UPS and Global Marketplace - Term Paper Example

?UPS and Global Marketplace Globalization basically reflects the current economical and social situation. It influences us every day directly or indirectly. In the highly competitive world especially in recent days if the company don’t think and work globally they will not gain any competitive edge over others. So to stay competitive and successful they must follow the global trends. They must be competent enough to handle new challenges in the market by generating globalization process. Logistical companies are more engaged with the outside business cooperators and they are more inclined on low cost and high quality. The globalization has changed the world of logistics. In this paper I will be focusing on one of the largest logistics firm named UPS and will try to highlight on some of the key issues like their competencies, strategic transformations, customer-focused service and eco friendly activities. UPS in brief UPS is a process based firm and it was founded in the year 1907 in Seattle, Washington. It is basically a package delivery company headquartered in Sandy Springs, Georgia, United States. UPS is well known for its brown cars. It also operates its own airline. The essential part of it is that it provides the product as its process. UPS is the leader in freight services as well as in supply chain; in addition to that they are the largest package delivery company in the world. They supply around 3.8 billion packages annually across 200 countries and territories. The company is also the global leader in the logistics segment. UPS provides the most fuel-efficient logistics networks in the world, by mitigating the carbon footprint indirectly. They provide services, expertise, consulting support and also the products to green the supply chains of their own. In the year 2010, each day the company used to deliver more than 15.6 million packages to a minimum of 1.1 million customers per day which represents approximately 2% percent of GDP. They offer high class integrated solutions to mitigate the challenges faced in the globalization (Kumar, 2007, pp.5-11). Globalization and the UPS strike A report published in 1995 says that UPS undergone a significant change in their management and started to follow strategic market management through which they were on the front lines of competition. The company grew from a bicycle delivery service to a digitally coordinated corporation by using several strategies like ensuring maximum flexibility while cutting down the operational cost. It is quite evident that it was just because of the workers’ loyalty and commitment which made the company to stand high but the problems occurred when the higher authority started to enforce rules upon them. The workers found hardly any variation from the company’s stereotype rules. The injury rate in the organization was growing high and the workers didn’t find the place safe enough to work. Due to the implementation of several strategies in the globalization phase the company was getting high returns but still the workers didn’t get any benefit out of that and got frustrated. Hence, due to these several reasons they stand against the company for a strike in the year 1997 and challenged the globalization (Kumar, 2007, pp.5-11). Some approaches of being global Though the culture of UPS has been tested many times but still it is their core through which the company is standing sky high against the pressures from competitors. They did not mould into pressure even during the worst economic times. They took many initiatives and approached challenges. They created a centralized process group, which is known as Program Management Group-Process Center of Excellence by which they can propose the initiatives after which it is evaluated. After the evaluation it is well approved and then measured. This is an effort to redefine the Strategic Processes of the organization. It also ensures that the processes are documented. It also provides the training in design and process analysis. It is quite evident that to make the group effective it has to be centralized. In this way UPS became a process oriented company by making program and process work hand in hand. Significant changes or modifications cannot be done without any process creation so it seemed practical that Process and Project centers of excellence must be blended. To meet the needs and desires of the customers the company needs to change the processes through projects and so they implemented it. They chose the Modeler software to capture the processes in a more straightforward way. This is very useful as an analysis tool and user friendly for the process of consumption. Later on, this software did not support the product but they used it by buying the source code. After that they evaluated the Nimbus Control software for additional benefits like better governance and data centralization. Though the process management didn’t make a huge change of their process but the implementation of the new technology helped them to expand into those areas, which were cost prohibitive for them to change on their past days. UPS always try to keep track on what other companies are practicing so that they can follow better trends in order to sustain in the market. They always try to improve their process through close monitoring. Through their involvement with APQC they are trying to validate their methodology and wanted to gain a better understanding on how this process management can impact the bottom-line of the company. They try to grow by venturing into new geographies as a result they operate over 200 countries in the world. They also expanded their services and increased process to meet the challenges of globalization. UPS made a partnership with Ogilvy & Mather to create an advertising campaign. The commercials were made in four languages such as: Spanish, Chinese, British and American. Through the commercials they launched a global message that in the logistics industry they are a powerful one. One of the important aspects of UPS is that they know logistics is not only about moving packages. It is more about how the products are integrated, the supply chain, multi-modal customer service and the integrated planning process (Wood, 2011, pp. 2-7). Hence, they are working upon it to beat the global challenges. There are some important issues, which they focused on. These are discussed below: Carbon Neutral Shipping Carbon neutral shipping is a concept offered by UPS. It is an attempt to reduce the carbon dioxide impact while maintaining sustainability at the same time. This company purchase certified carbon offsets in order to balance the emissions produced during the transportation process. They undertook many environment friendly projects like reforestation, destruction of methane, proper methods of wastewater treatment, and landfill gas destruction. Carbon neutral shipping helps to reduce the impact on the climate and is a type of commitment which they share with their customers and also motivate them to do the same. UPS launched this carbon neutral in 2009 in the U.S and made it international in the next year. This particular service which they are providing is getting popular in both U.S. and Europe, especially in retail and professional services (Delivering the World, 2009). Substitute for diesel In the year 2008, the diesel price was hiked by $5 dollar a barrel. So the company showed their interest in liquefied natural gas for their trucks. This could reduce the import of oils to more than one million barrels a day. Another estimate suggests that like diesel engines it don’t have to use the spark ignited engines and hence, it is more efficient. So they planned to add 48 L.N.G trucks on the highways. There will be a computer within that truck which will add the diesel fuel when the engine senses the need for lubrication. Hence, the diesel consumption reduced by 95%. UPS implemented many vehicles which can run by using propane, hydrogen fuel cells etc. The company also started their age old practices of bicycle carrier delivery to meet its demand during holidays (Delivering the World, 2009). Healthcare Supply Chain UPS has shaped the infrastructure of logistics to support healthcare industry by developing new remedies like delivering the prescriptions to doctors and patients. The specialized invoicing systems and vehicles helped the healthcare industries to meet their needs much better than ever. UPS extended their support to the healthcare industry in 2009. They started this with new state-of-the-art facilities in Puerto Rico and Netherlands. These facilities are vital for the healthcare industry. The reason is that increasing the speed of delivery is not enough because the end users as well as regulatory authorities need strict temperature control and chain of custody not only to ensure quality but also reliability. UPS chose those facilities near the cluster of healthcare companies to maintain an efficient distribution channel for the customers. Through these facilities the customers also get the cost benefit (Delivering the World, 2009, pp. 8-14). Acquisition of TNT Express at a cost of $6.8 billion UPS acquired a Dutch shipping company called TNT Express which is the largest acquisition in its 105 year history. This acquisition will enhance their integrated global network and make them a global leader in logistics industry. Both the companies would complement the strength of each other to become a leader in customer service and transportation technology. The deal would help UPS to enhance their reach in the European market by expanding their express capabilities. Through this the company also deepens their position in the fast growing regions like Asia pacific and Latin America. The culmination of two strong management bodies would also increase their operational excellence and help them to focus more on customer service (United Parcel Service and TNT Express to create a global leader in the logistics industry, 2012). Shift of strategy from push to pull-oriented business model The company started to follow the pull model instead of push strategy. The new customer driven pull model is not linear like the previous one. With this implementation the supply chain became more efficient because the customers now directly involve in the supply chain activities and have their voice in the functioning of that system. Through the pull strategy the customers are better informed with the products. The company also gets benefit out of it because they have to maintain low inventory and better aligned the products to customer needs which ultimately results to low costs. So through this strategy UPS gets better customer response globally and made their supply chain much more efficient. Spending on information technology and using the internet to match the global competition The company created an atmosphere by which they can directly connect millions of customers. They rolled out new e-commerce services based upon which they connect with the customer’s mainframe to manage the fulfillment, production cycles, payables etc. The motive is to involve the customers directly into the supply chain. With this new facility the customers can track up to 100 packages at a time. The company is getting high returns out of it and if the customers started to use UPS online services then their shipment would increase by 20%. UPS earns half the volume of business from the customers who are electronically connected. They launched their website in 1994 and enhanced it with some practical tools through which they get more than one million hits a day. Website makes UPS much more popular across the world and it also plays a huge role on their brand evaluation program (United Parcel Service and TNT Express to create a global leader in the logistics industry, n. d., pp. 5-11) Recommendations It has been observed that UPS focused highly on process to meet the global challenges but there is a huge risk involved in it. Venturing into new countries means they have to habituate with various languages and the country’s rules and regulations. To cope up with those situation process variations will crop up, which leads to inefficiency and cost. To grow internationally without losing the profitability means they have to focus deeply and analyze properly on the business process. They must know the local demands in order to prosper on that particular region. Like APQC they should tie up with other external organizations to increase the efficiency of their process. The most important aspect of any organization is the human resource. UPS should always try to keep the employees and workers happy by providing company benefits. Previously in this topic we have seen that the workers got frustrated by the company’s pressure and behavior and went on to a strike. If this is the situation then the company will lose faith and it may hamper on their profit margin. UPS as an organization should think of giving something back to the society. They can arrange some literacy programs by opening schools for the poor children and invest on NGO’S. Conclusions UPS is a global company, which grew from a small-package. UPS is the leading logistics firm for a long period of time. So far they integrated the latest technology by which they became the cost leader in the logistics industry. The shipping and consulting services of UPS are so trustworthy that both Consumers and business house rely upon them. The UPS Foundation has promised around US$1 million to micro lending organizations across the world. They made grants to the organizations so as to promote literacy, social, economic development of young female. UPS is among the few organizations in the world that is penetrated deeply into local economies. UPS is the organization who believes that social and economic progress cannot be done without globalization. Illiteracy became a tremendous barrier for economic empowerment especially for women. Thus they provide grants to promote literacy of women. UPS as a global organization always involves in creativity and innovation to manage the impact on environment (Company Spotlight United Parcel Service Foundation, 2009). References Company Spotlight United Parcel Service Foundation, (2009), retrieved on August 11th, 2012 from: http://www.thefundraisingjournal.com/Archive/0909-1/UPSFoundation.html Delivering the World, (2009), retrieved on August 11th, 2012, from, http://www.sustainability.ups.com/community/Static%20Files/sustainability/UPS_V27_0718_300dpi_rgb.pdf Kumar, D, (2007). Outside the Box: Corporate Media, Globalization, and the UPS Strike. University of Illinois Press United Parcel Service and TNT Express to create a global leader in the logistics industry, (2012), retrieved on August 11th ,2012 from, http://www.tnt.com/corporate/en/data/press/2012/03/UPS_and_TNT_to_create_a_global_leader_in_the_logistics_industry.html United Parcel Service and TNT Express to create a global leader in the logistics industry, (n.d.), retrieved on August 11th 2012 from, http://pressroom.ups.com/Press+Releases/Archive/2012/Q1/United+Parcel+Service+and+TNT+Express+to+Create+a+Global+Leader+in+the+Logistics+Industry Wood, D, (2011), UPS Case Study: Inside Out, retrieved on August 11th, 2012 from, http://www.bptrends.com/publicationfiles/09-06-2011%20CS-UPS%20Case%20Study-Dawson%20Wood.pdf Read More