The Background To UPS Commerce Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Today UPS, or known as United Parcel Service, is a global company, its trademark is the worlds most famous and one of the most admirable trademark. As the worlds largest express carrier and wrapped delivery company, but also professional transportation, logistics, capital and leading provider of e - commerce services. Every day, they are more than 200 countries in the world and regional management, logistics, capital flow and information flow. As the world's largest package delivery company and a leading global supplier of specialized transportation and logistics services, UPS through a combination of cargo flow, information flow and capital flow, and constantly develop new areas of logistics, supply chain management and e - commerce. Shrink from those UPS companies to reinvent themselves, just like its history demonstrates(Angle Roh,2008).

UPS was founded in 1907 as a Messenger company in the United States, through a clear commitment to support global business objectives, UPS has developed to a large company has assets of $36 billion dollars. In 1907, was a great need for private Messenger and delivery services. In order to meet this need, 19 year old youth James e full of entrepreneurial spirit. " Jim " Casey, borrowed $100 from a friend created the American Messenger company is located in Washington State Seattle. First name for new business pursuits. Receiving bases after the call from the Office, in response, Messenger run trade, food parcels, on which the delivery note, baggage, and restaurants. Most of the deliveries to walk, is distant trips it is riding a bike. Cars are rare at that time, still used horses and four - wheeled wagons for transport of goods in department stores. 6 years later, United States parcel post system to build. Jim and his partner Claude Ryan at the edge of the sidewalk of a humble Office of carrier services business. Jim's brother George and several other juvenile is more than 10 years of the company's messengers. Although the world, but the company running good, thanks in large part to strict guidelines Jim Casey - humble hospitality, honest, reliable, around-the-clock service and low prices. These principles still guide UPS,Jim is summarized in the following slogan : the best service, the lowest price(Simon,2006).

1913, UPS companies as technology development, start of delivery improvement. 1913 - 1918, automobile and telephone improvements led to a fall in the Messenger business, the company began to focus on motorcycle for some package delivery, and by 1918, three of Seattle's largest department stores have become regular customers, to configure their own delivery cars, and transforming the business to merchants parcel delivery. In 1919, the company expanded beyond Seattle for the first time, to Oakland, California, uses it to its present name " United Parcel Service company ", and the development of a common carrier service. In 1924, UPS launched the appearance of forming the future of the other for the first time a technical innovation : the first conveyor belt system of the package. Although the common carrier service was originally limited to a small area around Los Angeles, but that by the year 1927, it has been extended to areas of around 125 miles from the city centre. At the same time, retail delivery service UPS has expanded to include all the major cities of the Pacific coast of the United States. From 1930 to 1952, effects of World War II led to reduced retail store delivery business and encouraging customers to bring their own package home. Nevertheless, the UPS continues to grow. The early in the 1950 of the 20th century, reality clearly shows that contract services to the retail stores is limited. UPS's core business is still concentrated in retail deliveries, while managers decided in 1952 started in those without the State Commerce Commission and cities authorized ICC common carrier service. 1953 Chicago became the first common carrier service after UPS in California city. In 1929, UPS became the first package delivery company through private airlines to provide air transport services. However, the lack of traffic is due in part to the great depression combined with other factors leading to the service in the same year to end. Until 1953, UPS Regeneration air freight, UPS package again in regularly scheduled airline flight in the aircraft cargo hold. This service is called " UPS Blue label air ", it grows, by 1978, each State, including Alaska and Hawaii are providing the service(Form 10-K,2010).

UPS revenues divided according to regions and modes of transport takes on a different distribution. Judging from the area, business 89 per cent of total revenue in the US, European and Asian operations accounted for 11. Judging from the mode of transport, domestic land transport accounted for 54, domestic air, 19 domestic delayed transport 10 per cent, transport, 9 non - parcels business accounted for 4. On January 10, 2001, UPS to 433 million dollars worth of new shares issued to acquire California owned by Fritz group logistics companies and logistics business of the company into the UPS will continue to expand, making it a larger transport group. On November 28, 2000, UPS will increase its global flight from 3 times a week to 5 times, to cope with the increasing number of transnational transport operations. UPS in the total amount of goods transport on this route daily increase of 200,000 pounds. UPS is famous for its Brown trucks, in the United States, it is synonymous with package car. UPS uses in this Brown on its vehicles and uniforms is called " Pu - Brown ", the title of origin was created because qiaozhi·puerman - General sleeper compartments used is the color of the company(Contact UPS: United States.",2009).

II. Recent history and evolution of logistics

A. Include information on significant milestones in logistics maturity

In 1975, the Interstate Commerce Commission finally authorized UPS from Montana to Utah's Interstate service, and in Arizona, parts of Idaho and Nevada service area expanded to the State. UPS has authorized this service with the Pacific coast of the five States and all States in the eastern part of the existing services together. Results, UPS became the first in the 48 contiguous States of the United States providing service to every address in the package delivery company. This historic regional convergence within the UPS service is called " Golden link ". The same year, UPS International for the first time, it provides services in the city of Toronto. The following year, the operation also began in Germany. However, in the 1980 of the 20th century saw UPS enter the international transport market, in the Americas, Eastern Europe and Western Europe, the Middle East, Africa and the Pacific coastal region more and more countries and regions to establish a business. In 1985, UPS began between the United States and six European countries of international air services. And then, in 1989 and increased domestic air operations in Germany(Shipping,2009).

In the 1980 of the 20th century, due to the growth of the air parcel delivery requirements and cancellation of the Federal Aviation Regulations have created new opportunities for UPS. But the cancellation of the requirement but also caused the change, such as the establishment of a route, reducing flights, also abandoned some routes. In order to ensure reliability, UPS began to set up their own transportation fleet. UPS Airlines is the fastest growing airline in FAA history, but almost a year form all the necessary technical and support system. Today, UPS Airlines is one of the ten airlines throughout the United States. Features of UPS Airlines is having some of the world's most advanced information systems, such as information for flight planning, scheduling and load handling systems COMPASS computer operation monitoring, planning and scheduling. The system can be used for up to six years in advance to arrange the best flight schedules, which is unique in the industry(Angle Roh,2008).

By 1993 UPS every day for more than 1 million of regular customers delivering 11.5 million packages and documents. So large quantities makes UPS must develop new technology to maintain efficiency and competitive prices, and to provide new customer services. UPS Technology spread an incredible range, from small handheld devices, specially designed package delivery vehicles, to the global computer and communications systems. Each courier UPS drivers carry handheld data collector DIAD, this device is for quick record and upload delivery information to the UPS network and development. DIAD information even includes the recipient's signature digital pictures so that it provides to customers real-time information about their shipments. This proprietary device also allow drivers to maintain continuous contact with their headquarters, making changing pickup schedules, traffic patterns and other important messages to synchronize. In the other end of the field of technology, UPSnet is a global network of electronic data communications, can provide information for international package processing and delivery channels. UPSnet uses more than 500,000 miles of communications lines and a dedicated satellite to connect more than 46 countries or areas of more than 1300 UPS delivery station. The system tracks 821,000 packages daily. In 1986-1991 years, UPS has spent US $1.5 billion to technology improvements, and plans to spend $3.2 billion in the next 5 years. These improvements are designed to improve efficiency and expand customer services(Hamilton, Brad,2007).

In the late 1990 of the 20th century, the UPS is another transition. Although the core business remains in the distribution of goods and associated information, UPS has begun to branch out and focus on a new channel, as a service. Pursuant to UPS management's view, the company's expertise in shipping and package tracking to position it as into a global business facilitator, and became a three mobile force comprising the commercial service enterprise of logistics and information flow and capital flow. In order to achieve the vision of this new service, UPS began strategically acquiring existing companies and to create new kinds of companies that do not exist previously. UPS created through these acquisitions and to explore new ways to deliver services to its customers. By providing unique supply chain solutions, UPS enables its customers to better serve their customer service and focus on the core competitiveness.1995 UPS formed UPS logistics group, based on customers' individual needs to provide global supply chain management solutions and consulting services. In 1995, UPS acquired a company called SonicAir, making UPS the first day, " " next flight " services and secured at 8 o'clock in the morning of overnight delivery services company. In 1998, established UPS Capital Corporation whose mission is to provide a comprehensive menu of integrated financial products and services, enabling companies to develop their business(Hamilton, Brad,2007).

B. Describe a typical logistics model prior to UPS in 2011

UPS's primary business is the time-definite delivery of packages and documents worldwide. In recent years, UPS has extended its service portfolio to include less than truckload transportation (primarily in the U.S.) and supply chain services. UPS reports its operations in three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations(Roberts,2009).

Supply Chain & Freight UPS - SCS for UPS Supply Chain Solutions includes UPS' forwarding and contract logistics operations, UPS Freight, and other related business units. UPS' forwarding and logistics business provides services in more than 175 countries and territories worldwide, and includes worldwide supply chain design, execution and management, freight forwarding and distribution, customs brokerage, mail and consulting services(Roberts,2009).

Business Foundation is a hub for UPS plus radiation network structure. UPS Operations Center collects from users of the package and send it to the hub. Hub centralizes many of the operations center sent after packages to categorize them, and assign it to the other operations center or hub, finally arrived at its destination(Maus, Jonathan ,2008).

The UPS Parcel Network is based on a hub and spoke model. UPS operates centers that feed parcels to hubs where parcels are sorted and forwarded to their destinations. Centers typically are the point of entry for parcels and send the parcels to one or more hubs. A hub is a location where many centers send packages to be sorted and sent back out to other centers or hubs.

The UPS air network runs similarly to the ground network through a hub-and-spoke system, though air hubs are typically located at airports so airplanes can quickly be unloaded, the packages sorted, and the aircraft loaded again. Centers feed packages to facilities at airports (called gateways), which in turn send them to an air hub to be sorted and put on another airplane to a final destination gateway, and then from there to a center.

III. The Transition at UPS

A. Identify the key drivers for logistics transformation at the company

Follow the change of time, UPS have been in transition to better adapt to this society. UPS every once in transition are necessary, which makes ups continued progress, and their market is constantly expanding. Now I will present the important transition of UPS.

During the early 1990s, UPS recognized a gap in the market for a logistics provider that can offer fully integrated supply chain management. This motivated the management at UPS to begin the transition of the company from a traditional package delivery provider to an "enabler of global commerce". This involved repositioning to a facilitator of the three flows that makes up commerce: goods, information and capital (UPS, 2012). The drivers for change are drawn from the two angles. Firstly, from a UPS client's perspective to maintain competitive advantage and provide greater value for their end customers. Secondly, from an internal UPS perspective which focuses on giving customers access to the UPS portfolio of logistical capabilities, thereby increasing market share and profitability.

UPS recognized the positive correlation between innovation of services and customer satisfaction, with increased market share and profits early in its history. Their company strategy today is still underscored by this relationship (UPS, 2012). Management at UPS has strategically positioned the firm to achieve their objectives as set out in their mission statement. This is done by continually creating value for customers, by being in state of perpetual transformation to strengthen their leadership position, while investing in key markets and new opportunities that enable UPS to expand its offerings (UPS, 2012). UPS continues to grow, maximize returns for its shareholders and increase market share whilst maintaining strong relationships with clients. These objectives do not come easily, especially given the fierce competitive rivalry UPS has with its main competitors FedEx and DHL.

B. Describe the process undertaken

The nature of logistics is that change is inevitable and the ability to stay ahead of the pack can determine whether or not a business is a success or failure. This concept echoes UPS' corporate objective of being a facilitator of the three flows that makes up commerce; which is achieved by implementing a strategy consisting of three key elements: create value for their customers, transform the business and invest for growth.

To achieve the corporate objective and see UPS' transformation from a package delivery company to an enabler of global commerce required the company to analyze its own internal competencies and expertise. Then they had to ascertain a thorough understanding of its external environment and customers. The results of the analysis put UPS in a position to leverage its capabilities and resources within a dynamic environment and deliver more value for customers.

The processes undertaken are reflected in the corporate strategy. For example, UPS has implemented various solutions and expanded services to create value for their customers. Value is defined here as the perception of the benefits associated with a good, service or bundle of goods and services in relation to what buyers are willing to pay for them. Recent service launches included the introduction of UPS My Choiceâ„¢, which allows customers have greater control of their shipments in terms of delivery times, delivery authorization and other aspects of delivery. Additional value creating solutions include cost efficient ways to manage returns and a suite of mobile phone applications (UPS, 2011). UPS has also expanded to include financial capabilities that focus on financing supply chain solutions. Some examples include accelerated payment services, working capital and commercial financing, all of which are provided by the subsidiary UPS Capital. (UPS, 2011)

C. Ascertain the key milestones of the transformation

Since opening in 1907, UPS has used innovation and creativity to transform their business multiple times. Through analyzing the history of the company, research has shown that there are certain milestones that pre-empt these key transformations. These milestones, along with needs of internal and external parties have helped to form UPS into the successful global firm it is today. Leaving behind the days of being a US based small package Delivery Company, UPS is now a global operation, managing logistics, finances, customs brokerage and freight services.

Throughout the history of UPS, they have strived to be the most reliable and affordable package Delivery Company available. In the 1980s, the company wanted to expand on these goals and become more competitive in the market. They achieved this through investment in technology and airplanes. UPS initially invested millions of dollars on new technology for their operations. Today, they still continue to spend money on improved technology in an effort to remain competitive and provide the best services possible to their customers.

The 1990s brought new challenges to UPS, as research of the industry found that all of the country's small package delivery needs were being met either by UPS or one of their competitors. The company realized that if they remained focused on this market, their company growth would be dependent on the growth of Gross Domestic Product in the United States. UPS did not accept this limitation and set out to find alternative ways to grow the company. A consensus was made to transform the company into a global supply chain service provider.

The overall success of the transformations at UPS can be related to their use of technology, strategy, skills and a holistic view of the organization. The extensive use of technology in the organization enables them to communicate more efficiently with their customers and partners. In doing so, UPS can better anticipate the needs of their clients, putting them in a better position to be able to adapt to the changing environment.

D. Consider the impact on the business model and strategy at UPS

As a business expands and changes, it is not uncommon for there to be changes in their business model and strategy. Over the course of their extensive history, UPS has undergone several transformations, in which they have revised their model and strategy to embrace the new changes. UPS started out using a push-oriented business model, in which the balance of power rested mostly with the manufacturers and suppliers. In this model, much of the supply chain members were isolated from the end consumer. As the business world evolved over the years, the power began to shift from suppliers to customers, which created a customer-driven pull model. UPS recognized this change and modified their business model to reflect it. UPS has been using a diversification strategy to expand their enterprise and over time they have added additional objectives of sustaining the core business and forming their future through various goals and policies.

In preparation of another transformation, UPS was analyzing their external environments which include various markets and customers. During this process, they identified a change in the balance of power between suppliers and customers. Before the days of internet trading and e-commerce, most companies followed the push-oriented business model. The foundation of this model was that suppliers would build up masses of inventory, in order to "push" it to the market at a specific time. This method works best when demand can be easily anticipated. In today's society however, customers are becoming more knowledgeable and have access to a greater number of suppliers for the products they desire. As a result, customers are more demanding and expect to purchase products on their terms, not the supplier's terms. This new style is referred to as the customer-driven pull model. UPS took notice of this change in the external environment and began making adjustments to their business model to accommodate this demand from customers. Overall, UPS began to move the focus from reliability and efficiency, to the needs of their customers.

E. Quantify the financial benefits of the transition to both UPS and customers

As UPS continually reinvents the company, they are adding new services for their customers and expanding into new markets as a method of company growth. These new services also provide financial benefits to the customers and UPS. As a logistics service provider, UPS can offer services for clients that will benefit their financial position including speeding up the invoice process and lowering administrative costs through upgraded billing systems (UPS, 2012). These services on offer are designed to help companies that ship large quantities of packages on a regular basis, however, any UPS client can sign up to use these online resources.

In terms of companywide financial performance, UPS is in a strong financial position. Since floating the company in 1999, the company has been able to make strategic investments and acquisitions which have maximized profits, as well as increased share earnings for shareholders. However, like so many other global firms, UPS did suffer as a result of the 2008/2009 global financial crisis (GFC). In April 2009, following a downturn of some months, UPS stock price fell to below USD40 (See Figure 5 below). Comparatively though, this fall was in alignment with the fall in the Dow Jones Industrial average (UPS, 2012).These results were a reflection of the global economy, not specifically a fault of UPS. Furthermore, the 2nd quarter results for this same period reported a 16.7% reduction in revenue (UPS, 2012). As the global economy improved, so did the financial position of UPS. From the dip in 2008/2009, UPS' financial performance has rebounded to pre-GFC levels and continues to grow. Revenue in 2011 was at the highest it has ever been at over USD53 billion annually. Income in 2011 increased to USD3.8 billion from USD2.1 in 2009. For shareholders, latest results again indicate an improved position since the GFC. The firm's stock price as at 4th quarter 2011 was just over USD73 and the dividends paid was USD2.08 per share which reflects an increase of 75% and 15% respectively since 2008/2009 (UPS, 2011). Figures 1 to 4 presented below show the changes in the data between the years 2003-2011.

Over the years, companywide transformations have allowed UPS to expand into a global enterprise, with increasing profits year after year. Technology offers financial benefits to customers in helping to keep shipping costs competitive, while the integration of extensive online tools helps customers easily track packages for invoicing purposes and make shipping payments via the internet. Each change that UPS made has helped to build a larger customer base which leads to more revenue and offers more ways to lower operating costs. As UPS continues to transform in the future, they will be looking for additional ways to lower their costs and increase the bottom line profit. Technology has helped in the past and will continue to improve in the future years to come.

IV. Sustainable logistics at UPS

A. Expand on the statement 'Logistics is sustainable' on the UPS home page

In my view, logistics is the circulation of commodities, but with the economic and social development, logistics has been more than just circulation of commodities, its scope is very extensive, including the transportation of goods, goods storage, goods handling, goods custody, etc(wf66,2006).

And the sustainable development is means not only satisfy the needs of contemporary people, but also to meet the needs of future generations.They are an inseparable system, it is necessary to achieve the target of economic development, but also to protect the atmosphere, freshwater, marine, land and forests and other natural resources and the environment, good for mankind's survival for future generations to sustainable development and to live and work. Sustainable development and environmental protection have established contact, not the same. Environmental protection is an important aspect of sustainable development.The core of sustainable development is development, but requires strict control of the population, improve population quality and environmental protection, sustainable use of resources under the premise of economic and social development.

More than a century, the UPS philosophy of environmental protection into daily deliveries. 1907 employees to walk or ride a bike shipment has been delivered. In the 1930s, UPS used electric cars. Today, UPS uses a series of high-tech alternative fuel vehicles. UPS has invested billions of dollars to the infrastructure of technology, processes, and the whole transport network is designed to maximize energy saving. Moreover, the UPS innovative technology has opened up a range of services such as route optimization of carbon-neutral transport, paperless invoices and environmentally friendly packaging(,2011).In addition to logistics needs, companies have chosen UPS to promote its sustainable development goals. Through the integration of the UPS software, companies of all sizes have made the shipment process, customs clearance, execution and settlement automation, in order to increase productivity while saving costs and paper(thenewlogistice,2011). UPS chairman and CEO Scott Davis said: "While other companies may be postponed due to the economic crisis of sustainability innovation, we believe that long-term vision, the responsible use of our resources will allow us even stronger(,2011).

Ups in order to achieve sustainable development, service development to the international service, the company's development to the international. ups is a very rich experience in global transportation experts, they can reach very many new customers and suppliers. They can to provide a quick solution for any size shipment at any time, regardless of the customer need of affordable transport options, or select the fastest service for urgent shipments ups can put forward a proposal in a short period of time.For the prompt delivery of the shipment, UPS offers time and express services, and can often choose early morning delivery, and the end of the day before delivery. The delivery time is usually one to three days, depending on departure and destination countries(,2012).For non-urgent shipments, as well as the requirements of reliability and a clear date of delivery, ups the company's services also provide an excellent alternative option for the customer's business. Generally, delivery time is two to five days, depending on departure and destination(,2012).Through the world-class UPS service, customers can more easily leave a good first impression. Good impression means ups will have more customers in new markets and grow faster in the world.

B. Identify the sustainable logistics direction of the company

Ups can focus on the employees, occupational health and society,relationship between labours and manager,and human right.

As we all know, UPS transport millions of packages every day.We know that customers and ups the company's concern about the impact of transport to the environment.This is why the development of each company must consider the issue of environmental protection, ups companie can reduce their own carbon dioxide (CO2), also demonstrates the support of the concept of sustainable development, you can also use the green logistics.Green Logistics is in the process of commodity logistics as much as possible to reduce environmental pollution and logistics environment clean,and development and utilization of our resources must not be harmful to the next generation environment life, and their use of resources.

Each company's development is inseparable from the employee, the employee's enthusiasm may directly affect a company's revenue and profit and companies can implement the distribution according to work policy, active employees can get more revenue, according to the efficiency of the staff to reward them, or promotion.

And next can focus on the relationship between labours and manager.Managers and employees should have a good relationship, managers can often communicate with their staff understand the needs of employees, and difficulties in their lives, managers should try to help employees suffering, to meet their needs, so that it can stimulate the enthusiasm of the staff to win more benefits for the company.Maintain a good relationship between managers and employees is an important development factor.Bad relationship will lead to a gradually toward paralysis, bad relationship between managers and employees will give a company very big influence.