UPS has taken notice that being "green" is important to its customers and shareholders. Because of this, they have implemented a variety of ways to be more environmentally friendly and make less of a footprint on the Earth. Natural resources are an important input to UPS's business and UPS is taking to combat energy waste and use natural resources more effectively. Because "green" business is a growing concern with shareholder's and customers, the issue of natural resources is extremely important to the success of UPS.
A variety of aspects of the company are affected by efforts to be more "green" and use fewer natural resources. To deliver its packages each day, UPS has one of the largest airplane fleets in the world, trucks, and other delivery methods to be fast and reliable for its clients. Because of the different ways that UPS gets to its customers, all the methods of transportation will be affected. The operations involving packaging will also be affected as they strive to implement more eco-friendly materials. With the exceeding use of oil to make gas, delivery and transportation has been adjusting over the concern of natural resources. The air delivery system has made changes to adjust for the importance of natural resources as well. UPS has the world's ninth largest airliner fleet and to reduce its use of fuel it uses the Lido Flight Planning System, which calculates the most efficient route between two points, based on weather, winds, terrain and other factors. As the first United States based air carrier to use this technology, they have "achieved significant fuel, noise and emissions reductions by using a technique called Continuous Descent Approach (CDA). UPS estimates CDA can reduce nitrous oxide emissions by 34 percent, noise emissions by 30 percent and fuel consumption by 40-70 gallons per flight. That's a savings of over 1 million gallons per year annually (UPS Corporate Responsibility)." Not only are the airplanes using fewer natural resources, but UPS's air hub in Louisville is making energy efficient changes as well. The hub has docks that allow planes to park directly next to the facility, "eliminating the need to run ground tugs, dollies and other equipment required to load and unload aircraft parked on ramps." (UPS Corporate Responsibility). With the truck delivery method, UPS has also made changes to adjust for natural resources. UPS has implemented Package Flow Technology, to optimize these delivery routes. This allows UPS to plan the most effective route before a package is even loaded into a delivery vehicle. Package Flow Technology minimizes miles on drivers' daily routes meaning fewer miles traveled and less fuel use and emissions.
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Also, because UPS uses many different packaging materials for their shipments, the way they package their materials and their methods of recycling will be affected. In their delivery process UPS uses something called a Delivery Information Acquisition Device. This is a hand-held computer that drivers carry to electronically record delivery information, including recipient signature. UPS's website states that this device "is used in 49 countries and eliminates the use of 84 million sheets of paper, saving 7,308 trees per year (UPS Corporate Responsibility)." UPS also uses reusable sort bags instead of plastic bags when they sort their packages and they also use "forever bags" which has reduced their waste by 21,500 tons. Packaging materials were also designed to eliminate bleached paper and increase the use of recycled material. UPS has implemented its own e-waste recycling program to ensure that electronic equipment used by the company is refurbished or disposed of properly when it becomes outdated. To date, UPS has recycled more than 16.9 million pounds of electronic equipment.
UPS will be able to fully implement hybrid vehicles into its operations and delivery system in the future. However, in the same aspect, this portion of the value chain can also retard the trend. UPS has fleets of thousands of vehicles and airplanes. It would be extremely costly to replace all the vehicles with environmentally friendly hybrid alternatives. At this point in time only 2,100 of the 90,000 vehicles are going to be replaced by hybrid trucks. In order to have a huge impact on this trend, it would be ideal to replace all vehicles. UPS's operational system as a whole relies on the distribution and movement of packages, which by nature requires fuel and emissions.
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UPS is also taking initiatives to use much less emissions to transport its packages: UPS has one driver and one vehicle for air, ground and international shipping in their delivery process. Some competitors use three drivers, and three trucks, to handle the same volume, doubling or tripling their environmental footprint. Without even having to implement costly hybrid vehicles, they are able to cut back on the amount of transportations groups it takes to moves the products.
In the "going green" movement, at this point, UPS's involvement is purely voluntary. However, that is not stopping them from making the initiative to find ways to reduce carbon emissions and reduce gas. They were well aware of this trend before many of its major competitors and are a leader in the reduction of emissions and preservation of Natural Resources. UPS is currently the only small package carrier to make carbon offsets available to its customers.
They are also leaders in the current trend to begin using hybrid vehicles in their fleet of delivery trucks. Hybrid vehicles run on electric, as well as fuel. This enables the vehicle to use electricity to power their vehicle and by doing so, reducing CO2 emissions. "UPS has 90,000 vehicles in its fleet. By next year, some 2,100 of those will be alternative-fuel vehicles that run on electricity, compressed natural gas or other forms of energy, company officials said (UPS Corporate Responsibility)." With such a large fleet of trucks, the implementation of these more "Natural Resource friendly" vehicles can have a huge impact on the percentage of CO2 released into the air. UPS has taken a major stand in publicly trying to do its part for the environment. These hybrid trucks are expensive, but that is not stopping them from doing the right thing.
Due to its cost and scarcity in many locations, UPS tries to reduce water use too. They have a vehicle washing policy that saves 365 million gallons of water annually while using an environmentally friendly wash agent. There are 49 facilities equipped with active water reclamation systems.
According to the company's sustainability report UPS made a commitment to slash carbon emissions aircraft emissions of 42 percent by 2020. This will require the company to lower flight speeds to save fuel but the type of bio-fuels being used were omitted from the report.
UPS also helps its customers dispose of unwanted electronics. Through its Asset Recovery and Recycling Management Service, UPS Supply Chain Solutions oversees the final disposition of electronics through repair, recycling or disposal in an environmentally safe manner, all while controlling logistics-related activities.
Until there are more improvements made in the availability and scientific advancements of natural resources, thus reducing costs of implementing "going green" initiatives, it will be hard for UPS to fully reduce its environmental footprint. At this time, technology in hybrid cars, fossil fuels, and packing materials is still developing, and "green" alternatives are still seen as a luxury rather than the norm.
The growing trend of globalization is crucial to UPS's business model. They have expanded their business across the globe and rely on globalization for their own growth as a company. The package delivery industry as a whole has become an international venture. Therefore to compete in this industry, UPS has to create a global infrastructure. The article "UPS Has Big Plans For China And The World" talks about UPS, the United Parcel Service, and its push into Global Markets, including India and China. That article continues with the fact that UPS has based this move on three principles: "integration rather than extraction with each international move, localize its global operations in ways that adapt to and respect the communities into which it moves, (and) build a culture of trust in the countries it enters (Malykhina)." Last year in India alone they saw a growth of 45%. They also focus on technology, enabling them to build connections throughout the world and network on a global basis.
UPS operates in the operations and logistics of moving parcels from one point to another. As consumer demands across the globe become international so must UPS's supply chain operations. UPS is currently spending $1 billion annually on IT to achieve their goal of becoming "a worldwide purveyor of a range of transportation and transportation-related services." UPS's vision of synchronized global commerce enables companies of all sizes to participate in the international marketplace.
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Elements of the industry value chain that contribute to the retarding of this trend are Customs when entering and leaving countries. Also, currency issues arise when dealing with so many different governments. Working with a vast array of currency exchange rates directly effects UPS's revenue. Next-day-delivery is a key feature of UPS's services; however with the rising trend of globalization it will become increasingly difficult to provide this type of service to the world.
UPS is very aware of the globalization trend. They fully plan on growing their business through globalization. UPS is taking many steps to deal with this trend. UPS operates their own air fleet which allows them to reach their goal of expanding across the globe. They also put tremendous time and money into their supply chain to keep them competitive on a global scale. UPS has made its mark on the world by using stock and cash to make it the largest shipping company in the world and also a growing competitor to DHL as the largest global logistics company. UPS has positioned itself in over 200 countries and is preparing for consumer growth in new markets. This company should be able to use its 100+ years of experience to aid it in "synchronizing the world of commerce". UPS follows three valuable business lessons that have had a positive impact on their brand internationally. The first is that they have learned that long-term commitments build brand equity and are rewarded. They learned to think local but act global. Third, they learned that if you're perceived as an extractor as opposed to an integrator, you're in trouble.
Although the company was shook from the 2008 global financial crisis and saw a huge decline in shipping, the company said their business is stabilizing even when their share prices have been dropping. Business demand has been drastically cut. UPS should be expecting to have a declining contribution margin profit during the course of the year but as the entire economy as a whole begins to stabilize, UPS should as well. (Carey) (U.P.S. Earnings Decline 49%, to $445 Million, as Downturn Saps Demand)
The global trend of demography is probably the least important to UPS for several reasons. Globalization, natural resources, and techno-science are all much more important. The evidence is that these three other trends have a much greater impact on UPS's business ventures. Other evidence includes that finding articles on this subject was significantly less prevalent than the past trends.
The work force and delivery capabilities will be affected most by this trend. As people migrate to a place like across china, UPS will have to keep a focus on maintaining a strong workforce and there distribution HUBS. It's important for the company to keep track of these migrations because business will be where the people are. UPS will be able to use this to their advantage if they can stay on top of the trend.
The industry value chain has affected UPS directly. This article is about a current bill, the National Labor Relations Act, which UPS's employees are under. Their competitor on the other hand, FedEx, has its employees covered by the Railway Labor Act. This gives FedEx a competitive advantage. Therefore, UPS is pushing for FedEx's employees to be covered under the National Labor Relations Act, just like everyone else in the industry. FedEx's complaint is that "It is legislation written by UPS, for UPS and only benefits UPS," said FedEx spokesman Maury Lane. "Everyone else suffers." However, UPS's counterargument is that their employees get special rights. "What is it about their express drivers that is so special that they should be under a different law than every other driver in the country?" "It's time to level the playing field in the package delivery industry," Ken Hall, the Teamsters' vice president and Package Division director, said in an emailed statement. "No one company should get a special deal at the expense of U.S. taxpayers," Hall said. Whether UPS is actually trying to eliminate FedEx's competitive advantage, or make the industry fair for its employees is unclear. (Sivaraman)
UPS is taking steps to better set themselves up for the global demography trend. Its has taken a majority stake in the operations of Unsped Paket Servisi San ve Ticaret A.S. UPS's already existing package service provider in Turkey and the Middle East. According to this article this area includes "trade to and from 21 countries." These countries are critical in the strategy for UPS as this area is a gateway for Europe, Russia, and Asia. Not only is this area a bridge between large nations with high demand for UPS's services but there is a growing demand in this area for their services due to the oil and natural gas industry and the monies brought into that area from it. As the wealth of these nations increase so will their demand for goods and UPS's services. These areas include a large population of people with a large potential for demand using UPS's very powerful brand. (Joint Venture Positions UPS for Growth in Middle East, Turkey and Central Asia)
Political demography can directly stipulate the population and political behavior of two different nations. China is emerging as a strong global economic power and creating a substantial setback on UPS freight operations. Its transportation networks in China have been disrupted by the nation once called the sleeping giant. China Post, the country's national postal service, had been given a monopoly on October 1, 2009 over domestic letters and documents mailed within China to Chinese addresses. Global business practices are a demographic factor that will cut short UPS's global boundaries. According to Doug Caldwell, an industry consultant with ParcelResearch.com, the global recession brought China to enact a "protectionist move" to stimulate the economy: "I'm sure the local companies were complaining to the government, saying that unless they pass this law, they will have to lay people off. Local issues sometimes trump goodwill gestures, like[sponsoring] the Olympics." The Chinese unemployment level rose and as a result, the government thought it best to invest domestically than open their marker to global competitors. (Ramos)
The Techno-science mega trend has played an increasingly important role for the package delivery industry and UPS. Technology has allowed for UPS to connect the world. Moreover, UPS's view of technology has typically been one of an early adopter and a trend setter. In the 80's UPS started using a delivery board named DIAD (delivery information acquisition device) to move away from the time consuming and error prone paperwork. This device allowed customers to get close to real-time delivery and tracking information from the UPS customer representatives. Another example of trend setting use of technology was the use of the internet to provide detailed tracking information to shippers and receivers alike, thus providing a real-time flow of information to customers and lowering costs on UPS's side by lessening the number of on-staff phone representatives required.
Techno-science directly effects how the company does business. Without the advancements UPS currently has in place with their information technology they would be unable to compete in the market place and therefore fail as a corporation.
The industry value chain as a whole does not contribute to hastening or retarding of this trend. The industry is constantly updating its self with the latest technology. The only thing slowing them down is at which the speed of advancements in technology occur.
UPS is extremely aware of the techno-science trend. A new advance in UPS's technology enables the company to ship packages like never before. "The enhancements UPS unveiled this week beef up the company's main technology offerings, which include WorldShip 9.0, Quantum View Manage, and UPS Billing Solutions"(Gardner). These new software technologies allow users the track packages and ship them around the world. The technology is user friendly and consumers are able to track packages through the internet. WorldShip is even available in 14 languages. UPS has invested a large amount of money in these capabilities: "It's a constant evolution. We spend $1 billion a year on technology solutions" (Gardner). "The heart of UPS technology is centered at its Worldport technology center in Louisville, Ky., where UPS maintains 122 miles of high-speed conveyors and a database capable of processing some 60 million transactions an hour" (Gardner). Coupling this ability with the ability for each individual user to track any of those 60 million transactions, internationally and in real time is astonishing.
UPS introduced a new Web-based parts system that manages global service orders and inventory for critical parts management. This new system is called the UPS Post Sales Order Management System (OMS), and it enables global company's visibility to quickly assess their critical parts inventory, determine the most optimal routing strategy to meet customer needs, place orders online, and track parts from the warehouse to the end user. It has real time information and a better routing system. For example, "the new OMS usesreal-time inventory data tolocate the nearest warehouse to fulfill a parts request and thenselectsthe ideal routing to most cost effectively meet the customer's deadline.In addition, he said the OMSsystemprovidesfull visibility into when the order is placed, picked up, on flight to a destination, delivered, and more" (Berman). UPS faces the obstacle of keeping this new system running properly. UPS faces obstacles related to their ability to quickly and efficiently process information. UPS has to be sure to have their systems running smoothly at all times. If a server or system goes down UPS will not only lose time and money, but possibly customers and future business. Having a reliable and consistently performing network is absolutely crucial to maintaining business.
The trend of governance plays a very significant role in UPS's industry and business. Since UPS was founded in 1907 the governance has changed drastically since then. For example, during the early 1900's unions were very popular as they were a good benchmark to ensure the quality of the work environment as well as pay. Now, as public opinion of unions shift, UPS is tied to relics of an era prior to higher levels of government regulation and legislation. For example, The United Parcel Service had a big strike 12 years back in the summer of 1997. Although the company was financially sustainable with profits of $1 billion, it classified 58 percent of its workers as part-time. Furthermore, only 8,000 of the 43,000 jobs UPS had created since 1992 were recognized as full-time. This was how the company defined the term "flexibility" to justify their actions. They only employed people during peak hours, giving them free reign to assign it workers half the hourly wage of the people who worked full-time but performed the same duties. These part-timers would work close to 39 hours a week but did not receive overtime pay, full benefits, or the higher salary that somebody who worked 40 hours a week did. UPS has come a long way now though. (Critical Social Issues In American Education)
As trends shift away from the necessity of additional layers of governance like unions, the company will have to adapt and react to the current culture and business requirements. One example of changes that will occur is that union employees may receive less monetary compensation than they are accustomed to as the competition increases and profit margins shrink. UPS will continue to adapt and grow and as culture continues to shift laws may also shift in UPS's favor.
I believe that the leadership at UPS and their internal governance is ready for the challenges ahead. UPS shareholders elect the board of directors and the board of the directors establishes the policies for the company and provides oversight of the company's management. UPS's Board of Directors appoints a Nominating and Corporate Governance Committee of at least three directors of the Board and designates one member as chairperson. The Nominating and Corporate Governance Committee consists entirely of "independent" members of the Board of Directors. "Independent" means a director who (i) satisfies all criteria for independence established by the Securities and Exchange Commission (the "SEC"), (ii) meets the New York Stock Exchange (the "NYSE") definition of "independence" (including all criteria imposed with respect to service on nominating, corporate governance or similar committee) and (iii) is otherwise free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Nominating and Corporate Governance Committee, all as determined by the Board of Directors. (UPS: Board of Directors)
The Nominating and Corporate Governance Committee assists the Board of Directors in identifying, screening and recommending qualified candidates to serve as directors of the Company and in developing and recommending to the Board of Directors a set of corporate governance principles for the Company. The committee considers recommendations for officers, Board candidates, and shareowner nominees. They consider the selection criteria for important figures such as the officers for UPS, they also make recommendations to the Board concerning the Company's corporate governance principles, including the structure, composition and functioning of the Board and all Board committees, the delegation of authority to management, Board oversight of management actions and reporting duties of management. More importantly they evaluate or provide for evaluation of the performance of the Board and oversee and help implement annual self-assessments by each of the standing committees and review and recommend retirement policies for directors. They also review any outside directorships in other public companies held by senior company officials. (UPS: Board of Directors)
As the world's largest package delivery company and a leading global provider of specialized transportation and logistics services, UPS continues to expand. From using electric vehicles in New York City during the 1930s to developing water conservation techniques while keeping the familiar brown package cars clean, as well as operating the world's largest fleet of compressed natural gas (CNG) vehicles, UPS has long practiced environmentally-conscious innovations to protect natural resources, and will continue to do so. Through UPS's response to the other mega-trends as well, such as techno-science, globalization, corporate governance, and demography, they have taken the correct steps to become powerfully positioned in the world. $51.5 billion revenue in 2008 was achieved because UPS has made exceptional progress in these mega-trend areas. UPS will need to continue to evolve in these areas to continue to expand and be successful in the coming future.