Two teenagers with only a hundred dollars launched United Parcel Service. It is the perfect example of ingenuity, hard work, and dedication to fulfill the American dream. Jim Casey 19, and Cloude Ryan 18, had one bike for the operation. Since there were no phones in the early 1900’s, telegraphs had to be delivered by hand (Hiskey 2010). The two saw the opportunity and focused on this to be their area of expertise. They also delivered lunch for office workers. After a few years, the two merged with a rival company known as the Merchants Parcel Delivery and in the process bought a few motorcycles and even cars.
After the merger, they decided to expand their business to delivering parcels for retail stores since telephones had become rather common. Anything that could be transported in a bike or a car was potential business. Their main competition was the U. S Postal Service. In 1918, they introduced the same day delivery system for department stores to home shoppers (Hiskey 2010). They also changed their name to the United Parcel Service to reflect the diversity of their enterprise. This business was the backbone of the business for the next three decades. They also diversified their delivery service outside of Seattle to California, New York, Washington, and 28 other states. To enable this broad operation, they ventured to air travel under the United Air Express Division.
This operation was cancelled in the great depression. Profits also reduced due to the surge of sales of automobiles since people could now deliver their own parcels. The blue label air service was reinstated in the 1970’s and deliveries would now be made out of the continent. By the end of the 1970’s, they were delivering parcels in all the 50 states and even some parts of Europe. In 1980, the company bought its own planes for their operation and profits grew to $190 million (Hiskey 2010). After this period, the company has continued to introduce new programs in their operation leading to increase of profits. To date, it has become a household name known for its competence and efficient delivery system with FedEx being its only completion.
Apart from consistency, technology has played a great role in UPS’s growth and expansion. To have an advantage over their competition, UPS has invested heavily in technology and it has led to increase in profits through costs cut and time saved. The most vital technology that UPS uses is the bar code scanning system. The powerful mainframe computer, a portable computing device, and the internet enable it (Goessl 2010). The bar code placed in a package indicates where the package is headed. Since machines and conveyer belts in the warehouse do most of the work, the machines scan the bar codes and direct the packages to their appropriate stations to be packed in the planes and shipped to their desired location. With the use of bar codes, the packages only take approximately thirteen minutes in inspection and other security checks in the warehouse.
Another technology that UPS has become heavily reliant on is the tracking technology. The logistics department introduced this system to enable customers have constant knowledge to the location of their package. Items that cannot make use of the standard device have a tracking fluid injected in the package. UPS constantly upload the location of parcels into their mainframe and that information is readily available to the customers. This technology gives the customers confidence in knowing the location of their parcels as well as prevent losses of packages for the company which would lead to massive losses (Goessl 2010).
DAID (Delivery Information Acquisition Device) is a handheld computer device that stores the information of each package (Goessl 2010). This device is carried by the driver who enters information about the time the package was delivered and the signature of the person who receives the package. This information is transmitted to the mainframe of the company through the delivery van. The company keeps the information where the client can access it and verify its arrival. Apart from the above-discussed technology, UPS uses many other technologies like the UPS rates and service selection, use of renewable energy, and many others.
FedEx and UPS have been competing for the same market segment for the past four decades. According to the financial releases, UPS has had a higher return over the years compared to FedEx. However, the last annual financial records released of UPS recorded a significant reduced profit compared to the past years and FedEx whose operation is far less profitable in comparison. As of December 2012, UPS recorded a gross profit of $40,553,000, a net profit of $807,000, and expenses of $39,210,000. On the other hand, as of May 2013, FedEx recorded a gross profit of $27,839,000, a net profit of $1,561,000, and expenses of $25,288,000. The three reportable segments of UPS income statement are the selling general and administrative operating expenses, income from continuing operations, and the net profit.
Outsourcing supply chain management has become a part of the UPS service provision. It increases the competitive advantage in supply chain management by providing flexibility and accessibility of commodities. It also helps the consumer keep up with the trends and have access to products last minute. UPS has specialized in this sector in pharmaceutical, medical equipment, and perishable goods, which include crabs and flowers.
Outsourcing is complicated and requires special skill and equipment to give quality products that the consumers expect. However, the returns are very encouraging if the customers’ response is positive. However, the goods targeted must have a wide customer base to enable profits. UPS has received wide acclamation on its performance in this delicate business sector.
Technology in international package reporting segment
UPS’s international package reporting segment offers guaranteed international shipping services worldwide. The company offers three different options, which include Express Plus, Express, and Express Saver. As in all the other operations of UPS, technology plays a vital role in these operations. The company offers the clients an option of ordering goods online through their website. In addition, clients sending packages could enquire through their website the price off shipping after they enter the weight, time of shipping and type of package they are sending (Goessl 2010). Customers understand better the choices they have.
UPS and FedEx competitive strengths
Customers continue to embrace these two U.S based shipping companies throughout the world. The two combined deliver about 25 million packages worldwide a day. Though the two companies have different goals, they operate in the same markets. First, UPS offers cheaper ground service for next day delivery compared to FedEx. In addition, UPS has 91% on time delivery compared to FedEx, which scores 88% in comparison (Chianis 2013). However, UPS asks for extra charge for Saturday delivery while FedEx treat Saturday as a standard day.
Franchising is also another sector that separates both companies. While FedEx purchased Kinko in the U.S and overseas in 2003, UPS purchased Mail Boxes almost a decade later in 2012. UPS now has these printing services in the U.S, Puerto Rico, and Canada. FedEx excel in comparison since they have over 2000 such offices globally (Chianis 2013).
Finally, in fastest international shipping, both companies offer next day delivery. UPS has the UPS Express critical as the fastest shipping program that offers business owners confidence and convenience since they deliver at a specific time (Chianis 2013). The FedEx International Next Flight is the option offered by FedEx. The difference between the two is that FedEx does not offer specific time guarantee like the completion.
FedEx mobile suite of services
FedEx offers FedEx mobile suite of services, which provides specific modifications to the normal type of shipping. This includes shipping of refrigerated items and shipping of suitcases and luggage among other services. Refrigerated items include human organs, blood, among others (Goessl 2010). In addition, FedEx offers a traveler an option to transport their suitcases to their destination thus the customer avoids the hustle of baggage claim lines and loss of baggage. UPS also offers a similar service of shipping refrigerated parcels.
If I was offered a position at, the WorldPort warehouse in charge of technology, the four gadgets I would immediately familiarize myself with include the DAID, UPS computer central mainframe, UPS in-house package tracking software, and bar-code scanners. The two companies offer very competitive services for such wonderful work. They have aided the progress of various businesses because they connect the buyer and seller globally.
1. What automotive company uses UPS as their parts supplier? Briefly describe
how they take advantage of UPS services.
Bentley, which is based in the United Kingdom, uses UPS as their parts supplier. They have stored their parts at the warehouse and whenever a customer needs the parts, they ship them immediately.
2. What company setup shop right next to FedEx so they can quickly deliver their
Perishable goods? What do they sell?
Net grocer has set up shop next to FedEx. They sell a selection of groceries, which are frozen, refrigerated, health, and beauty supplies.
3. How many times is the average FedEx package scanned?
4. Over the past 18 months, UPS has opened 12 new dedicated facilities on 4
continents. What are they dedicated to?
The new shops are dedicated to printing, photocopy, and documentation services.
5. What does telematics do for UPS?
Telematics in UPS is dedicated in creating innovations that reduce fuel cost in UPS delivery cars and airplanes to cut operational cost
6. What does UPS Quantum View do for customers?
It gives customers complete shipment visibility right from the phone or laptop. They also offer automatic delivery notifications for the customers.
7. Which is bigger? The FedEx Memphis hub or the UPS WorldPort Hub? Provide
statistics in at least a one paragraph answer.
The UPS WorldPort Hub is smaller than the FedEx Memphis hub even after it was expanded a few years ago. The FedEx Memphis hub is 832 acres with over 300miles of the hub and 175 slots of airplane parking. WorldPort Hub at Memphis is considerably smaller measuring 5.2 million square feet with a perimeter of 7.2 miles with slightly less number of parking slots.
8. According to company financials, what was the total income and profit for each
company? Who did better in terms of profit as a percent of revenue?
As of December 2012, UPS recorded a gross profit of $40,553,000, a net profit of $807,000, and expenses of $39,210,000. On the other hand, as of May 2013, FedEx recorded a gross profit of $27,839,000, a net profit of $1,561,000, and expenses of $25,288,000.
9. How did Siemens help to expand the Worldport Hub?
Siemens helped expand the hub because they shipping all their products through UPS. In addition, software upgrades and packaging was also completed at the warehouse.
10. What fine foods company has a warehouse next to the UPS WorldPort facility?
What do they keep there? How do they do it?
Clearwater fine foods have a warehouse next to the UPS WorldPort facility. They keep American crabs in water troughs and ship them last minute since the crab will die after staying out of water for a few days.
11. What is the name of the hand-held device that UPS drivers use? How does it
integrate with the UPS ERP system?
It is called the DAID (Delivery Information Acquisition Device). It is a handheld computer device that is carried by the driver who enters information about the time that the package is delivered and the signature of the person who receives the package.
Hiskey, D. (2010) UPS Was Founded By Two Teenagers With One Bicycle and $100 Borrowed from a Friend. Retrieved from: http://www.todayifoundout.com/index.php/2010/06/ups-was-founded-by-two-teenagers-with-one-bicycle-and-100-borrowed-from-a-friend/
Chianis, A. (2013) BUZZBATTLE: UPS vs. FedEx — Which Shipping Giant is Worthy of Your Business? Retrieved from: http://www.businessbee.com/resources/news/operations-buzz/buzzbattle-ups-vs-fedex-which-shipping-giant-is-worthy-of-your-business/
Goessl, L. (2010) How Technology has Contributed to the Success of Ups. Retrieved from: http://www.insidebusiness360.com/index.php/how-technology-has-contributed-to-the-success-of-ups-12092/