UPS, United parcel Service itself is a largest package delivering company in the world. It was founded in 1907 and its corporate headquarters is located in Atlanta, Georgia. They are the US base global leader in supply chain management. Initially they started their services in 1907 as a private messenger and service in Seattle, Washington. (United Parcel Service, 2010) Their operations are mainly in five international regions which are: Europe, Middle East & Africa, Asia Pacific, Latin America, Caribbean islands, Canada and the United States covering over 220 countries. And it generates revenue of $49 billion per year.
UPS operates in three segments as: U.S. Domestic Package, International Package, and Supply Chain & Freight. (About UPS, 2010)
"One of their main Supply Chain & Freight segment offers forwarding and logistics services, such as supply chain design and management, freight distribution, customs brokerage, mail, and consulting services in approximately 195 countries and territories; and less-than-truckload and truckload services to customers in North America. The company also offers various technology solutions for shipping, visibility, and billing, as well as provides export and import financing; payment solutions; and risk mitigation offerings."Â (Yahoo finance, UPS profile, 2012)
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Factors that influence the UPS change and innovation strategy
Even though UPS functioned well, they needed to make changes in their innovation strategy is the courtesy and interest in finding ways to act effectively using the infrastructure and expertise in basic transportation of goods and services and information. They had targets of entering into new markets where they can double their growth. Global commerce was also a factor which UPS wanted to undergo.
In order to fulfil their objectives they practised the following factors:
E-Commerce - the first factor that influences the change in UPS. As all of us know business transactions have dramatically changed comparing to the transaction people did few decades ago. In the past consumer were doing business exchanging goods to goods physically contacting both party but in modern world people do not make any physical meeting with business partners unless all the process have dedicated for the Internet technology. This was an opportunity to lead for new innovation strategy for UPS. (United Parcel Service, 2010)
UPS had a new technology system in order to increase their efficiency, where their customers can track the parcel form the home itself or from the mobile with the internet facility.
In order to find out more opportunities within the organization, they invested worldwide and expanded the call centre to provide effective service to the business and customer than before.
By analyzing the customer behaviour and the new trend of internet UPS develop the processing rate of B2C (Business to consumer) which help the company's mass scale due to the number of transactions is more than B2B. As mentioned in the case studies, UPS is providing logistics for NIKE. Business transaction operate over Internet technologies describe as E-commerce which has become the growing trend in modern world therefore this has been clearly identified by the UPS and wanted to concern it as a factor for future change process.
Growth of the global economy is another factor which affect the business in a hug way. Human needs and wants has increased in present, where there is a massive demand for goods and services worldwide, and the economic growth was too low in early days, comparing to current global economy. UPS as a supportive industry acts as the enabler of all the parties to process transactions.
Open consensus-based process helps UPS to make significant change in short period of time. After having business savvy UPS implement the best of them to the business and keep encourage employees to come up with new ideas the e-commerce team who were very concerned of the idea regardless of the source.
The core competencies and capabilities of UPS which enable their strategic transformation
As given in the case studies, the core competencies and capabilities are important assets to any corporation which operates in the logistic industry. Being a massive organisation, UPS monitor and understand their core competencies and capabilities very well. The internal analysis done by the management of UPS identifies their opportunities within the organization. To make a strategic change it is really important to get to know about the transformation when it enter into a new trend called e-commerce.
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It is important to understand certain core competencies and capabilities effect when strategic transformation occurs in an organization because it revel and analyses whether organization meet with certain aspects that required.
The core competencies and capabilities
UPS has a huge amount of customers worldwide, representing in 200 countries and in 15 different languages. In average they deliver 13.2 million packages per day which made them to become the world's leading logistic organisation. Strategic transformation usually drives towards the expansion of the organization which required to very good customer base to enable their fulfilment of goals and objectives. (Mitchell Levy, 2001)
The reputation of UPS in the logistic industry existed for nearly ten decades and within the 95 years of quality time, they had a good maintenance on their quality, integrity and honesty within the internal environment of the organisation especially with the employees.
The integrated global network is a critical factor in the industry. UPS runs its operations based on all levels of services as air, ground, domestic, international, commercial and residential. Their pickup and delivery service system incorporated via air, land and ground become further potential for competencies and capabilities. As per their recent reports, UPS operate on ground fleet of approximately 101,900 trucks and operate in air fleets of 510 aircraft becoming one of the largest airlines in the world therefore UPS supply chain solutions enable customers' inventory to move more effectively to any destination in the world enabling multi faced infrastructure.
UPS practices some innovative ideas on their operations, it bring them advantages in improving their effectiveness towards their customers.
For example they implemented the parcel tracking system in 1992 and created their own tracking site, UPS.com where the customers find it convenient to get information regarding their packages. These did exceed all expectations of the clientele and earn the popularity through online. Currently UPS gets more than a million parcels in order to track it within a day's time. UPS Corporate (1991-1999)
The following part of the balance sheet shows the improvement of UPS's assets which includes their goodwill as well
Dec 30, 2011
Dec 30, 2010
Dec 30, 2009
Cash And Cash Equivalents
Short Term Investments
Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Deferred Long Term Asset Charges
(Annual report UPS, 2012)
Business communication services also expand by the UPS infrastructure call centre volume that taken as 2.5 million request per daily sale for 13 million package deliveries. Literally it is an excess call centre services therefore UPS is offer them for customers integrating call centre services which enables core capabilities for strategic transformation.
UPS capital is the name of the financial unit of the organization. This offers traditional and non traditional financial services and insurance products. For example COD payments, credit risk assessment and transferring funds and the provided cash flow for small businesses in order to carry out the B2B transactions.
The problems which UPS faces when implementing change within the organization and the management avoid/deal with those problems
Implementation of change within the organisation UPS, generates different type of problems. There are many facts that cause issue when there is a change in organization directly involve with workforces. According to the given case study, UPS which is a large international organisation needed a change approach in how they operate the business so they implicated the transformation of global commerce, identifying the emerging trend and as a result, they became the enablers of global commerce.
Even though they became the enablers of global commerce, the stated factor brought them some problems which they have to deal with. As they are a large international organisation, when implementing the e-commerce on the latest technology, they needed latest technical equipments to maintain the technology. For example they wanted to buy the latest software such as GPS systems and web servers along with the latest hardware equipments. As UPS help a strong capital, they somehow managed to settle those expenses.
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On the other hand, adoption of technology does not only rely on the equipments but also on the labour which is needed for the high skilled technical jobs. When the situation comes that the employees have to adopt themselves according to the new technology, it's not each and every employee accepts and adopt. They might show resistance which might be a threat for the business process. Due to enhancements of technology UPS has to recruit more workers in order to develop the existing work force.
In such case, UPS can apply the Kurt Lewin's change model which includes the following stages.
(Change management.coach.com, 2008)
The unfreezing stage of change model is all about getting prepared to the change. The company has to organise and plan for the change. According to UPS, the company is owned 99% by their employees. Therefore the management has to make agreements among the work force before they get into the change .When planning a change; the organisation has to get the opinions of their stakeholders in order to proceed with the change.
As a next step the organisation has to understand the way of improving the internal and external factors of them which is highly related with the transformation. They have to create urgency in order to change. For example, the organisation has to consider their strengths weaknesses and opportunities. When UPS adopts e-commerce, they have to have an in-depth understanding of it. For example for a B2B transaction, NIKE has all of its deliveries to authorized dealers are being transported via UPS. But via B2C, NIKE directly visits customer door step via UPS when they made their purchases on websites like Amazon, EBay or some other direct websites.
Transition or change can be said as the inner movement that is made in reaction of a change. The participation of the employees is the most important part when it comes to the transformation of the organisation. Employees have to be motivated and encouraged to come out with their ideas by UPS without any hesitation. They need to build self confidence in each and every employee when the change happens.
The next step in transition is the implementation process where the management trains their employees in order to continue the process. For example during the transition process the management can provide the employees with some special training especially for those are more into technical side. Knowledge transfer happens via training with excellent supervision provided by the management.
As a result of implementing the transformation, the company has improved the service which they provide to the public as well as increasing their level of sales worldwide. They noticed cost efficiency too. As the change brought them a positive feedback from their stakeholders as well, it was a good improvement for UPS on their transformation.
UPS, by transforming them self with the investment of billions, have managed to revolutionize the logistics industry creating sophisticated working environments which is applicable for all dimensions of operating markets. Understanding the in and outs of an organisation and maintaining a good relationship with the stakeholders in order to perform well, helps the organisation as it is suggested in the case study of UPS. I recommend this case study as a good example for any type of an organization who's willing to transform.