United Parcel Service

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 magazines 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

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Profitability UPS vs. Federal Express
10
Stock Performance(http//global.factiva.com/en/ch
md/chart.asp?instrumentsUPS.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

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2003 Revenue by Segment (In billions)www.UPS.com
2.9
5.6
25.0
13
Competitive Forces Affecting The Company
(Recklies)
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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 cant 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

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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 1980s 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.

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UPS IT/IS Usage

• Tracking process
• Synchronized Commerce
• Goods
• Information
• Funds

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Usage continued

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

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Distribution Services Network

• Combines IT networks
• Ability to leverage established networks
• Inventory staging
• 99 Reach

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Recommendations

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