Feedback Loops of United Parcel Service - Report Example

Feedback Loops of United Parcel Service - Part V - Total Number of Words 261 Introduction For this study, a balancing loop and a reinforcing loop will be identified and applied in the case of the United Parcel Service (UPS). In the process of going through the main discussion, factors behind selecting the identified balancing and reinforcing loop will be tackled. Eventually, the effects of these feedback loops over the short- and long-term organizational efficiency of UPS will be thoroughly discussed. Prior to conclusion, the opportunities of organizational learning that can be identified throughout the organizational diagnosis since module 2 will be provided. Balancing and Reinforcing Loop Applied in the Case of UPS Balancing Feedback Loop The desired goal of UPS is to maintain its market position as the largest global and most reliable package delivery company. (UPS, 2008b) The customer-base of UPS has been increasing each year. Since the market price of oil has significantly increased over the years, the need for UPS to invest on increasing the company’s reliability through the use of information and communication technology arises. For the past few years, the market prices of crude oil per barrel has significantly increased (IBON Media, 2008). To narrow down the gap between not increasing the company’s delivery rates and the high cost of oil, UPS decided to reduce the number of transit times by one or two days within its 1,000 traffic lanes which deliver packages throughout the 11 states like Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, and Texas (UPS, 2008c). (See Figure I – Balancing Feedback Loop on page 3) Figure I – Balancing Feedback Loop Factors behind Selecting the Identified Balancing Feedback Loop This type of balancing feedback loop enables us to have a better understanding with regards to effective ways that will enable UPS to maintain its desired position in the market despite the external challenges caused by the significant increase in the prices of crude oil and the tight market competition. Reinforcing Feedback Loop The “arms race” is a good example of reinforcing feedback loop that can be used in explaining the organizational and business success of UPS. (Larsen et al., 1996) The most critical environmental input of UPS are the customers. Given that UPS is offer its services around the world, the company needs to have a large-based of regular customers to enable the company to compensate with its daily operational expenses associated with the need to establish several offices around the world. To enable UPS to effective provide the needs and wants of its long-term customers, the company continuously expand its services by investing on necessary transportation, communications, and logistic facilities and other related equipments. In line with the need to invest on information and communication technology (ICT), the company manages to develop and maintain its official website including the other mode of domestic and global communication such as the use of handheld Delivery Information Acquisition Devices (DIAD) to make it easier on the part of the company to manage, operate, and keep track of its daily business transactions like the shipment and delivery schedules around the world on a real-time basis aside from being able to maintain a good business relationship with its existing customers (UPS a). Because of the increased in the delivery service rendered by UPS to its customers worldwide, the number of UPS existing loyal customer increases over time. The increase in the number of loyal customers is a positive sign that the business performance of UPS is good. As a result, there is a significant increase in the annual sales and revenue of the company. Therefore, UPS has an excess fund to re-invest some of its money on necessary transportation, communications, and logistic facilities. (See Figure II – Reinforcement Feedback Loop on page 5) Factors behind Selecting the Identified Reinforcing Feedback Loop The “arms race” enables us to clearly understand the business strategy that enables UPS to increase its annual sales and revenue despite the tight competition in the global markets. Figure II – Reinforcement Feedback Loop Effects of Identified Feedback Loops over the Short- and Long-term Organizational Efficiency of UPS The balancing feedback loop can increase the organizational efficiency of UPS by enabling the managers to have a better analysis and understanding of what is happening with the micro- and macro-economic condition in the world market. Since UPS manager is able to consider the tight competition in the world market, the company decided not to increase the delivery rates to allow UPS to maintain its existing loyal customers as the company tries to attract new customers. Instead of increasing the company’s existing delivery rates, UPS decided to simply make the business operations more efficient by investing on ICT and reducing the number of transit times to allow the company to save more money from consuming too much oil products. This strategy enables UPS to enjoy the positive short- and long-term business outcomes. Similar with the use of the balancing loop, the reinforcement feedback loop also strengthens the ability of UPS managers to effectively develop a business strategy that will significantly increase the sales and profitability of UPS within the short- and long-term period of time. Opportunities of Organizational Learning that can be Identified throughout the Organizational Diagnosis since Module 2 When it comes to the development and application of both the reinforcement and balancing feedback loop, UPS managers should promote team work or team learning to enable them to develop a more effective feedback loop (Larsen et al., 1996). Given that UPS employees practice a shared vision, it would be easier on part of the employees to learn and improve their skills and knowledge through personal mastery (Senge, 1990: p. 236). Given that UPS employees are composed of competent team members, the managers should also be a good leader and implements an open communication with the rest of the employees for them to be able to maximize the organizational learning as the manager increases the employees’ work potential (Larsen et al., 1996). For instance: Prior to developing the reinforcement feedback loop, it is best for UPS managers to brain storm with the rest of the employees particularly on how they can improve the company’s investment on transportation, communication, and logistic facilities. By taking into consideration the point-of-view of the team members, UPS managers will be able to visualize better strategic options that could increase the existing customer-base, business performance including the annual sales and profitability of the company. The same concept applies when developing the balancing feedback loop in the case of UPS. By going through a brain storming process with the team members, UPS managers will be able to develop better strategic solution that could effectively address the ‘perceived gap’ which could serve as a barrier on the part of the company in terms of being able to attain its organizational goal. Conclusion Regardless of whether the result is positive or negative, the application of reinforcement and balancing feedback loops are useful in terms of critically analyzing the factors that can significantly affect the business performance of UPS as a business organization. Basically, analyzing the process of each feedback loops will allow UPS managers to critically think about what could possibly happens when a particular strategy has been implemented to make the company able to attain its organizational goals. As part of developing the feedback loops, it is necessary on the part of UPS managers to develop team work and organizational learning to increase the effectiveness of each of the identified feedback loops. In the absence of having team learning, UPS management will have a difficult time being able to immediately perfect the development of a recommended strategic solution based on whatever external challenges that may arise in the future. *** End *** References: IBON Media. (2008). Retrieved November 12, 2008, from Speculation: A Closer Look At Oil Price Hikes (First of a series): http://info.ibon.org/index.php?option=com_content&task=view&id=345&Itemid=50 Larsen, K., McInerney, C., Nyquist, C., Santos, A., & Silsbee, D. (1996, May 13). Retrieved November 12, 2008, from Learning Organization: http://home.nycap.rr.com/klarsen/learnorg/#_Toc356579328 Senge, P. (1990). The Fifth Discipline; The art and practice of learning organization. New York: Doubleday. UPS. (2008a). Retrieved November 12, 2008, from 1991 - 1999: Embracing Technology: http://www.ups.com/content/corp/about/history/1999.html?WT.svl=SubNav UPS. (2008b). Retrieved November 12, 2008, from About UPS Highlights: http://www.ups.com/content/us/en/about/index.html?WT.svl=SecNav UPS. (2008c). Retrieved November 12, 2008, from Current Press Releases: UPS Freight Accelerates Shipping for Customers in 11 States: http://pressroom.ups.com/pressreleases/current/0,1088,5007,00.html Read More