UPS Review
Running Head: UNITED PARCEL SERVICE
Review of United Parcel Service
By
Perry T. Patterson
Submitted to
Dr. Richard D. Manning
Nova Southeastern University
Graduate School of Computer and Information Sciences
Master of Management Information Systems
Electronic Commerce on the Internet
Fall 2002
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UPS Review
Table of Contents
Abstract
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History
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Future ………………………………….……………………………….…
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UPS.com Site Information …………..…………………………………………
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Early Years
Growth to Nationwide Carrier
Corporate Information and Financial Evaluation
Shipping and Tracking
E-Business Solutions
Electronic Data Interchange (EDI)
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Conclusion ….....…………………………………………………………………..
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References …………………………………………………………………….…..
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Shipping Systems
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Abstract
Founded almost 100 years ago as a small messenger service, United Parcel Service (UPS) has
prided itself on early adaptation of technology to enhance their efficiencies and services. UPS is
now the largest package carrier in the world and has grown with such technological advances as
the car, airplanes, computers and now the Internet. UPS is continuously a leader in technology,
while never loosing focus on the ultimate goal of customer satisfaction.
UPS is a financially stable organization that has watched its stock value rise despite difficult
times. They have done this while advancing their community involvement and demonstrating
their social responsibility. Combined with their technological savvy, UPS appears to be an
excellent organization that should continue to prosper in the years to come.
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History
Early Years
United Parcel Service began as a small messenger service in Seattle, Washington in 1907.
Founder James E. (“Jim”) Casey built what was initially American Messenger Company by
focusing on some basic principles: “customer courtesy, reliability, round-the-clock service and
low rates” (UPS Company History, 1907-1929). Deliveries in the early days were done on foot
or by bicycle.
In 1913 UPS began to shift its focus from messages and restaurant deliveries to packages
for retailers. They were one of the first companies to use an automobile in their operations,
purchasing a Model T Ford. They also developed what they termed “consolidated delivery”.
This was a planning mechanism where all packages for an area in Seattle were loaded onto one
vehicle. Instead of delivering each package individually, they could take all the packages
together saving tremendous time and resources. This was one of the early signs that UPS would
be at the forefront of new concepts and technologies.
In the 1920’s UPS began it initial expansion and settled on the name United Parcel
Service. They were “United” as companies were merged from Seattle, Washington, Oakland,
California and Los Angeles, California. “Service” was deemed their ultimate focus. During this
time they pioneered such services as scheduled daily pickups, C.O.D. payments direct to UPS
and multiple delivery attempts. They also installed the first conveyor belt system for package
handling.
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Growth to Nationwide Carrier
UPS grew on a steady pace for the next 50 years surviving through hardships such as The
Great Depression, World War II and regulations that pitted them against the United States Postal
Service. While they were the first company to use air service for packages in 1929, this short
lived experiment was brought back in the 1950’s by partnering with passenger airlines to carry
packages in available cargo spaces. UPS also fought hard against various state and federal
regulations and expanded to be the first company to service each of the 48 contiguous states.
Starting in 1975, they could now ship from coast to coast.
1988 brought about the creation of UPS Airlines which quickly became one of the 10
largest airlines in the United States. Information Technology was now becoming a major focus
at the company. They developed systems for optimizing package management, flight schedules
and payloads. They capitalized on technology to expand to over 185 countries and territories
throughout the world.
UPS continued to expand on technology to manage their incredible growth through the
1990’s. Drivers carried handheld devices for noting package deliveries and recording signatures,
a global electronic data communications network, called UPSnet, was put into place and in 1994
they launched www.ups.com. Customers soon were able to track all progress of their packages,
door to door, on-line. Eventually they formed UPS Logistics Group, an enterprise that levered
the technologies and techniques learned throughout their decades of experience.
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Future
UPS will continue to grow and prosper as they are always looking for change and
advancement. When Chairman and CEO Michael L. Eskew was asked this year how he saw
UPS evolving, he replied:
There are three dynamics to which we're adapting. The first is globalization. When I
started here, we were in 37 states and had $1 billion in revenues. Now, we're doing
business in 200 countries and have $30 billion in revenues. The second is changing
consumer needs: researching what they want, when, and how much they're willing to pay
for it. The final area is speed. Our customers want to do things quickly, so we're trying to
be as fast to market as possible. (Business Week, June 3, 2002)
UPS.com Site Information
UPS.com has recently launched an updated version of their Web Site. Initially launched
in 1994, UPS.com is ever changing. The latest version now has a new Global Home page and a
new UPS Corporate site. The goal seems to be to better server in the international marketplace.
They have their site in many languages, which the user selects by country.
UPS.com has a tremendous amount of relevant information available to corporations and
consumers. The information available can be broken down into a few groups; corporate
information, package shipment service offerings and customer service. UPS has made a
considerable effort to provide virtually all the information someone needs about UPS on the
UPS.com web site.
UPS.com is running Netscape-Enterprise/6.0 on several Sun Solaris 8 servers, as noted
by Netcraft (http://uptime.netcraft.com). UPS is a self hosted site running out of Mahwah, New
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Jersey. Some functions, such as those related to package shipping, require a secure login via the
My UPS.com. Signup is quick and easy.
Corporate Information and Financial Evaluation
UPS provides typical and interesting information related to their company. Keeping with
a well organized site, they have the corporate information divided into a few clear segments.
UPS corporate sections are for information and press releases about UPS, job listings, investor
releases and community relations. Within these sections UPS posts news, company events, and
information about their NASCAR sponsorship, awards, executive information and the company
history. The information found was extremely useful in the creation of this paper.
Essentially these sections are used to tell of the great value of UPS as a company and use
it to recruit new people. We learn that UPS was named one of the "50 Best Companies for
Minorities" by Fortune Magazine and one of “America’s Most Generous Companies” by Worth
Magazine. They also have pages describing the UPS Foundation, an organization whose mission
statement is “To act as a catalyst that promotes volunteer opportunities and provides support for
education and urgent human needs through focused, funded initiatives” (UPS Company
Crossroads).
United Parcel Service (symbol UPS) seems to be doing very well at this time. While the
DOW JONES INDUSTRIAL AVERAGE had been down almost 20% for the past year, UPS is
currently trading 20% higher than a year ago. They have an Operating Margin of 12.76% and a
Profit Margin of 7.67%.
UPS did not always have such good fortune. Its stock price opened at $65 in November
of 1999 but saw its stock dip below $50 in September, 2001. Like many companies, UPS
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seemed to take a hit to its stock after the terrible events of September 11, 2001. Fortunately, they
have recovered well over the last year. The UPS.com site does provide access to a wealth of
information including all SEC filings, financial data and Annual Reports dating back to 1999.
Everything a prospective investor would like to learn is readily available for analysis. With all
the recent corporate scandals, UPS appears to be very forthcoming with their financial
information.
UPS also posts a very clear statement of its existence. They list statements detailing their
values, purpose, mission and strategy. My personal favorite of their values is “We believe that
innovation fortifies our organization through the discovery of new opportunities to serve our
people and our customers (UPS Governance).”
In addition to profitability and social responsibility, UPS also can boast about business
and technical excellence. Samplings of awards for the year 2001 are inclusion in the CIO
Magazine’s Web Business 50, ranking 7th on the InfoWorld 100 and being named to Forbes
magazine’s Platinum 400.
Shipping and Tracking
UPS puts a great number of tools at the hands of companies and individuals. By putting
tools in the hands of the consumers, UPS has saved a tremendous amount in customer service
expense. Instead of a call to a service rep to arrange a pickup, the consumer can schedule this
on-line. Instead of a clerk hand printing a shipping label, the consumer can print this themself.
The label will even include the special bar coding UPS requires for managing the movement of
the package throughout its vast package processing network. The features are very helpful for
small businesses and non-routine deliveries.
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Another key function for the UPS.com web site is package tracking. This is an
invaluable tool for corporations. From personal experience, countless false claims have been
discounted due to the point-to-point tracking available. No longer can a client claim they did not
receive a package. With UPS.com, you can pull up proof of delivery in a flash. You can even
tell the client who signed for the package and when. This is effective for small and large
businesses alike.
Other support features for shipping include rate and transit time calculators. This allows
a small business to determine the charges and time that will be incurred for the delivery of a
package. Supplies can also be ordered on-line, again at a convenience to both the consumer and
UPS itself. A recurring theme for the UPS website seems to be power to the customer and
reduced resources required by UPS.
E-Business Solutions
UPS makes available a number of systems and services that are designed for their larger
clientele. UPS allows customers to use special software applications to directly connect to UPS
via the Internet. A key advantage for retailers is that they can integrate their own systems with
the UPS systems for seamless package management.
Electronic Data Interchange (EDI)
A company can have a system that weighs a package, notes the ship address information
from its own files and calculates the shipping based on negotiated rates. At the end of a business
day a shipping manifest is created and then electronically transmitted to UPS. UPS loads this
information into their systems and the tracking information is available for viewing on-line via
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UPS.com. This often happens even before UPS has started processing the package! A company
with any significant volume of packages can save a lot of time by not manually creating shipping
labels and entering the information on UPS.com.
Shipment status information is also available via electronic transfer. Companies can
download a daily or hourly file of all package movement which can be loaded into that
company’s backend systems. Once loaded, the company can reconcile all shipments to verify
they were completed as directed. The company can merge this data with other details about an
order for one of their clients to give that client information on an order. The company’s client
can then see details about their order and the order shipment, all on one place. In this way, UPS
is helping companies improve their customer service and ability to minimize staff with their online solutions.
Shipping Systems
Many companies ship large volumes of packages which merit them special rates and
services from UPS. Even though the companies may be larger, they still may not have the
resources available to manage and maintain fancy shipping and manifest system. UPS partners
with companies to provide the appropriate systems. UPS will typically do this for their large
clients at little to no cost. UPS views these systems as a service that works to “lock in” a large
customer’s shipping business.
The UPS Customer Technology Program provides discounts on brand name PCs, such as
DELL®, COMPAQ and IBM along with all of the software necessary to create shipping labels
and electronic manifests. The systems come ready to use and typically require minimal training
and support. UPS will also integrate the UPS OnLine WorldShip software with a companies
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back end. This is another way in which UPS is providing a technological solution to its clients to
save clients time and money, while providing improved services.
UPS also works with a large number of third part software and hardware companies to
integrate custom shipping solutions into warehouse automation systems. An example, a client
using a custom system would be Alliance Entertainment Corporation (AEC) located in Coral
Springs, FL. AEC (www.aent.com) is the largest independent distributor of pre-recorded
entertainment products, such as CDs and DVDs, in the United States.
AEC uses systems from Manhattan Associates (http://www.manh.com) to manage a
paperless pick, pack and ship for orders to hundreds of retailers on a daily basis. Manhattan
Associates had already integrated their systems with UPS eliminating the need for AEC to
acquire the systems or software necessary for electronic data interchange. As packages cross the
in-line scales and are scanned for identification, labels are created and applied by machines. The
shipping data is then formatted and available for transmission to UPS on regularly scheduled
intervals.
According to Brian Wofford, Vice President of Electronic Data Interchange for AEC,
“UPS e-Logistics solutions have allowed AEC to technologically advance its Supply Chain
Management by automating our shipping and manifesting process and providing real-time
information to AEC’s internal business units and their customers.”
Conclusion
While many companies have come and gone with the boom and bust of the “Dot Com”
economy of the last five years, UPS has continued to prosper. Between 1997 and 2002, Forrester
Research (as cited in Forbes Magazine, 2002) estimates that on-line sales have grown from $2.4
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billion to $72.1. According to Davide Dukcevich of Forbes Magazine, UPS “delivers
approximately 55% of all goods purchased on the Web”. While many of the names have
changed, UPS secured the package business of Amazon.com, one of the sustaining brands over
that time. UPS does not try to sell products directly over the Internet in the sense of an Amazon
or Wal-Mart. Instead, they service these companies.
It has been said that the people who made money during the California gold rush weren't
the miners who found precious nuggets, but the merchants who sold them their pants. The
heirs of Levi Strauss, who have populated the Forbes 400 list of the richest Americans
over the years, attest to that. (Dukcevich, 2002)
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References
UPS Company History, 1907-1929. (n.d.) Retrieved November 2, 2002, from
http://www.ups.com/content/corp/about/history/1929.html
UPS Company History, 1930-1980. (n.d.) Retrieved November 2, 2002, from
http://www.ups.com/content/corp/about/history/1980.html
UPS Company History, 1981-1990. (n.d.) Retrieved November 2, 2002, from
http://www.ups.com/content/corp/about/history/1990.html
UPS Company History, 1991-1999. (n.d.) Retrieved November 3, 2002, from
http://www.ups.com/content/corp/about/history/1999.html
UPS Community Crossroads. (n.d.) Retrieved November 3, 2002, from
http://www.community.ups.com/
UPS Governance. (n.d.) Retrieved November 6, 2002, from
http://www.shareholder.com/ups/corpgov.cfm
Dukcevich, Davide (October, 10, 2002) UPS: Net Profit. FORBES,
http://www.forbes.com/2002/10/10/1010ups.html
Industry Insider, (June 3, 2002) Q&A: The Man Who's Repackaging UPS. Business Week,
http://www.businessweek.com/@@9y5j@4YQjONkuw4A/magazine/content/02_22/b3785
043.htm