite dish, digital set-top boxes, and warehousing data with DIRECTV’s remote control. existing system, the company can achieve With so many customers to convert, supply chain visibility for efficient DIRECTV had to completely rethink inventory management. Networking fulfillment and returns procedures. existing systems and outsourcing Pleased with the reliability and flexibility warehousing also helped DIRECTV of FedEx shipping and stock management quickly ramp up operations with minimum in the past, the company turned to FedEx capital investment. to help handle the demanding transition. When an order is initiated from the sales channel—third-party reseller, call Streamlined processes increased center, or in this case, the Primestar efficiency customer database—it is sent directly to DIRECTV had managed small equipment FedEx. The order information progresses distribution projects but the Primestar via FedEx Net to the WMS, where the acquisition required a greater scale product is picked and packaged for operation. Existing fulfillment and return shipping. The data is simultaneously sent operations were initially set up to support to both DIRECTV’s invoicing system to shipping 500 boxes per month to charge for units sold and to the FedEx The FedEx Supply Chain Solution. Ship Manager Workstation. Concurrently input into the system when the return transmitting order information to all order is created. Because each package is involved departments expedites the assigned a FedEx tracking number, both shipping process by eliminating internal DIRECTV and its customers will be able lag times. When the order is ready for to monitor their returns in route back to distribution, a shipping label is created and the warehouse. “We want to make the a tracking number is assigned. As each customer experience as easy as possible,” RESULTS SUMMARY order is filled, a confirmation e-mail can explains Littman. “With integrated FedEx be sent to the recipient with all the NetReturn API, the returns process will The effects on shipping and tracking information, so that be smoother for us as well.” DIRECTV’s supply Returned orders are handled in one of chain were immediate. the reseller or customer can track the two ways. If it is an undeliverable item, By using FedEx Net to order in real time—24 hours a day—on simultaneously fedex.com. the FedEx fulfillment center receives and communicate among DIRECTV ships equipment directly to restocks the item into inventory. Using the the WMS, FedEx Ship sales partners and end customers. Orders order number, returns are logged into the Manager Workstation, can be shipped as either individual parcels WMS. The WMS sends the returns and DIRECTV’s or in bulk for cost-efficiency and easier information through FedEx Net to invoicing system, both handling in transit. Each shipment is DIRECTV’s Order Management System order and inventory assigned a “license plate” with all the (OMS) to speed customer credit. accuracy increased necessary shipping information and a If the return is damaged or needs while cycle times consolidated tracking number, as well as a repair, the customer either calls decreased. “With vendor ID code and order serial numbers. DIRECTV’s customer service or goes to FedEx Net, we’re able Access to this detailed information the corporate website to initiate a return. to process up to enables resellers and DIRECTV to DIRECTV creates a return order through 13,000 orders in one reference or track orders by multiple FedEx NetReturn API by uploading shift,” explains Littman. pieces of information. License plating also customer information directly from its “By sharing helps identify customer activation, as well OMS. A return label can either be sent information, we can as speed credit on order returns. over the Internet for the customer to print eliminate lag times and and drop off the package at an authorized get maximum Returns management completes the FedEx drop-off location; or DIRECTV efficiency with cycle can dispatch a FedEx courier to print a minimum manpower.” DIRECTV also integrated FedEx return label at the customer’s location and NetReturn API to streamline the returns pick up the package for return delivery. and repairs processes and further enhance The return is then sent directly to customer service. FedEx NetReturn API DIRECTV’s repair facility where the is a customizable returns management FedEx Signature Proof-of-Delivery solution that simplifies the returns process triggers the customer financial settlement for both a company and its customer. By process for the returned item. Once the integrating FedEx NetReturn API into its item is repaired, the repair facility sends system, DIRECTV is able to automate and an Advanced Shipping Notice (ASN) to monitor returns by enabling customers to DIRECTV and the FedEx fulfillment arrange their returns electronically. center through FedEx Net. The FedEx Shipping and tracking information is fulfillment center receives and processes DIRECTV the repaired products as inbound adapt to our needs as fast as our plans inventory that is placed into stock for change. I don’t think any other company future fulfillment. Throughout this could do that for us.” closed-loop process, DIRECTV The introduction of FedEx® Home maintains product visibility to facilitate Delivery, a residential delivery service, operations planning, improve inventory provides additional customer service management, and increase customer opportunities. As the number of direct-to- satisfaction. customer shipments increases, DIRECTV is considering cost-efficient shipping and Growing bigger and better home delivery by appointment—without With its 9.8 million-subscriber base sacrificing reliability or customer service. increasing by the day, DIRECTV is One of the country’s fastest growing confident it is equipped to handle future satellite television suppliers, DIRECTV growth. Alliances with key retailers shows no sign of slowing down. “We’re have brought in even more customers expanding into more markets now than ever and DIRECTV now sells direct to these before,” says Littman. “As we create consumers. “With FedEx, I know we more opportunities for growth, we’ll count can handle any sudden increase,” says on FedEx to help us keep ahead of our Littman. “FedEx has proven its ability to competition.” ORDER MANAGEMENT PROCESS Orders for satellite equipment are sent from various channels directly to DIRECTV. Order information is sent via FedEx Net from DIRECTV's Order Management System to the Warehouse Management System. Order information is simultaneously sent to both DIRECTV’s invoicing system and to the FedEx Ship Manager Workstation. The order is picked and packed in the FedEx fulfillment center. The FedEx Ship Manager Workstation calculates a shipping rate, assigns a tracking number, and generates a shipping label. Shipment status information is sent to DIRECTV's Order Management System where it is available to handle customer inquiries. The package is picked up by FedEx, scanned, and delivered to the customer. Warehouse Management System Third party reseller Invoicing OR DIRECTV Order FedEx Net Management System Customer FedEx Ship Manager Workstation shipping labels