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United Parcel Service

United Parcel Service. Background. United Parcel Service - Founded in Seattle 1907 (Jim Casey) - Expansion 1920s - Partnership with Blue Label Air - 1993 diversified with offering logistics - 1998 Began offering financial services. Current Executives. C.E.O. Michael Eskew (2002)

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United Parcel Service

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  1. United Parcel Service

  2. Background United Parcel Service - Founded in Seattle 1907 (Jim Casey) - Expansion 1920s - Partnership with Blue Label Air - 1993 diversified with offering logistics - 1998 Began offering financial services

  3. Current Executives • C.E.O. Michael Eskew (2002) • C.F.O. D. Scott Davis (2001) • C.I.O Kenneth Lacy (1997)

  4. Company Culture • Parking Spaces • Cutting costs (economy class flights) • Uniformity • Egalitarianism (promotion within)

  5. UPS Today • Headquarters in Atlanta, Georgia • 357,000 employees (317,000 U.S. ; 40,000 International) • Regional offices located in: • Africa • Australia/New Zealand • Caribbean • Central America • Europe • Middle East • North America • South America

  6. Interesting Facts • Fortune 500 ranking: 42 • UPS awarded one of Fortune magazine’s Diversity Elite 50 Best Companies for African American, Asians and Hispanics.

  7. Key Competitors • AMR Corp • Atlas Air Worldwide • Federal Express • U.S. Postal Service • DHL International • US Airways • Lufthansa • Nippon Express • Yellow Roadway

  8. UPS vs. Federal Express • Use of technology • Hub strategy • Employees and culture • Service cost structures • Financial performance

  9. Profitability: UPS vs. Federal Express

  10. Stock Performance(http://global.factiva.com/en/chmd/chart.asp?instruments=UPS.N)

  11. 2003 Package Operations • 2003 Delivery Volume: 3.4 bil packages and documents • Daily Delivery Volume: 13.6 mil packages and documents • Service area: More than 200 countries and territories • Customers: 7.9 mil daily (1.8 mil pick-up, 6.1 delivery) • Operating facilities: 1,748 • Delivery fleet: 88,000 cars, vans, tractors, motorcycles • Aircraft: 582

  12. 2003 Revenue by Segment (In billions)www.UPS.com $2.9 $5.6 $25.0

  13. Competitive Forces Affecting The Company (Recklies)

  14. Competitive Rivalry Within The Industry • Federal Express • United States Postal Service • TNT Post Group • Deutsche Post World Net

  15. Threat Of New Entrants • A good amount of resources to start up and run a company of that nature. The investments needed in information technology are too much and this acts as barriers to entry. • UPS has invested millions of dollars in the development and use of technology and so have many of its major competitors.

  16. Threat Of Substitutes • New ways to communicate such as e-mail and other forms of communication are being used more frequently. • Federal Express, the United States Postal Service, and others offer a similar service and this is where substitutes can hurt UPS.

  17. The Bargaining Power Of Customers • Customers can’t bargain with UPS about prices, but they can go somewhere else to get their packages delivered. • This is easy to do and any customer can just switch over to a competitor because membership is not being required if you decide to use a new carrier

  18. The Bargaining Power Of Suppliers • Because they provide more of a service in delivering packages, there is no real direct supplier to be worried about. • Ground delivery units, aircraft transportation firms, and IT support • Air2Web, Inc. helped with wireless shipment tracking as a part of its service package. Able to link business applications to multiple wireless networks.

  19. Strategy & Challenges • Their strategic goals changed and were able to integrate new technology with overnight and ground services to compete with Federal Express. • Since the middle of the 1980’s USP has invested $14 billion dollars to build integrated global networks. • In 1990 they introduced their own handheld, called Delivery Information Acquisition Device (DIAD) that captures and transmits delivery data in real time. By integrating it with their services, they stayed ahead of Federal Express with that technology. • The strengths of UPS are their reputation and adaptability. They have been in the business for more than 90 years and have performed to their customers expectations. • Their weaknesses are that they are the largest business in the parcel delivery industry and have the most market share to lose. Also constant changes in technology play a role in their future due to the constant need of upgrading and developing.

  20. UPS IT/IS Usage Tracking process Synchronized Commerce Goods Information Funds

  21. Usage continued • Parts Planning • Lower inventory costs • Service improvement • Enhanced performance • Order to Cash • Order flexibility • Cost savings • Simplicity of the supply chain

  22. Distribution Services Network • Combines IT networks • Ability to leverage established networks • Inventory staging • 99% Reach

  23. Recommendations • Develop easy to use systems • Market to online shoppers and at home businesses • Employee satisfaction • Maintain on-time delivery

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