The Background To UPS Commerce Essay Example

service, honesty, reliability, round-the-clock availability, and affordable prices. These principles remain integral to UPS today and are reflected in their motto: "the best service, the lowest price" (Simon, 2006). By 1918, three major department stores in Seattle became regular customers of UPS. As the company expanded further, they developed their own delivery vehicles and transformed into a parcel delivery service for merchants. In 1919, they made their first expansion beyond Seattle and reached Oakland California while changing their name to "United Parcel Service company." In 1924, UPS introduced the first conveyor belt system for packages through a common bearer service initially limited to Los Angeles but eventually expanding within approximately a radius of 125 miles from the city center by 1927.During this period, UPS also expanded its retail delivery service to major cities on the Pacific coast of the United States. Despite the decline in retail delivery business caused by World War II and the encouragement for customers to bring their own packages, UPS continued to grow. In the 1950s, managers expanded services to cities without authorization from the State Commerce Commission and ICC. Chicago became the first city outside of California to receive common bearer service in 1953.

In 1929, UPS was the first package delivery company to offer air transportation services through private airlines. However, this service was later discontinued due partially to factors like the Great Depression. From 1953 onwards, UPS offered air cargo and package services on regularly scheduled airline flights through their aircraft loading hold. According to the Form 10-K report of 2010, "UPS Blue label air" grew and became available in all states including Alaska and Hawaii.

UPS's revenues are divided

based on regions and modes of transportation. The US accounts for 89% of total revenue while European and Asian operations account for 11%. Domestic ground transportation makes up 54% of revenue followed by domestic air transportation at 19%, domestic delayed transportation at 10%, and non-package transportation at 4%.UPS acquired logistics companies owned by Fritz Group and a California-based logistics business in January 2001 using $433 million worth of new shares issuance. This acquisition allowed UPS to grow and become a larger transportation group. As part of their expansion, on November 28, 2000, UPS increased its global flights from three times a week to five times a week to handle the growing number of international transportation operations. This resulted in a daily volume increase of 200,000 pounds of goods transported on this route. In the United States, UPS is known for its Brown trucks that are synonymous with package delivery. These vehicles and uniforms are colored in "Pu-Brown," which matches the company's branding. In order to provide better service coverage, UPS expanded its territory in 1975 to include Montana, Utah Arizona parts of Idaho and Nevada. This expansion allowed UPS to cover every address in the contiguous 48 states, making it the first company to achieve this milestone known as the "Golden Nexus." Additionally, in that same year (1975), UPS started offering international services in Toronto and added Germany as an operational location the following year. Throughout the 1980s, UPS continued expanding into various regions worldwide including Americas, Eastern Europe Western Europe Middle East Africa and Pacific coastline.
UPS began offering international air services between the United States and six European countries in 1985. In 1989, UPS

took advantage of Germany's increase in domestic air operations to make changes and establish new routes. To ensure reliable services, UPS created its own transit fleet, leading to UPS Airlines becoming one of FAA's fastest-growing airlines after a year of technical and support system preparations. Today, UPS Airlines is ranked among the top 10 airlines in the United States and utilizes advanced information systems like COMPASS for flight planning, scheduling, and load management. With these systems, UPS can plan flight schedules up to six years ahead of time. To maintain efficiency and offer new customer services at competitive prices, UPS has embraced various forms of technology, including their handheld information aggregator called DIAD. This device allows drivers to record real-time delivery information with digital images of the receiver's signature uploaded to the UPS website. Additionally, DIAD helps drivers stay connected with their central offices and navigate through traffic while on deliveries.On a larger scale, UPSnet is a global network used for electronic data communication that connects over 46 countries and 1300 UPS delivery stations worldwide. This efficient system tracks an impressive 821,000 packages every day. UPS has invested significantly in technology to improve operations and customer service. From 1986 to 1991, they invested $1.5 billion in technological advancements. Looking ahead, UPS plans to invest an even larger sum of $3.2 billion over the next five years with the goal of increasing efficiency and expanding services.

During the late 1990s, UPS underwent major changes by embracing new technologies and infrastructure while still prioritizing their core focus on distributing goods and associated information. While they have expanded their business focus to include a new service, UPS remains dedicated

to its expertise in transportation and package tracking. This positioning has established UPS as a global facilitator for businesses, covering logistics, information flow, and capital flow.

To achieve their vision for this new service, UPS has acquired existing companies and created new ones to explore innovative ways of meeting customer needs. By offering unique supply chain solutions, UPS helps clients enhance customer service and focus on their core competenciesUPS established the UPS logistics group in 1995 to offer customized global supply chain management solutions based on customer requirements. That same year, they acquired SonicAir and became the first company to provide next-day and overnight delivery services. In 1998, UPS created UPS Capital Corporation to provide financial products and services for business growth. Before 2011, their main focus was delivering packages worldwide within specific timeframes, but over time they expanded their offerings to include less than truckload transportation in the US and supply chain management. The company's operations are divided into three sections: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations (also known as UPS-SCS). This division includes forwarding and contract logistics operations as well as other related units like UPS Freight. With a presence in over 175 countries, this division offers various services such as global supply chain design and management, cargo forwarding and distribution, customs brokerage, mail services, and consulting. The Business Foundation acts as the central hub for UPS's network infrastructure where customers' packages are collected before being sent to the Operations Center and directed to the hub location.The text discusses how UPS operates its Parcel Network on a hub-and-spoke model, with various centers directing packages to hubs for

sorting. The air web of UPS also functions in a similar way, with air hubs located at airports for quick unloading, sorting, and reloading of aircraft. Centers send bundles to airport gateways which then forward them to an air hub for sorting and loading onto another plane bound for a final destination gateway and center. This constant transformative process is part of UPS's ongoing improvement and market expansion efforts. In the early 1990s, UPS recognized the need to adapt and identified a gap in the market for integrated supply chain management logistics. This realization led to UPS shifting from being solely a package delivery supplier to becoming a facilitator of global commerce. Through this transformation process, UPS positioned itself as a global commerce enabler by focusing on facilitating the flows of goods, information, and capital in commerce.The company acknowledges the significance of innovation and customer satisfaction in achieving its goals, as stated in its mission statement. To maintain a competitive edge, increase market share, and satisfy customers, UPS continuously adds value for clients, undergoes transformation to strengthen its leadership position, and invests in key markets and new opportunities. Despite competition from FedEx and DHL, UPS aims to continue growing by maximizing returns for shareholders and maintaining strong customer relationships. In the logistics industry where change is inevitable, staying ahead determines business success or failure. UPS aims to facilitate the three flows of commercialism by creating value for clients through analysis of internal competencies, expertise, external environment and customers' needs. Through this analysis, UPS leverages their capabilities and resources to provide more value for clients. This includes implementing solutions such as UPS My Choicea„?to empower customers

with greater control over their shipments, introducing cost-efficient methods for managing returns, and offering a range of mobile phone applications (UPS 2011). Additionally, UPS has expanded its offerings to include financial services like accelerated payment services, working capital, and commercial funding through UPS Capital (UPS 2011). Throughout its history, UPS has consistently utilized innovation and creativity to drive transformations within its business.The analysis of UPS's history reveals significant milestones that have influenced its transformations. These milestones, along with the needs of internal and external stakeholders, have greatly contributed to making UPS the successful global corporation it is today. Originally established as a small package delivery company in the United States, UPS now manages various logistics services worldwide, including financial operations, customs brokerage, cargo services, and their core package delivery function. From the start, their objective has always been to be acknowledged as the most reliable and cost-effective package delivery enterprise. To achieve this goal during the 1980s era when they aimed for further expansion and increased competitiveness in the market, UPS strategically invested millions of dollars into technology advancements for operational processes while also expanding their aircraft fleet. Today, UPS continues to invest in improved technology to remain competitive and offer exceptional customer service. In the 1990s, UPS encountered challenges in meeting package delivery demands across states either through their own services or competitors' offerings. They recognized that their company's growth would be linked to the US Gross Domestic Product and decided to explore alternative methods for expansion by becoming a global supply chain service provider through consensus reached within the organization.The success of these transformations can be attributed to the use of technology, strategy,

skills, and a holistic view of the organization. By leveraging technology, UPS effectively communicates with customers and partners to better anticipate and adapt to changing customer needs. Adjustments in their business model and strategy are common as businesses expand and evolve. Throughout its history, UPS has gone through various transformations where they revised their model and strategy to embrace these changes.

Initially operating under a push-oriented business model where manufacturers and suppliers held most power while keeping supply chain members isolated from end consumers; however, as the business landscape evolved this power shifted towards customers creating a customer-driven pull model. Recognizing this shift, UPS adjusted their business model accordingly.

UPS implemented a diversification strategy to expand their enterprise and incorporated various goals and policies to sustain their core business and plan for the future. They analyzed their external environments, including different markets and customers before another transformation. They identified a shift in the power balance between suppliers and customers.

In the past, most companies followed a push-oriented business model where suppliers built up inventory and pushed it to the market at specific times. This worked well when demand was predictable but became outdated with the rise of internet trading and e-commerce.In today's market, customers are more informed and have access to a wider range of suppliers. As a result, their expectations have increased and they now prefer to purchase products based on their own terms rather than those set by providers. This approach is referred to as the customer-driven pull model. Recognizing this shift, UPS adapted its business model to meet customer demands by shifting focus from reliability and efficiency to meeting customer needs. Furthermore, UPS has expanded

into new markets and introduced new services for company growth. These services not only benefit customers but also contribute to UPS' financial success. As a logistics service provider, UPS can improve customer financial positions through upgraded charging systems that expedite billing processes and reduce administrative costs. While available to all customers, these online resources are primarily designed for companies that ship large quantities of packages regularly. In terms of overall financial performance, UPS is in a strong position due to strategic investments and acquisitions since becoming publicly traded in 1999. However, like other global companies, UPS faced challenges during the 2008/2009 global financial crisis (GFC). In April 2009, after several months of decline, the stock price of UPS dropped below USD40 - similar to the decrease in the Dow Jones Industrial average at that time.
The financial results of UPS were influenced by the global economy rather than any specific fault on their part. As the global economy recovered, so did UPS's financial position. In 2011, their gross revenue reached an all-time high of over USD53 billion annually and their income increased from USD2.1 billion in 2009 to USD3.8 billion in 2011. These improved results followed the Global Financial Crisis (GFC) and benefited shareholders as well.

During this period, UPS's stock price also experienced significant growth, reaching just over USD73 in the fourth quarter of 2011, a 75% increase since 2008/2009. Dividends paid per share increased by 15% to reach USD2.08 during the same period.

Figures 1-4 illustrate changes from 2003-2011 that showcase how UPS's transformation initiatives led to global expansion and higher profits year after year. One key factor behind these positive outcomes has been UPS's utilization

of technology to provide financial benefits to customers and maintain competitive transportation costs.

Through integrating online tools into their services, such as package tracking and transportation payment options on their website, UPS has made it more convenient for customers to engage with them. These changes have contributed to expanding their customer base, generating higher revenue, and reducing operating costs.

As UPS continues its evolution, they will prioritize leveraging technology further in order to decrease costs and enhance profitability for continued success.The website of UPS provides detailed information on their commitment to sustainable logistics in the section titled "IV.Sustainable logistics at UPS". This commitment encompasses several aspects including transportation, storage, handling, and detention of goods. Sustainable development aims to satisfy current and future needs while also safeguarding the environment and natural resources. While closely related, sustainable development and environmental protection are not identical concepts. Environmental protection is an essential aspect of sustainable development that necessitates population control, improved population quality, preservation of the environment, and sustainable use of resources along with economic and social progress.

UPS has been incorporating environmental protection into its operations for over a century. In 1907, employees began utilizing bicycles or walking for deliveries before transitioning to electric cars in the 1930s. Presently, UPS employs various advanced alternative fuel vehicles and has made significant investments in technology and infrastructure to conserve energy across their transportation network. Furthermore, they offer carbon-neutral route optimization services, paperless billing options, and environmentally friendly packaging thanks to their advanced engineering capabilities. By integrating UPS packaging solutions into their processes, companies can fulfill their logistical requirements while simultaneously advancing sustainability objectives.UPS has streamlined the shipping process, customs clearance, execution, and settlement

automation to increase productivity and save costs. According to Scott Davis, UPS's President and CEO, responsible resource usage and a long-term vision will strengthen the company despite the economic crisis. To achieve sustainable development, UPS is expanding its international services and leveraging its expertise in global transit to attract new customers and suppliers. Regardless of clients' preference for low-cost options, UPS offers fast transportation solutions for cargo of any size. They also provide express services with early morning or end-of-day delivery choices. Most shipments have a delivery time of one to three days depending on their origin and destination. For non-urgent shipments, UPS offers reliable alternatives with clear delivery dates typically ranging from two to five days. This approach aims to impress customers positively and attract more clients in new markets for accelerated global growth. The company places significant emphasis on sustainable logistics, including employee well-being, occupational health and safety measures, labor-management relationships, as well as human rights considerations. With millions of packages delivered daily, UPS is committed to reducing its own CO2 emissions while supporting the concept of green logistics for sustainable development purposes.Green logistics focuses on reducing environmental pollution during transportation and ensuring sustainable resource utilization. To motivate employees, UPS can implement distribution policies based on performance, such as rewarding high-performing staff with increased income or promotions based on efficiency. However, fostering positive labor-management relationships is crucial. Regular communication between managers and staff is essential to understand their personal needs and challenges. Managers should provide support in overcoming difficulties and meeting demands, which will enhance employee motivation and benefit the company as a whole. Maintaining positive relationships between directors and employees is imperative

for the growth of a company, while negative relationships can gradually lead to stagnation or unproductiveness.