United Parcel Services (UPS) Competitive Advantage

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Table of Contents

Executive Summary
Introduction
Conclusion
References

Executive Summary

The report contains the internal and external business factors affecting United Parcel Services (UPS). It also discusses the benefits of e-commerce, a detailed plan for the UPS e-strategy. It assesses the resources required to implement the UPS e-strategy and develops a schedule for this purpose.

The report identifies business systems that will be affected by the implementation of an e-strategy and narrates how one would conduct and implement an e-strategy at UPS. The report concludes that e-strategy is beneficial to a business as it creates competitive advantage.

Through e-strategy, a business is able to reduce its operation costs as well as time. This way, it is able to attract more customers as compared to its competitors. It also recommends that businesses should adopt e-strategy in order to take advantage of its benefits. This assignment introduces e-strategy in UPS, its benefits and strategies for implementing it.

Introduction

E-business is the use of technology by firms or companies to carry out business activities, share information and retain healthy relationships (Remenyi, 2004, p. 37). United Parcel Services (UPS) originated in 1907 in a closet-sized office. It was started by Jim Casey and Claude Ryan both from Seattle. The two dedicated the business to offer the greatest services at the lowest rates.

Using this strategy for over 100 years, UPS has managed to become the leading ground and air package transport company. It is an international organization with more than 408,000 employees and 96,000 vehicles.

UPS delivers over 15 million packages and documents daily in the US and in over 200 foreign countries. It has invested heavily in technology therefore helping it to achieve a competitive advantage over the other market players (Laudon & Laudon 2011).

Analyses of the business factors, internal and external to UPS that dictate the requirement for an e-strategy

Internal business factors are the issues that affect business from within while external business factors affect business from without. One internal business factor is cost minimization. UPS aims to maintain good customer relations by delivery of packages at the lowest possible costs. This necessitates the company to use of scannable bar-coded labels to efficiently deliver the products to consumers.

The other internal factor that dictates the requirement of an e-strategy is time and cost efficiency and management. By use of Delivery Information Acquisition Device (DIAD), drivers are able to download their routes for a particular day.

The routes selected by the system are efficient in order to reduce delivery time. The drivers also use “340 Methods” in order to optimize the performance of every duty. This way time and cost of loading packages in to a track and delivering them are reduced (Laudon & Laudon 2011).

External factors that dictate requirement of e-strategy is competition from similar market players. UPS has been facing competition from FedEx and Airborne Express. In order to beat this competition, it has been necessary to advance its technology by using scannable bar codes. This has helped to monitor and speed up delivery of packages therefore maintaining a competitive advantage amidst competition.

The other external factor is technological change. Technology changes and advances with time. Once it is outdated, it may not be efficient and effective to rely on. UPS has been innovative enough to keep up with technological demands and changes.

For instance, it launched a web site where customers can access delivery information, place orders, track packages and print labels. Launch of The Post-Sales Order Management System (OMS) has also helped to manage international service orders and inventory. This updated technology has helped UPS to maintain quality and minimize costs of its services (Laudon & Laudon 2011).

Benefits e-commerce can offer UPS, together with the reasons why e-commerce is an activity worth developing

E-commerce is beneficial to UPS because it reduces costs of delivering packages. By use of scannable bar codes, information about the destination and delivery time of a package can be determined. Afterwards, the information is transmitted to UPS’s computer centers where it is sent to the nearest distribution center. Special software is used to develop the optimum route for each driver.

This way, fewer costs are incurred during transit. Additionally, E-commerce enables UPS to outsource its services to other companies therefore increasing revenue. For instance, it created a Supply Chain Solutions division which provides supply chain plan and management, mail delivery, logistics and financial services. One of the beneficiaries of these services is Servalite which manufactures fasteners.

The ability to outsource has improved overall performance of UPS. E-commerce has enabled UPS to reduce delivery time. Since there is software that can determine the best delivery route in terms of traffic, weather and location, then the time consumed during transportation is reduced. This way, more packages can be delivered at a particular day. The result is increased performance.

The other reason why E-commerce is worth developing is because it is less risky or safer. By use of bar codes, information about a product can be delivered to the central computers where it is monitored all the way to its destination. This way, chances of a package being lost or stolen while on transit are very few because every process is tracked and recorded (Laudon & Laudon 2011).

Assume that you are the Chief Information Officer for UPS

Produce a plan for the UPS e-strategy. The plan needs to be detailed, with SMART objectives, and specify the nature of the technical infrastructure that an e-strategy implies. Develop a plan for an e-strategy that ensures an organization retains its competitive advantage in a global market

Plan for the UPS e-strategy

Objectives: The goal or aim of UPS is to meet consumer needs by of delivering their packages on time and at the lowest rate possible. In order to do this, UPS should identify the most recent technology available, assess its viability, test it and finally implement it.

Nature of the technical infrastructure that an e-strategy implies: There is need to develop a technical infrastructure which can assist in achieving UPS’s goal. This involves the introduction of hardware, software and telecommunication devices. The hardware devices are the monitors, CPU’s and external features of the computers that are needed for use in automating delivery services.

On the other hand, software devices are the resources used to create websites, decode bar code information and develop Supply Chain Solutions system. The telecommunication devices on the other hand are mobile handsets, websites, e-mails and advertisements. These are necessary in order to facilitate communication between UPS and the customers.

E-strategy that ensures an organization retains its competitive advantage in a global market: In order for UPS to achieve a competitive advantage internationally, it should implement differentiation of its products. These are the activities to be carried out to improve the quality of a product (Porter & Millar 1985).

This can be done by improving packaging quality, introducing a complaint section in their website, or a free toll number where queries and complaints can be forwarded free of charge. With these factors in place, it is possible for UPS to deliver quality services according to consumer requirements. Additionally, it should aim at offering the lowest market prices always (cost advantage).

It can do this by computerizing its routes so that it can determine the most efficient routes to deliver its packages. Efficient route is that which requires the least time to maneuver. With effective differentiation and cost advantage, it is possible to keep up with competition (Laudon & Laudon 2011).

Assess the resource requirements for implementing the e-strategy at UPS

In order to effectively implement e-strategy in UPS, it is necessary to have the following resources:

Internet services: These are necessary in order to be able to obtain information in the barcodes, schedule delivery routes, monitor movement of packages, run websites and supply chain systems. With internet resources, it is possible to implement the delivery of packages right from the source to the destination.

Technical infrastructure: These are the hardware and software resources which are used to schedule delivery, process delivery costs, time and monitor movement. These devices also include telecommunication devices such as e-mails required to maintain the flow of information between UPS, drivers and customers.

Management Systems: They are used to assist in processing of orders, costs and optimizing the delivery routes. For instance, Post-Sales Order Management System (OMS) is used globally to manage UPS orders and monitor inventory requirements.

Additionally, the UPS Supply Chain Solutions system is outsourced to other companies in order to provide standardized services at a cheaper cost than if they had to build their own. It also offers services in customs brokerage, multimodal transport among others.

Develop a schedule for implementing the e-strategy at UPS

Obtain customer information (the name, destination and arrival time): This process involves obtaining information necessary to identify a customer and his or her residence.

Develop a scannable bar-coded label with the customer’s information: This label can be obtained by the customer over UPS website. It carries the customer’s name, address or package destination and arrival time.

Transfer the data on the bar coded label to UPS’s computer centers: The information about the customer is then forwarded to the computer centers located in New Jersey or in Georgia. These centers are able to coordinate all the information and dispatch it to the distribution centers.

Send this information to the distribution center closest to the final target of the package. Customer details are sent to the center nearest to the customer. This helps to reduce transport costs and time.

Distributors then obtain the data on the label and decide the optimal delivery route: They rely on special software to decide the route that has the lowest traffic, best weather and the address of each customer.

The driver logs on to the Delivery Information Acquisition Device (DIAD) device to know the delivery route: DIAD can obtain the wireless networks used by cell phones. When the driver logs on to the device, he obtains customer’s signature and delivery details.

The package delivery is tracked and recorded by the UPS computer network until its final destination: Package information is then sent to UPS computer network where it is stored and processed. The delivery information is available worldwide as evidence of delivery. This information can be used as proof of delivery in case of any future queries.

Questions: In case there are any questions or clarifications raised by the customers, the customer service department is able to respond to them on a timely basis.

Identify the business systems that will be affected by the implementation of an e-strategy and assess how they can be adapted to accommodate the requirements of the strategy. Include the consideration of the systems that need re-engineering and those that need only their interfaces modified.

Changing focus from business technology to performance of businesses is a difficult task. However, there is value in portraying the value of IT in business (Overby 2011). E-business affects almost all activities of business. These are:

Customer to community integration: With introduction of e-strategy, it becomes challenging for customers to interact with the community. This is given that some communities have no idea what internet is (Reiss 2001). This can need reengineering of the system in order to take care of the different cultures.

Customer to customer integration: E-strategy affects communication between customers because of language barriers. This requires introduction of interfaces which assist in interpretation of different languages (Reiss 2001).

Business to business systems: Operations between businesses are affected by e-strategy because there are barriers such as different currencies and trade laws. Since different countries use different currencies and follow different laws, it becomes difficult to freely conduct online business (Pope & Brown 2012).

Describe, in a narrative, how you would implement and carry out an e-strategy at UPS

An e-strategy should deliver customer’s packages on time and at the lowest cost possible. The process should start with establishment of technical infrastructure. These are the soft wares, hard wares and telecommunication devices. The soft wares are the systems used to establish UPS websites.

When the website is established, the customer can obtain routes, expected costs, delivery time, print labels, schedule a pickup and then track the packages. The hard wares are later located at the UPS centers in New Jersey and Georgia. The hard wares are the monitors, the CPUs which support the operations of the soft ware devices.

At the UPS center, the customer information can be assessed to determine the nearest distribution center. At the distribution center, special soft wares are used to determine the optimal delivery route in consideration to weather, traffic and the customer location. The driver then logs on to a hard ware device called DIAD and obtains the customer and destination details.

This device can also function as a communication device as it dispatches delivery details to the UPS computer center. The internet, technical and management systems are necessary in order to ensure that information flows from the website, to the UPS computer center and then to the post-Sales Order Management System.

The information should then be provided on the UPS website so that the customer can monitor the delivery process. In case of any rerouting, it should be communicated effectively among the driver, the customer and UPS (Laudon & Laudon 2011).

Develop processes to monitor the implementation of an e-strategy at UPS

In order to monitor or supervise the implementation of an e-strategy at UPS, it is important to carry out the following procedures:

Create an UPS website: This is necessary in order to enable the customers to check delivery routes, determine transport time, print labels, plan pickup and monitor packages.

Establish a warehouse: This is necessary in order to store the packages that are yet to be delivered to their respective destinations. It is also necessary in order to store unclaimed packages.

Create computer center or network: This is necessary in order to monitor the transport of packages, an allocation of transport to the nearest distribution centers and storage of delivery information.

Establish distribution centers: These can be situated in major cities and town centers. They should be convenient for any given customer in order to reduce costs and time.

Create DIADs for drivers to logon in order to obtain customer information. The DIAD information should be linked directly with the UPS computer network in order to monitor and record the delivery process (Laudon & Laudon 2011).

Assess how an e-strategy contributes to ensure an UPS’s competitive advantage in a global market

E-strategy enables UPS to reduce costs of operation and time spent during these processes. For instance, when consumers use the UPS website to schedule pickups and print labels they save time instead of having to travel to UPS offices for such services. The use of sophisticated soft wares enables UPS to schedule delivery routes that are most efficient while at the same time considering whether, traffic and stop location.

Additionally, UPS uses management systems such as Post-Sales Order Management System (OMS). Such a system manages international orders and stock therefore reducing costs of doing manual orders. As a result of these systems, UPS is able to offer affordable products to its customers. There is reduction in delays therefore making the customers to feel that UPS’s services are reliable.

This leads to a competitive advantage over the other market players like Airborne Express and FedEx. UPS also manages inventory delivery of other companies like Servalite. For instance, it created a logistics plan for the company in order to reduce shipping time and merge inventory.

This way, UPS is able to raise its sources of revenue and as a result, it can be able to reduce its service costs with less impact on its general performance. This is competitive since the other market players do not have similar strategies (Laudon & Laudon 2011).

Conclusion

UPS is a package delivery company that has invested a lot in technology in order to beat competition in the market. Its competitors are FedEx and Airborne Express. It does this by issuing its drivers with DIAD in order to enable them to know the routes they are supposed to follow. They also use management systems which assist in management of orders.

E- strategy can be beneficial to businesses as it reduces costs and time therefore creating a competitive advantage. However, it can be disadvantageous because there are some barriers in online trading. UPS has benefited from e-strategy, and therefore the same strategy can work for many other companies.

Although technology has its disadvantages, I would recommend that businesses should adopt it as it has more advantages than disadvantages.

References

Laudon, K & Laudon, J 2011, Management Information Systems: Managing the Digital Firm, Prentice Hall, New Jersey.

Overby, S 2011, IT Value Is Dead, Long Live Business Value. Web.

Pope, A & Brown, G 2012, Business-to-Business ‘e’ Strategy. Web.

Porter, M & Millar, V 1985, ‘How information gives you competitive advantage’, Harvard Business Review, vol. 63 no. 4, pp. 149-160.

Reiss, M 2001, E-Business: Basics and Challenges. Web.

Remenyi, D 2004, Proceedings of the 11^th European Conference on Information Technology Evaluation, Academic Conferences Limited, London.

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