Sustainable Logistics At Ups Commerce Essay

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Due to factors like the climate change, the limitation of fossil fuels or as well the corporate image, the topic of sustainability in Business receives more and more awareness of today's managing directors. According to a DHL study concerning sustainability, the logistics industry is expected to continue growing (Deutsche Post [DHL], Delivering Tomorrow [DL], 2010, p.14). Even now, logistics is a major source of CO2-emissions with 13.1 % of global greenhouse gas emissions only for freight and personal transport (DHL, DL 2010, p.34) and furthermore 61% of worldwide consumption oil is caused by the overall transport (including passenger transport) (DHL, DL 2010, p.58) . Regarding the fact, that especially fuel is a limited source, logistics companies have to rethink their whole business processes in order to be sustainable. When it comes to transport, it becomes obvious that many cost drivers are linked to it such as: buying the vehicle, maintenance and repair, the salary of the driver, fuel consumption or insurance. UPS is already aware of these facts and tries to optimize the use of renewable energies and to reduce the use of fuel [UPS Corporate Sustainability Report (UCSR), p.1]. Unfortunately, it is not only fuel but also a great quantity of water and electricity that are used by UPS and other logistics companies for their processes. The reduction of the use of these materials is an aim in which the logistics industry has still to spend a lot of time [UCSR, p.87; p.94]. If UPS manages to become fully independent from petroleum and only use renewable energy sources instead, the logistics of UPS could be called sustainable concerning the sector of energy consumption. But there is not only the energy aspect. Packages are still made out of wood, and although UPS starts projects like a big tree planting (UCSR, p.11; p.91), it will be hard to plant as many trees as they are slashed every year. Logistics is such a big and complex industry and still there is so much competition between companies like DHL, UPS or FedEx, which results in a constant underbidding of prices. Due to the fact, that starting a sustainable business costs a lot of money, one of the big players has to make the first big step which will be a high economic risk. According to the UPS' Corporate Sustainability Report, the company realizes numerous projects already that aim at a more sustainable business which will help them to stay successful in future. These steps are described in part 4b and show the high effort of UPS concerning this matter. Nevertheless, we consider that the logistics industry is not a sustainable business until the first global player in logistics will change its business concerning energy use, consumption of materials and waste management.

The Sustainable Logistics Direction of UPS

As already described UPS spends a lot of time and money for their sustainable development. The purpose of this paragraph is now to show which plans and aims are inherent in the sustainable restructuration and what position UPS wants to have in future.

At first, in the following, the environmental and economic dimensions of the sustainability strategy of UPS will be analyzed:

As examined already, UPS wants to minimize the use of fuel. This action is part of a strategy, which aims at the protection of the ozonosphere, the fight against the climate change and the prevention of environmental pollution.

Besides avoiding miles of driving by optimizing the routes and the transportation network, another part of the strategy is the use of alternative fuels and advanced technology.

Also, the supply chain management of UPS is a section of the optimization process, and within this procedure, the company wants to increase the use of renewable energy [UCSR, p.22]. Reducing the total consumption of fuel has not only environment-related but especially financial reasons for UPS. Every company is aware of the higher future need of fuel. Therefore UPS wants to reduce the dependence on petroleum by using for example electric vehicles or trucks. Of course, the company has to admit that a decrease of the fuel use leads to lower costs [UCSR, p.57]. Consequently, these lower costs can lead to lower prices, higher customer satisfaction and therefore to even higher profit for UPS. Based on these facts, nobody will wonder why UPS focusses this topic so hard.

Furthermore, caring so much about the environment has another advantage for UPS. The company underlines that they want to meet every applicable law and regulation of all countries [UCSR, p.99]. If there are new international environmental regulations for companies in future, UPS will be prepared for this case and would not need to restructure the company's processes for a high amount of money, in contrast to other companies. [UCSR, p.66]

In order to attract more companies that are looking for sustainable services, UPS started to expand their portfolio in terms of sustainable logistics solution and still continues this procedure [UCSR, p.1]. The idea behind the growing portfolio is the first part of UPS' strategy concerning the economic dimension of sustainability. UPS offers for example "carbon neutral shipping" that besides the normal transportation costs comprises a little charge for their environmental projects (e.g. the tree planting project) that shall lead to a more ecofriendly shipping of goods [UCSR, p.88]. Offering such an ecofriendly way of transportation is like offering a new product and this can create new needs of the customer. On top of that, UPS is presenting itself as a sustainable company. This leads to a more positive corporate image [DHL, p.19] and according to Willard (2012, p.46) a positive corporate image results more likely in additional revenue.

Based on the UCSR, it can also be analyzed which position UPS wants to have in future.

As a general aim, they want to connect the shipping activities of millions of businesses worldwide in order to increase the economic vitality and environmental sustainability of the global economy [UCSR, p.17; 39]. Within the report, UPS also present their suggested solution for realizing this idea of a worldwide network: using the UPS logistics capability. In other words, UPS aims for taking all the effort from their customers and control as well as optimize an even larger worldwide transportation system, and that of course for sustainable reasons only …

In order to complete the analysis of the sustainability direction of UPS there is the last dimension: social sustainability. Also concerning this matter, UPS phrased its aims in this area. On the one hand, they want to hire very good & qualified people and on the other hand they want to keep them employed as long as they want [UCSR, p.110]. To do so, they enlarge the safety standards, give all employees certain privileges and keep measuring the key performance indicators for employee satisfaction.

On top of that, UPS tries to give every employee the chance to get internal promotions and to reach the management level by attending internal education classes [UCSR, p.109]. In accordance with Schermerhorn (2011, p. 293), these actions result in a workforce that identifies itself with the company, knows the internal processes well and has a high level of motivation. Furthermore, internal recruitment is not only important for the social but also for the economic sustainability. Hiring qualified employees is very expensive while promoting the own staff is very cheap and less time-consuming. Therefore it is not surprising that UPS also focusses on these aspects in their long-term business strategy.

As a conclusion, the reader can see that UPS pursues the target of being a worldwide successful logistics company by using the described long-term and far-reaching sustainability strategy that considers environmental, social and economic dimensions.

Sources

United Parcel Service of America (2012). Corporate Sustainability Report 2011 - Logistics at the Core. Retrieved on 12th December from http://www.responsibility.ups.com/community/Static%20Files/sustainability/2011_UPS_CSR_Report.pdf

Deutsche Post AG (2010). Delivering Tomorrow. Towards Sustainable Logistics. Retrieved on 12th December from http://www.dp-dhl.com/content/dam/logistik_populaer/trends/StudieSustainableLogistics/study_towards_sustainable_logistics.pdf

John R. Schermerhorn, Jr. (2011). Management - 11e. USA.

Bob Willard (2012). The new Sustainability Advantage: Seven Business Case Benefits of a Triple Bottom Line (1st Edition). Canada

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